As a company director, shareholder or partner your business is often one of your major assets. It is therefore important to safeguard the ownership of the company in the event of the death of either you or one of your business partners.
What would happen if one of you were to die or become critically ill?
It is possible to ensure that the future of your business is taken care of by implementing either a partnership protection plan or a shareholder protection (depending on your business status). This involves a legal agreement regarding future ownership of the business in the event of the death or critical illness of either you or another owner in the business. This is known as a cross option agreement.
This is also known as partner protection insurance, partner share protection or a share protection plan. The purpose of these policies is to pay out a lump sum benefit to the value of the shareholders shareholding to the business, this then enables the business to purchase the shares from the deceased shareholders estate. This enables the remaining shareholders to retain control of the business. A cross option agreement must be in place in order for the exchange of capital and shares to take place.
Advantages of Partnership Protection
With a shareholder protection plan (or an ownership protection plan) you can ensure that if a major shareholder of your company dies, the remaining shareholders will receive a lump sum pay out to enable them to purchase his share of the business.
Share Protection Insurance is normally accompanied by a Cross Option Agreement that will stipulate that if a major shareholder dies, the other shareholders will be able to purchase his shares in the business. This will enable them to keep the company running smoothly.
Advantages of Shareholder Protection
What do Quest Financial Solutions do for you?