There are several ways to finance a buy-sell agreement. We will study 4 methods below: Insurance LLC If several owners of a business are looking for the benefits of a “cross purchase” contract, while avoiding the risks associated with a “cross purchase”, it is worth considering the creation of a separate limited liability management company (“Insurance LLC”) in order to maintain and manage insurance policies insuring the life of business owners. Existing policies held by owners can be transferred to Insurance LLC or new policies can be purchased by Insurance LLC. Each member of Insurance LLC is designated as the beneficial owner of the life insurance policies insuring other members whose ownership shares in that member`s business entity are to be purchased as part of the operating company`s purchase-sale agreement in the event of death. Life insurance policies must also designate Insurance LLC as the beneficiary. The fact that Insurance LLC owns all policies provides centralized administration and creditor protection for the policies it held and avoids the inclusion of inheritance tax for its owners, benefits that are not otherwise available if individual owners maintain the policies. It also avoids poor tax outcomes when an owner leaves the business and ownership of the policy needs to be adapted. While integrating an LLC insurance into a buy-sell agreement can result in costs and complexity, the benefits of an LLC insurance can often outweigh those costs. The ownership of Insurance LLC is equivalent to that of the business unit and an independent person or corporate agent should play the role of manager. Each member of Insurance LLC must make capital contributions equivalent to the premiums on the life insurance policy for which that member is designated as the beneficial owner, in accordance with the member`s purchase obligation under the operating company`s purchase-sale agreement. If a policy has more than one beneficial owner, each member`s contribution to the policy premiums must be proportional to the member`s total percentage of participation in the business unit (if the purchase and sale provides for a pro-rated purchase). Example. A holds a total holding percentage of 35% in the business unit and B has a total percentage stake of 5% in the business unit.