10.3.2.3 Partnership Entity Buy-Sell Plan
This plan is very similar to the cross-purchase plan, yet slightly different. In the entity plan, the business is also considered a partner. It is the business itself that holds life policies on the other partners. When one of the partners dies, the business entity (the partnership) is the beneficiary who purchases the deceased's shares from the estate and then divides the shares among the remaining partners. This process eliminates the need for six policies; three are sufficient.
Z Company purchases life insurance policy on Ralph for $1 million.
Z Company purchases life insurance policy on Ron for $1 million.
Z Company purchases life insurance policy on Ray for $1 million.
Three life insurance policies purchased total.
