Common Contracts
1 similar Cross Purchase Buy/Sell Agreement contracts
The Cross Purchase Buy/Sell ArrangementCross Purchase Buy/Sell Agreement • June 26th, 2014
In a cross purchase agreement, when an owner dies or becomes totally disabled, the surviving business owners agree to purchase the deceased or disabled owner’s business interest. Each business owner is applicant, owner, beneficiary and premium payer for insurance policies on the lives of every other business owner. At death or total disability, each surviving owner/beneficiary normally receives the policy proceeds income tax free. Each surviving owner pays cash to the disabled owner or deceased owner’s estate and in return the disabled owner or deceased owner’s estate transfers a pro rata portion of the disabled or deceased owner’s business interest. The result is that the disabled owner or the deceased owner’s non-liquid business interest has been transformed into cash and the surviving owners own 100 percent of the business.
