Which disability buy-sell agreement is most appropriate for businesses with a limited number of partners?

In the context of disability buy-sell agreements, a cross-purchase agreement is particularly suited for businesses with a limited number of partners because it allows each partner to purchase the interest of a disabled partner directly. This arrangement is beneficial when there are few partners involved, as it simplifies the process of transferring ownership and ensures that each partner's share is handled individually.

With a cross-purchase agreement, each partner maintains a specific financial relationship with the others, and there is a clear understanding of who will buy the share of a partner who becomes disabled. This type of agreement is typically funded through individual life insurance policies on each partner's life, which can provide the necessary liquidity to complete the transaction seamlessly without needing to involve the entire business entity in the buy-sell process.

In scenarios where there are only a few partners, there's less complexity in managing individual agreements, and partners can make informed decisions based on their unique partnerships and investment dynamics. This approach generally leads to a smoother transition and better control over the ownership stakes among the existing partners.

The other options are less suitable for a limited number of partners. An entity purchase agreement involves the business itself purchasing the interest of a disabled partner, thus complicating ownership structure with more partners. A sole proprietorship agreement