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                Retail or Wholesale Cost For Shareholder's Stock At Death?


                                                          

Corporation /

Shareholder
A--RETAIL
B--WHOLESALE
Date of Payment After Death Before Death
Principal Payments to Purchase Stock Yes, After Tax Dollars. No
Amount of Principal Determined after death. Subject to negotiations with heirs, survivors, attorneys, other advisors, IRS. Set in advance by Agreement.
Interest Payments Yes Yes
Amount of Interest

Unknown. 

Detemined after death.

Assume very favorable 8%.

Approximately 5.5%
Actual cost Total share price + interest paid

Total interest paid by date of death. 

No principal payments. 

Always less than stock cost.

Timing of Payments Start at date of death.

Start discounted payments now.

Stop at date of death.

Payments Carried on Books Yes, liability after death for negotiated value of shares. Yes--asset before death--for exact equity value of interest payments.
Stock Encumbered After Death Yes No
Buyer At Death Unknown--not specified Set in advance by Agreement with Corporation/Shareholders
Discounted Value of Principal and Interest available at date of death in one sum. No Yes
A.  Installment payments after death either to heirs or bank, from cash if available, reserve account, borrowed funds, or any buy-now, pay-later plan.
B.  Life insurance (specialized form of).
Note:  "Interest/Interest Payments" in Method B really are life insurance premiums (of a special type), the cost of which usually is less than the interest paid in Method A!

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