FUNDING OF BUY/SELL AGREEMENTS

These policies are designed primarily for partnerships and professional corporations comprised of two to five principals. Consideration may also be given to corporations and partnerships with six to ten principals.

These agreements are most often found within:

Accounting firms Advertising agencies Architectural firms High-tech and computer firms Medical practices and clinics

Engineering firms Law practices Employment agencies Small manufacturers

Public corporations, husband-wife combinations, parent-child combinations and other relationships that do not meet the “arms length” test may be ineligible for Buy Sell insurance policies.

The business should be operating, or the partners associating, for at least three years. The business must also have a net worth of at least $50,000. 

The owner of the policy may either be the corporation or partnership (entity purchase), or alternatively each owner can own a policy on each of the other owners (cross purchase). The entity purchase may be preferred when there are more than two owners involved as a means of reducing the number of issued policies. The existence of a formal buy sell agreement is highly recommended.

The above is meant to give a brief overview of the funding of Buy/Sell agreements.  For more information please call us at 604.687.7773 or email solutions@customplanfinancial.com