By Raymond Nash
Business Planning
Buy-Sell Life Insurance LLC
Buy-Sell arrangements using life insurance have traditionally taken three approaches: cross-purchase, stock redemption, and a hybrid, also commonly known as a “trusteed Buy-Sell”.1 While each of these approaches has distinct advantages, increasingly a fourth approach is providing an operating company with greater efficiency and protection: an LLC that owns and manages life insurance within a Buy-Sell arrangement.
The Buy-Sell Life Insurance LLC is designed to provide central ownership, administration, and maintenance of the necessary life insurance policies funding the Buy-Sell need. With this structure, it becomes simpler to allocate premiums and death benefits among parties to the agreement. It can also reduce exposure of the policies to the operating company’s creditors and help ease the distribution of policies to the members should they no longer be required to fund the agreement.
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