Sole - Proprietor Buy-sell Plans

: The buyer (e.g., the key employee) typically owns the policy on the life of the proprietor and is the named beneficiary.

Unlike traditional buy-sell agreements between multiple partners, a sole proprietor agreement usually involves an external buyer:

: Premiums paid as bonuses are taxable income to the employee. sole proprietor buy-sell plans

: Typically a key employee , a family member, or even a competitor.

An effective agreement should be drafted by legal professionals and include: Funding a Buy-Sell Agreement with Life Insurance : The buyer (e

: The buyer agrees to purchase the business from the owner's estate at a predetermined price or formula upon a "triggering event" (usually death or permanent disability).

For a sole proprietor, a buy-sell plan (often called a ) is a legally binding contract that ensures the business continues and provides liquidity to the owner's estate after their death, disability, or retirement. Without such a plan, the only options are often to dissolve the business or leave it to an heir who may not want to run it. Core Structure: The "One-Way" Plan An effective agreement should be drafted by legal

: Death benefits paid to the buyer are generally income-tax-free.