A further problem businesses face is that once a shareholder dies; the company or the surviving shareholders may struggle to raise the necessary funds to buy the deceased’s shares. Share protection will ensure that there are available funds for the remaining owners to purchase shares for a fair value from the estate of the deceased, so that control of the business is retained.
As an added measure and to avoid any issues with the family of the deceased, you should consider seeking advice and drafting effective legal arrangements that allow the surviving shareholders the option to purchase the shares of the deceased shareholder and also provide the estate of the deceased shareholder the right to require the surviving shareholders to buy the shares of the deceased shareholder. These agreements should be carefully worded to ensure that business property relief is preserved and this is where specialist advice comes in.
In summary, there are many insurance products on offer in the market; however, the main reasons business owners are not insured are the cost of the premiums and a limited understanding of the different insurance products that exist and the associated benefits. Additionally, many do not see the benefits of insurance, unless they are in a position to make a claim.
As each business is unique and has different vulnerabilities and risks, it is key that you evaluate these risks and understand the type of insurance cover required to meet your business needs. Book a quick call with one of our financial planning experts to get some help assessing what you need.