The very foundations of a business can be shaken in the event of a business owner’s death, with a number of implications for both the stability and viability of that company.
Maintaining continuity within the business will be a priority, with a business usually representing not only the livelihood of you and your family, but also that of your employees and stakeholders.
Dealing with the loss and pressure can be severe, even more so if there is uncertainty or disputes over how the company carries on. The family of the deceased will be dealing, not only with the shock and grief, but concerns around their financial future, especially if the business was the main income and asset.
As a shareholder you would wish to retain control of the business for:
- a clear succession plan of what happens next and who remains in control;
- a smooth transitional period for clients and employees; and
- family members and fellow shareholders to be looked after to avoid financial uncertainty
How can this be achieved?
Shareholder Protection Insurance (SHI) ensures a succession plan is in place. SHI is essentially an insurance policy that safeguards shareholders or partners – allowing them to retain control of the business.
An SHI pays out a lump sum upon death (or critical illness) of an owner. It provides:
- the company funds to buy the shares from the family of the deceased shareholder; and
- the family the ability to sell the shares for a fair value in a tax-efficient and pre-agreed manner
The benefits of SPI can include:
- Mutual benefit to the ongoing owners and family
- The business returning to ‘normal’ as soon as possible
- Shareholders retaining control of their business without the burden of finding funding
- The family financially compensated for the loss of a (potentially major) breadwinner
Get in touch
An SHI can be complicated and have differing tax implications; it is important to discuss the best solutions for your individual business.
Magma’s aim is to help businesses and individuals ensure they have the right protection for themselves, their families and their business. Speak to one of our team below if you would like to find out more.
The Team
Our experienced and approachable team are on-hand to assist you, please get in touch below:
