4 - Ownership Protection
If you run your business with a partner or have shareholders, what would happen if they weren’t around? When someone passes away, their assets usually go to their dependants – that would include any shares in your business. And what the dependants want may not be what your business needs. For example, they may prefer to receive a lump sum, but you may not have the cash flow to honour this. That could mean you have to sell on shares, which could reduce your control of the business.
That’s where ownership protection can keep things focussed. It means that if a business partner or shareholder were to pass away, then the remaining colleagues have the opportunity to buy up their proportion of the company. There are various options you can choose from, including Shareholder Protection, Company Share Purchase Protection, Partnership Protection and Limited Liability Protection.
With these options, each controlling shareholder or partner takes out a policy that reflects the value of their shares. A plan would then need to be set up outlining how those shares should be valued, with the option to buy given to those remaining, as well as the option to sell for the dependants of the deceased.