Good Commission Term Company?
- Thread starter 3timer
- Start date
- 1,802
there are many different companies to choose from.
Here are a couple point to consider:
How old are they?
How is there health?
What length of term will they buy?
You mentioned term in your heading; I personally have never been a part of a buy-sell agreement where term was used. I can see where it may work; assuming their young enough and will pay off the balance before the term expires. But maybe a Term ROP would be a good idea. Again too many variables and not enough data. Give us a little more information so that we be able to help.
- 9,744
Are you using the "entity" or "cross-purchase" method? How are they organized?
- 1,926
There's a way to use a hybrid of the cross purchase and redemption method and only use 3 policies. You might have to use different companies for each policy depending on the ages and medical conditions.
- 9,744
Ned, is this the "wait and see" method (that I forgot about)?
Can you tell us about the mechanics of it?
- Thread starter
- #6
- 9,744
These guys (girls?) are relatively young...Lower premiums in the short-term, or long-term?
- 1,802
My thoughts exactly Moonlight. What is the time horizon for this agreement to be settled in full?
- 1,926
We use a "Trusteed" agreement in cases that have more than two shareholders. A trustee is named owner and beneficiary, only one policy is needed per shareholder, versus multiple policies needed in a cross purchase. The trusteed agreement has the advantages of a cross purchase, step up in basis. I have a copy of an agreement that I can make available if your attorney isn't familiar with the concept.
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