An agreement to sell a partner's interest in a Tennessee business in the event of premature death can be accomplished by a written:

• Buy-Sell Agreement
• Cross-Purchase Agreement
• Entity-Purchase Agreement

These agreements provide a business arrangement in which one person or entity agrees to "buy" and the other party agrees to "sell" an interest in a Tennessee business, at a pre-determined price.

Many Tennessee businesses have one of these written agreements in place, but there is one very important problem - there are no funds to execute the agreement.

Funding a Tennessee Buy-Sell With Life Insurance

Normally, each partner or owner applies for life insurance on the lives of each of the other co-owners.  In the event of the death of an owner, the life insurance proceeds are paid to the remaining owners and his/her interest in the Tennessee business is actually sold to the surviving owners.

Let's look at a Tennessee business with three partners - Partner "A"; Partner "B"; and Partner "C".

Here's how life insurance would be purchased:

• Partner "A" would buy life insurance policies on Partners "B" and "C"
• Partner "B" would buy life insurance policies on Partners "A" and "C"
• Partner "C" would buy life insurance policies on Partners "A" and "B"