What happens if my partner dies and I have to buy out their estate instead of them personally?

If your shareholders' agreement includes a buy-sell provision triggered by death, often funded in whole or part by life insurance held for this purpose, that mechanism generally determines the price or valuation method and process, and the buyout proceeds with the deceased partner's estate, acting through the executor, standing in their place rather than the partner personally.

Without such a provision, you're negotiating a share purchase with the estate much like you would with any other shareholder, except the executor is bound to act in the beneficiaries' interests and may be less familiar with the business than the deceased partner was, which can slow negotiations. Either way, the transaction still needs a proper purchase agreement, and you may want an independent valuation if the shareholders' agreement doesn't already specify how value is determined. This is one of the strongest reasons to put a properly funded buy-sell arrangement in place while all partners are alive.