Advantages of Having Cross-Purchase or Entity Agreements

Posted by Winifred "Wini" Cannon | Sep 16, 2020 | 0 Comments

The advantages of having an agreement by way of either cross purchase or entity purchase are as follows:

Ensures the value of the business

The agreement ensures the value of the business. It ensures its liquidity because, upon proof of death, the partner's share is basically taken care of. It's paid to the estate and having either the entity purchase or the cross-purchase agreement settles that portion of the deceased partner's estate.

It won't get tied up in probate

As a result, everybody gets to move on and this matter doesn't get tied up in probate. So the family members or whomever the deceased partner designated as the person who will be getting the distribution of his or her assets gets paid immediately. The business is not tied up either because everything can continue to flow.

So these are the advantages of having cross-purchase or entity purchase agreements as vehicles to continue the business, and it's a very effective plan.

About the Author

Winifred "Wini" Cannon

Winifred “Wini” Cannon knows how business owners may be impacted when retirement, incapacity, or death occurs without a good plan in place. One example that is very common is in the instance where one partner dies leaving the other trying to stay in business complicated by the...

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