Close Corporation Plan

DEFINITION of 'Close Corporation Plan'

A form of business buy-sell agreement. Close Corporation Plans stipulate that the surviving partners must purchase all of the shares owned by the deceased partner or owner. The plan outlines the method of funding as well as the price at which the shares must be purchased.

BREAKING DOWN 'Close Corporation Plan'

Close Corporation Plans are usually funded with life insurance policies. They usually take one of two basic forms. One is a cross-purchase agreement, where each partner owns a policy on all of the others, and the other is known as an stock redemption plan, where the corporation owns a single policy on each stockholder.

RELATED TERMS
  1. Alien Corporation

    A corporation that was created in another country. Alien corporations ...
  2. Business Continuation Insurance

    Life insurance that a company or firm purchases to provide the ...
  3. Business Interruption Insurance

    A form of insurance coverage that replaces business income lost ...
  4. Business Owner Policy - BOP

    Insurance policies that combine protection from all major property ...
  5. Corporate Finance

    1) The financial activities related to running a corporation. ...
  6. Corporation

    A legal entity that is separate and distinct from its owners. ...
Related Articles
  1. Entrepreneurship

    How To Create A Business Succession Plan

    Make sure the business you built continues to thrive long after you've left the helm.
  2. Investing Basics

    Human Capital: The Most Overlooked Asset Class

    The skills and knowledge that allow you to make money are your best asset. Remember to invest in yourself!
  3. Options & Futures

    Choosing The Best Disability Insurance

    Social Security benefits can be hard to collect. Find out why you need disability insurance to protect your income, and learn how to choose the right policy for you.
  4. Insurance

    Beware the Sneaky Math of Universal Life Insurance

    Universal life insurance's cash value can be a cash cow – if there's any left. Read on to see if it'll work as an income source after you've retired.
  5. Products and Investments

    Cash Value vs Term Life Insurance: Which is Best?

    The debate between cash value life insurance and term insurance plus an investment plan is an ongoing one. Here's a look at both sides of the argument.
  6. Insurance

    Getting Your (Insurance) House in Order

    From starting a family to retirement, insurance can play a role in taking care of financial needs. This piece looks at some of the choices you can make.
  7. Term

    Is Term Life Insurance the Right Choice?

    Term life insurance is a policy with a limited coverage period.
  8. Insurance

    Cashing In Your Life Insurance

    In tough economic times, tapping into a life insurance policy can provide a needed source of funds.
  9. Entrepreneurship

    Becoming An Insurance Agent

    Life insurance protects families, employers and others from financial loss in the event the insured individual dies.
  10. Insurance

    Which Life Insurance is Right For You?

    Consumers have choices when it comes to life insurance. Knowing your future needs for cash or retirement can make the difference in what you select.
RELATED FAQS
  1. What is disability-income insurance?

    Disability-income insurance is insurance that provides financial benefits to a policyholder in the event of sickness or ... Read Full Answer >>
  2. Do beneficiaries pay taxes on life insurance?

    Generally speaking, when the beneficiary of a life insurance policy receives the death benefit, this money is not counted ... Read Full Answer >>
  3. Can I borrow from my annuity to put a down payment on a house?

    You can borrow from your annuity to put a down payment on a house, but be prepared to pay an assortment of fees and penalties. ... Read Full Answer >>
  4. What are the biggest disadvantages of annuities?

    Annuities can sound enticing when pitched by a salesperson who, not coincidentally, makes huge commissions selling them. ... Read Full Answer >>
  5. What are the risks of annuities in a recession?

    Annuities come in several forms, the two most common being fixed annuities and variable annuities. During a recession, variable ... Read Full Answer >>
  6. How can I determine if a longevity annuity is right for me?

    A longevity annuity may be right for an individual if, based on his current health and a family history of longevity, he ... Read Full Answer >>
Hot Definitions
  1. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  2. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  3. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  4. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  5. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
Trading Center