Shareholder protection- what do you want the ownership structure to look like?You are in business with one or more co owners. What are the chances something will go wrong? In other words, what are the chances of one of you dying or becoming totally disabled before age 65? Well, according to Zurich Australia the chances are quite high, which means your chances are not good. What, for example, the table is telling you is that if you are 1 of 3 owners of a business there is a 67% chance that one of you could die or be totally disabled before the age of 65.
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There is absolutely no reason to leave it to chance, putting at risk everything you have worked so hard for to achieve, when simple, affordable solutions may be at hand. If you would like us to help you, click here to email us or call us on the numbers below.
In situations where there are multiple owners there may be significant problems if one dies or is substantially disabled. By not having the right plan in place several problems could arise. These could be:
In situations where there are multiple owners there may be significant problems if one dies or is substantially disabled. By not having the right plan in place several problems could arise. These could be:
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Those aren't optimal outcomes. Whether it's a "forced" sale either way, or an outsider (potentially a competitor) coming in is not what most co owners envisage. Generally, co owners don't look to go into business with the ex owners family members. Certainly nobody wins if the business has to be liquidated in order to pay the seriously ill owner or estate in case of death. The good news is none of those outcomes need to happen. As an owner you need to know how you see the ownership structure looking should such a catastrophic event occur. The best time to do that is when everyone is fit and healthy. Sound analysis and implementation of a plan today can help you ensure that what you want the future ownership structure to look like is achieved. |
You also need to know, should you have a "buy and sell" agreement in place, exactly what circumstances will trigger the outcomes of that agreement. Most importantly, you need to know how that agreement will be funded, ie where will the money come from to purchase that shareholding. Do you want to be forced into using up your own cash reserves? Do you want the stress of taking on additional debt to make the purchase? Or would you prefer the simple, cost effective option of insuring that risk?
There are some other aspects that will also need to be considered:
A further issue is that there will be no on-going income coming from the business for the disabled shareholder or beneficiaries of the estate. This, however, can be addressed in ensuring shareholders carry adequate cover in their personal risk protection plans. We too can assist you in that regard.
There are some other aspects that will also need to be considered:
- how will personal guarantees be dealt with? PGs don't die or become disabled with you. Do you want your estate to be potentially saddled with a PG you signed? Do you want the ongoing stress of one if what's taken you out of the business is your total and permanent incapacity?
- how will current accounts be dealt with? The business could owe you a substantial amount of money. Are you confident it will have the funds to pay you (or your estate) out?
A further issue is that there will be no on-going income coming from the business for the disabled shareholder or beneficiaries of the estate. This, however, can be addressed in ensuring shareholders carry adequate cover in their personal risk protection plans. We too can assist you in that regard.
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The simple intention of this solution is to enable any remaining owner(s) to purchase the disabled or deceased owner’s share in the business. This in turn enables
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