If clients are unable to decide which type of buy-sell agreement to adopt, the "wait-and-see" plan may be a good alternative. Under this arrangement, an agreement is drawn up by an attorney that enables the principals to postpone the decision as to whether the corporation or the individual shareholders will purchase a deceased shareholder's interest.

To arrange insurance funding, the shareholders can purchase the insurance as if a cross-purchase plan had been adopted. If one of the shareholders dies, a cross-purchase can be implemented, or the principals can loan death proceeds to the corporation to execute a stock redemption.

If the principals decide that an entity-purchase/stock redemption plan is the best choice some time after the wait-and-see plan has been adopted, they can readily convert their cross-purchase-style insurance funding with no adverse tax consequences.

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