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Which Buy-Sell Agreement Is Right For You?

When structuring a buy-sell agreement and purchasing buyout insurance, there are two categories of arrangements.

Use our tool here to discover which one is best for you and read below to learn more about the advantages and disadvantages of each.

In a cross-purchase arrangement, each partner owns a buyout insurance policy on every other partner.

Pros: There is a tax advantage and this is simple when there are two or three partners.
Cons: This is complex when there are more than three partners as there are more insurance policies required.

In a redemption arrangement, the business owns the buyout insurance policy for each partner.

Pros: There is only one policy for each partner and the policy can be combined with key person insurance for extra business protection.
Cons: There may be negative tax implications and accounting may be more complicated.

Cross-Purchase vs. Redemption

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How many partners are in your business?*

What is the valuation of your business?*

Are any partners key employees of the business?*

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Does the business own key person insurance on any employees/owners?*

Yes

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