The following outlines the basis for shareholder buyout

Upon the death of a shareholder the remaining partner(s) or shareholder(s) are now in business with the beneficiaries of the late partner or shareholder's estate.
In most cases this is not ideal.

A buy/sell agreement outlines what will happen if a partner/shareholder dies or become disabled (Who receives the shares, how the business will be valued etc).
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​Funding the purchase price of the shares is important

Here are some options for you to consider.

The remaining partner(s)/shareholder(s) :

1.     Borrow from the bank. This requires $ for $ repayment plus interest

2.     Use working capital. $ for $ repayment plus tax as it goes from the company to personal funds

3.     Sell business assets. $ for $ plus opportunity costs on the assets sold

4.     Sell personal assets. $ for $ plus loss of enjoyment

Or

(Literal) cents in the dollar through an insurance contract

For example
A 60 year old effects life cover  to fund the buy out :
·        The annual cost at age 60 would be .75% of the amount being funded
·        At age 65 the annual cost would be 1.5% of the amount being funded
·        At age 70 the annual cost would be 2.7% of the amount being funded

At death or disablement, the capital amount is immediately available to the remaining partner(s)/shareholder(s)​