What is Share Protection?
If a major shareholder in your business dies, then shareholder business protection will ensure that control of the business stays with the remaining shareholders rather than passing to the deceased's beneficiaries. In return, the deceased's estate will receive the cash value of the shares.
How does Shareholder Protection work?
Each Shareholder takes out their own life assurance policy to cover a specified amount. A written legal agreement is put in place which:
a) gives the remaining Directors the right to buy the shares, and
b) gives the inheriting spouse the right to sell their shares to the Directors.
This is known as a cross-option agreement.
Is this expensive to put in place?
Not necessarily. The monthly premiums are based on normal life assurance rates. For example, a 40 year old non-smoking male with no medical conditions could pay as little as £9.98 per month* for a £100,000 of cover over 10 years. You will also need to pay your Solicitor to set up the legal agreement. We can recommend one who is experienced in these matters if required.
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