Buy/Sell Agreements
(Cross Purchase Plan)
A cross-purchase buy/sell agreement is a plan that provides for an orderly change of ownership when a business owner dies or becomes disabled.
Why Do You Need It?
A fully funded, cross-purchase buy/sell agreement can help solve many problems arising at the death or disability of a business owner. Basically, such a plan can:
- Predetermine the price at which the business owners agree to buy and sell their business interests
- Create a market for each owner's business interest
- Establish the value of each owner's business interest for federal estate tax purposes
- Assure creditors and employees of the continuation of the business in the event of an owner's death or disability
- Provide continuous income to a disabled business owner without adversely affecting the business' working capital
- Provide the money to fund the plan at the exact time it is needed
How Does It Work?
