Businesses with several owners
If a business has several director / shareholders or partners, the effect of the death of one of them is seldom considered. For example, in the absence of any agreement in place prior to death, shares owned by the deceased pass according to the beneficiaries in their Will.
For limited companies, this creates several problems:
- The main beneficiary in a Will is usually the deceased’s surviving spouse or partner. Often they have no interest in the business, but are now shareholders. Even worse if the deceased was the majority shareholder.
- Can the business continue to run as effectively following the death of a shareholder?
- Do the remaining shareholders have the financial means to buy out the beneficiary, or to purchase them from the estate of the deceased (if that is indeed possible)?
For partnerships, there are similar consequences following the death of a partner. The partnership is dissolved and the deceased will own a share of the proceeds of sale.
Again, this can create difficulties for the surviving partners in attempting to continue on with the business.
Another point business owners with other shareholders or partners don’t consider is, how would they cope if they didn’t die, but one of the others did?
A joined up succession strategy
Whether the objective is to ensure the business is a saleable asset or to ensure that co-owners can continue to run the business when someone dies, it makes sense to have a succession plan in place.
We can help with:
- Putting in place a succession plan, to cover all eventualities
- Provide powers to executors, which allow them to continue to run the business, as if they were the deceased
- Ensure shares pass to those the directors or partners wish them to pass to, whether they are to family members or
- Configure agreements so that business interests pass as tax – efficiently as possible (cross option share agreement and keyman insurance policy planning)
If you own a business and would like to discuss what we can do for you, please contact us for our expert advice.
Contact us for an initial discussion on your concerns
Use the contact form on our site here
Phone: 01623 325035