Director Share Purchase Insurance
A couple of friends share a dream or perhaps one has the money and the other a great idea. But they end up in business together. Maybe as partners or maybe as co director shareholders; but the business grows and becomes a valuable asset. They start to plan for the future but then one of them gets sick or dies…
Where there were two or several there is now one less. Those in the business now have to do more work and probably for less money. The sick or deceased director shareholder’s family is checking up to make sure they get their share of the profits. Telling the survivors how to run the business…
What was once a dream becomes a nightmare…yet it need never have happened. You can insure a business against the loss of a key person, indeed such a plan can ensure business survival – but the money stays in the business.
How does a sick director shareholder or the deceased director shareholder’s family get their money out? Taking the cash out of a business that has just lost a key player might well kill it completely; so transfer that risk to an insurance company using director share purchase assurance.
Director share purchase insurance is a plan written on the life of each director shareholder and placed into trust. In the event of the death or illness or a director the plan proceeds are paid out to the trustees who would normally be the surviving director shareholders. They then use the money to buy the deceased shareholder’s share of the business from his estate.
The survivors thus then own 100% of the business and the deceased or sick shareholder’s family has extracted its cash – without putting any extra strain on the firm.
All this has to be done correctly to avoid any IHT liabilities but expert advice can put the right money, in the right hands at the right time and with no tax to pay. Contact Us for further information.
Also see Life Insurance