Skip to content

Appropriate Buy-Sell Agreement

Peter and his father Ryan each own 20% and 80% respectively in the RP Partnership. The partnership generates enough income for both partners to be able to afford the life insurance premiums or for the business to be able to pay the life insurance premiums. Which of the following is correct if Peter and Ryan decide to establish a buy-sell agreement and want the arrangement to be fair for both partners?

  1. They should select an entity-redemption plan given the difference in ages.
  2. They should select a cross-purchase plan given the disproportionate amount of ownership.
  3. They should select an entity-redemption plan given the number of life policies required.
  4. They should select a cross-purchase plan given the family relationship.