Many Lincoln businesses are built by partners who trust each other completely. What happens if one of them dies unexpectedly is a harder conversation. Without a plan, surviving owners may end up in business with heirs, and families may struggle to receive fair value. A buy-sell agreement funded with life insurance is one common way to plan ahead.<\/p>\n
A buy-sell agreement is a contract that spells out what happens to an owner’s share of the business after certain events, such as death, disability, or retirement. Life insurance is often used to provide the funds needed to complete the purchase when an owner dies.<\/p>\n
| <\/th>\n | Cross-Purchase<\/th>\n | Entity-Purchase<\/th>\n<\/tr>\n<\/thead>\n |
|---|---|---|
| Who owns the policies<\/td>\n | Each owner owns a policy on the other owners<\/td>\n | The business owns a policy on each owner<\/td>\n<\/tr>\n |
| Who buys the share<\/td>\n | The surviving owners<\/td>\n | The business itself<\/td>\n<\/tr>\n |
| Number of policies<\/td>\n | Can grow quickly as owners are added<\/td>\n | Usually one policy per owner<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Some agreements use hybrid approaches. The right structure depends on the number of owners, the type of business entity, and tax considerations.<\/p>\n Details That Matter<\/h2>\n |