: The business often "bonuses" the premium payments to the employee, who then pays the insurer. Tax Considerations :
: Business-paid premiums are generally not tax-deductible. Essential Plan Components sole proprietor buy-sell plans
: Life insurance is the primary funding mechanism because it provides immediate cash when needed to activate the sale. How the Funding Works : The business often "bonuses" the premium payments
: Premiums paid as bonuses are taxable income to the employee. How the Funding Works : Premiums paid as
An effective agreement should be drafted by legal professionals and include: Funding a Buy-Sell Agreement with Life Insurance
Unlike traditional buy-sell agreements between multiple partners, a sole proprietor agreement usually involves an external buyer:
: The buyer agrees to purchase the business from the owner's estate at a predetermined price or formula upon a "triggering event" (usually death or permanent disability).