Scribd Logo
Upload

Welcome to Scribd!

  • 159 views

    Cross Purchase Buy-Sell Agreement Overview

    Uploaded by

    Provada Insurance Services
    CROSS-PURCHASE BUY-SELL AGREEMENTS (Funded with Life Insurance) WHAT IS A CROSS-PURCHASE BUYSELL AGREEMENT? A cross-purchase buy-sell agreement is an agreement among the owners of a closely held business under which each owner agrees to purchase the interest of the other owners, and the other owners agree to sell their interests, upon the occurrence of any of the specified triggering events. HOW TO IMPLEMENT 1. Advisor identifies an appropriate closely-held business whose owners need or want a

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Cross Purchase Buy-Sell Agreement Overview

    Uploaded by

    Provada Insurance Services
    159 views1 page
    CROSS-PURCHASE BUY-SELL AGREEMENTS (Funded with Life Insurance) WHAT IS A CROSS-PURCHASE BUYSELL AGREEMENT? A cross-purchase buy-sell agreement is an agreement among the owners of a closely held business under which each owner agrees to purchase the interest of the other owners, and the other owners agree to sell their interests, upon the occurrence of any of the specified triggering events. HOW TO IMPLEMENT 1. Advisor identifies an appropriate closely-held business whose owners need or want a

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    CROSS-PURCHASE BUY-SELL AGREEMENTS (Funded with Life Insurance) WHAT IS A CROSS-PURCHASE BUYSELL AGREEMENT? A cross-purchase buy-sell agreement is an agreement among the owners of a closely held business under which each owner agrees to purchase the interest of the other owners, and the other owners agree to sell their interests, upon the occurrence of any of the specified triggering events. HOW TO IMPLEMENT 1. Advisor identifies an appropriate closely-held business whose owners need or want a

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    159 views1 page

    Cross Purchase Buy-Sell Agreement Overview

    Uploaded by

    Provada Insurance Services
    CROSS-PURCHASE BUY-SELL AGREEMENTS (Funded with Life Insurance) WHAT IS A CROSS-PURCHASE BUYSELL AGREEMENT? A cross-purchase buy-sell agreement is an agreement among the owners of a closely held business under which each owner agrees to purchase the interest of the other owners, and the other owners agree to sell their interests, upon the occurrence of any of the specified triggering events. HOW TO IMPLEMENT 1. Advisor identifies an appropriate closely-held business whose owners need or want a

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 1

    CROSS-PURCHASE BUY-SELL AGREEMENTS

    (Funded with Life Insurance)


    WHAT IS A CROSS-PURCHASE BUY- HOW TO IMPLEMENT
    SELL AGREEMENT?
    1. Advisor identifies an appropriate
    A cross-purchase buy-sell agreement is an closely-held business whose owners
    agreement among the owners of a closely held need or want a solid business
    business under which each owner agrees to continuation plan.
    purchase the interest of the other owners, and 2. The owners enter into an agreement
    the other owners agree to sell their interests, with each other under which each
    upon the occurrence of any of the specified owner agrees to purchase the
    triggering events. interests of the other owners and the
    other owners agree to sell their
    CLIENT PROFILE interests upon the occurrence of a
    specified triggering event.
    A business with five or fewer owners who 3. Each owner purchases a life
    need or want a business continuation plan insurance policy (and, it is hoped, a
    and do not wish to pass their interests on to special buy-out disability policy) on
    other family members such as children the life of each other owner and is the
    owner, beneficiary, and typically the
    premium payor of each policy.
    HOW IT WORKS
    4. Split-dollar arrangements could also
    be used, or bonuses paid, especially if
    dealing with a “C” corporation.
    5. Premiums, of course, are not tax-
    deductible, but proceeds are tax-free.

    WHY USE A CROSS-PURCHASE BUY-


    SELL RATHER THAN ENTITY?

    The primary reason is that the purchasing owners


    receive a full cost basis increase for the price paid
    for the acquired business interest, reducing their
    taxable gain in the event of a subsequent lifetime
    sale. Further, since the business does not reflect
    the life insurance policies on its balance sheet,
    business valuation cannot be affected, nor will the
    life insurance be subject to Alternative Minimum
    Tax (AMT) at the business level. Caution: with a
    corporation that has more than two owners, care
    must be taken after an owner’s death to avoid
    violating the transfer-for-value rule in re-arranging
    ownership of the policies on the surviving owners.
    Use of a “trusteed” buy-sell could be the solution.

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy