O—Cross Purchase Agreement During Lifetime and Upon Death

The cross purchase agreement is one means of providing for the complete disposition of a business interest. Under this arrangement the owners agree, among themselves, to buy and sell their respective interests.

DURING LIFETIME. To illustrate how this works, assume that we have a corporation equally owned by two individuals, A and B. They enter into an agreement providing for the purchase and sale of their respective interests. Typically, this agreement is binding and obligates both parties, or their representatives, to either buy or sell upon the death, disability, or retirement of either A or B.