Entity redemption buy-sell
Certified Financial Planner glossary · Certified Financial Planner
Definition
A buy-sell funded so the business entity buys a deceased or departing owner's interest, typically needing N policies for N owners.
Entity redemption buy-sell in plain English
Three owners dread buying six cross-purchase policies just to fund a buyout. An entity redemption buy-sell has the business buy a deceased or departing owner's interest, typically needing N policies for N owners instead of N(N-1). Recommend the entity form when policy count becomes unworkable, and contrast it with cross-purchase when a basis step-up for the surviving owners matters more than administrative simplicity. Count the policies the structure actually requires.
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