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Types of Buy-Sell Agreements

The most basic of these agreements is the cross-purchase buy-sell agreement. The remaining owners purchase the shares but do not necessarily require the company itself to purchase. This is usually financed by the life insurance held on the deceased shareholder, so all partners take on life insurance on each other. The partners pay the premiums and the shareholders are the trustees. <br>Company Name: East Coast Financial of Central Florida<br>Phone: (001) 407 295 6559<br>Email: info@ecfofcf.com<br><br>Website:<br>https://ecfofcf.net<br>

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Types of Buy-Sell Agreements

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  1. Types of Buy-Sell Agreements

  2. The most basic of these agreements is the cross-purchase buy-sell agreement. The remaining owners purchase the shares but do not necessarily require the company itself to purchase. This is usually financed by the life insurance held on the deceased shareholder, so all partners take on life insurance on each other. The partners pay the premiums and the shareholders are the trustees. If there are too many shareholders, a trustee can be appointed as the beneficiary, and the trustee holds the policy for every stockholder and would be a representative for the others in a transaction. The trustee is responsible for the equal distribution among shareholders when one partner passes away. The other type is the entity-purchase buy-sell agreement. This requires the company to purchase the remaining shares. The business itself takes on life insurance on the shareholders at the same price as the partner’s share in the company, and the company pays the premiums. When the shareholder passes away, the amount of the policy is added to the deceased partner’s holdings and the interest is then handed over to the company. For more information visit - https://ecfofcf.net

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