http://blog.accuquote.com/2006/10/30/buy-sell-life-insurance-agreements-can-preserve-your-business/ AccuQuote blog is brought to you by AccuQuote.com, a leading provider in term life insurance for people across the U.S. This blog is dedicated to providing you with valuable information from experts on the topics of insurance, financial planning and personal finance. Fri, 12 Mar 2010 18:34:29 +0000 http://wordpress.org/?v=2.9.2 hourly 1 http://blog.accuquote.com/2006/10/30/buy-sell-life-insurance-agreements-can-preserve-your-business/comment-page-1/#comment-3679218 Chris Mercer Tue, 14 Nov 2006 20:40:18 +0000 http://blog.accuquote.com/?p=837566#comment-3679218 Buy-sell agreements must have a funding mechanism to be effective, and life insurance is one of the most effective such mechanisms in the event of the death of a shareholder. However, the shareholders need to discuss and document their buy-sell agreements to clarify whether life insurance proceeds are specifically a funding mechanism -- for the sole purpose of purchasing the shares of a deceased shareholder, or whether the proceeds create a corporate asset, which becomes part of the value of the company to be purchased. This is not a distinction without a difference! Buy-sell agreements must have a funding mechanism to be effective, and life insurance is one of the most effective such mechanisms in the event of the death of a shareholder. However, the shareholders need to discuss and document their buy-sell agreements to clarify whether life insurance proceeds are specifically a funding mechanism — for the sole purpose of purchasing the shares of a deceased shareholder, or whether the proceeds create a corporate asset, which becomes part of the value of the company to be purchased. This is not a distinction without a difference!

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