If you are a small business that operates as a private company then you should consider Shareholder protection.
Shareholder Protection is an insurance policy taken out by the business owners (shareholders) to allow the remaining shareholders to remain in control of the business following the death of a shareholder.
If a shareholder dies with no Shareholder Protection in place, their share in the business may be passed to their family. The deceased’s family, however, may not have the necessary skills, experience or interest to continue in the business, which could be extremely damaging for the remaining shareholders. The remaining shareholders may not have the funds for the share purchase, which could lead to a sale of the deceased’s shares to a third-party.
To avoid this situation arising, each shareholder takes out a protection policy for themselves, written in trust. In the event of a shareholder dying, an agreement exists between the business owners that allows the surviving owners to buy the deceased’s share of the business with the proceeds of the policy. In return, the deceased’s estate will receive the cash value of the shares.
Shareholder Protection can also cover critical illness, as well as death.
Please contact our independent financial advisers (IFA) who can discuss options for you to protect your business. Click here