Partners in a business want to ensure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suited for transitioning the business?

A. Deferred Compensation Plan
B. Buy-Sell Agreement
C. Split Dollar Plan
D. Executive Bonus Plan

Question

05-08-2024
Business

Answered

Partners in a business want to ensure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suited for transitioning the business?

A. Deferred Compensation Plan
B. Buy-Sell Agreement
C. Split Dollar Plan
D. Executive Bonus Plan

Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-08-05T13:18:37-04:00

Final answer:

A Buy-Sell Agreement is the recommended life insurance arrangement for transitioning a business, ensuring partners' families receive fair value for their portion in case of death.

Explanation:

Buy-Sell Agreement would be the most suited life insurance arrangement for transitioning the business. A Buy-Sell Agreement is a contract between business partners that stipulates what happens if one partner passes away. In this arrangement, the remaining partners use the life insurance proceeds to buy out the deceased partner's share, providing financial security for their family.

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