Shareholder and Partnership Protection

Death of a shareholder or business partner is a serious risk. But, despite affecting many smaller and medium businesses, it is often ignored.

The business not only loses valuable expertise, but may also be exposed to structural and management upheaval. It could even be wound up. This is because the deceased’s share in the business will pass to his or her estate – along with all voting rights, etc.

The loss of expertise can be addressed by taking our advice on Key Person Assurance, but the other issue is potentially more serious and requires a different approach. The survivors need to be able to buy the deceased’s share from the estate – which means having a sufficient fund of cash. Life assurance can provide the fund, but incorrectly structured policies may defeat the object by creating substantial tax liabilities.

We have corporate finance advisers who fully understand the issues and can advise on suitable policies to provide the fund. They will also highlight the points that need to be discussed with your legal advisers to make certain the survivors will have an absolute right to buy out the deceased’s interest.

If you co-own a business, and haven’t yet made provision for death, you could consult us for an initial appraisal of your needs: we don’t charge a fee for the exploratory consultation.

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