Cross-purchase structure is the underlying ownership and funding framework of a cross-purchase buy-sell agreement in which each owner acquires the departing ownerTMs interest directly and owns insurance on the lives of fellow owners. The structure dictates how many policies are needed, who pays premiums, how buyout prices are determined, and how basis is allocated after a buyout. While tax-advantaged for surviving owners, the structure can be administratively heavy when there are more than a few participants, prompting consideration of trusteed or hybrid variations.

Advisors analyze cross-purchase structures during business-succession planning, modeling policy-count complexity and premium flows as ownership groups grow. They collaborate with legal and tax advisors to build valuation formulas and to avoid transfer-for-value problems when policies are rearranged. Some structures use an LLC or trustee to own policies while preserving cross-purchase tax benefits. Understanding cross-purchase structure helps advisors propose funding architectures that deliver intended tax results without overwhelming owners with administrative burdens.