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What are Disability buyout policies designed to do?

They insure the life of the current owner or co-owner of a business.

Who owns and pays for Disability buyout policies?

They are owned by, paid for by and payable to the prospective buyer of the business.

Are premiums paid for Disability buyout policies tax-deductible?

No, premiums paid are not tax-deductible by the policyholder.

How are benefits received from Disability buyout policies treated for tax purposes?

Benefits received by the policyholder in the event of disability are received tax-free.

What type of agreement was established among Lawrence, Daryl, and Michael?

A cross-purchase agreement.

What was the business valuation of the practice shared by the dentists?

$1,200,000, growing at 5% per annum.

What is the triggering date for the buy/sell agreement in case of disability?

12 months after the onset of disability.

How long do benefits remain tax-free under Disability buyout policies?

Indefinitely, as long as the policyholder is disabled.

In the buy/sell agreement, what percentage of the payout does Michael receive if Lawrence is disabled?

$160,000.

What is the definition of disability according to the agreement?

Regular occupation.