The Problem
A two-partner business. One partner dies. Their spouse inherits half the business - and may have very different ideas about how to run it.
The Solution
A buy-sell agreement specifies what happens. Life insurance funds the buyout so the surviving partner can buy the deceased partner's share without depleting the business.
Cross-Purchase vs Entity-Purchase
- Cross-purchase: each partner owns insurance on the other(s). Cleaner tax treatment, gets complex with more than 2 partners.
- Entity-purchase: the business owns insurance on each owner. Simpler with multiple owners but has tax nuances.
Funding Levels
The policy should equal each owner's share of the business value. Re-evaluate annually as the business grows.
What We Coordinate
Legal counsel writes the agreement; we structure the insurance to match.