Who owns the policies funding a disability buy-sell agreement?

A disability buy-sell agreement is designed to ensure that in the event of a disability affecting one of the business owners, the business can continue operating smoothly. This type of agreement typically involves the business entity owning the insurance policies that fund the buy-sell arrangement.

When the business itself owns the policy, it guarantees that the funds needed to buy out the disabled owner's share will be readily available without conflicting interests from individual owners, officers, or shareholders. This structure also aligns the interests of the business with the financial protection necessary for all stakeholders involved.

By having the business entity as the policy owner, the proceeds from the policy will be directed to the business to facilitate the buy-sell process, thus safeguarding the continuity of the business and providing a clear financial pathway to address the situation created by the disability of an owner.