An insurance plan to help partners and shareholders buy a deceased or terminally ill persons share of the business.
We can advise Shareholder & Partners on arranging a suitable Protection Plan.
How it works:
- 1. Each shareholder/partner starts a Life Cover or Life & Critical Illness Cover policy. You can pay your own premiums, or the premiums can be paid by your business (which would be taxable on each individual director or partner)
- 2. Each policy is put in trust for the other shareholders/partners.
- 3. A written contract will be entered into by each shareholder/partner. This is known as a 'Cross Option Agreement'. It's a reciprocal arrangement that guarantees:
- o The remaining shareholding directors/partners can exercise the option to purchase the shares from the deceased shareholding director's/partner's estate;
- o The deceased person's estate has the option to sell the shares to the remaining shareholding directors/partners