How does the sick director shareholder or the deceased director shareholder get his or her money out? Taking the cash out of a business that has just lost a key player might well kill it completely; so transfer the risk to an insurance company with director share purchase assurance.
You might also want to make sure that you'll have the financial power to prevent unwelcome shareholders becoming involved in the running of your company.
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 partner 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 or beneficiaries.
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.