Intrafamily And Other Property Transfer Methods

Question 1

What are Buy-Sell Agreements?

Answer 1

Provides for the continuation of the business by employees, family members or surviving owners

Guarantees a market for the business interest

Business is more attractive to creditors

Question 2

What is a Cross-Purchase Agreement?

Answer 2

Each partner or shareholder purchases a sufficient amount of life insurance on the lives of all other partners or share holders to buy out the deceased or disabled partner or shareholder

Number of policies needed with N as the number of owners

N x (N-1)=number of policies needed

Question 3

What is an Entity Arrangement?

Answer 3

Entity itself buys the insurance policies on each partner or shareholder

Question 4

What is a wait and see arrangement?

Answer 4

Business owners wait until an owner dies or retires before deciding whether the surviving business entity will purchase a deceased or retired owners interest

Question 5

What is a Bargain Sale?

Answer 5

Sale of an Asset for less than its full amount considered part sale and part gift