Business owners are faced with a myriad of problems during the COVID-19 pandemic, not least the succession and viability of the business should a shareholder die.

The death of a director/shareholder in a small business could be ruinous.  It is therefore essential that the business can continue trading and the remaining shareholders are able to buy the deceased’s shares.

One way to achieve the above is to have a cross option agreement in place along with a term life assurance policy.  A cross option agreement ensures that on the death of a shareholder the remaining shareholders have the option to buy the deceased’s share.  The agreement should also protect the deceased’s beneficiaries by requiring the surviving shareholder/s to buy the shares.

The agreement is put in place by the shareholders whilst at the same time taking out life policies which become payable on the death of a shareholder and the pay-out used to purchase the shares.

Staying as fit and healthy as possible during these difficult times is a priority for people as well as businesses and it is vital to ensure your interests are protected.  Other key issues to consider to maximise protection include:

• Succession planning
• Key person insurance
• Shareholder agreements and partnership agreements.
• Business Power of Attorney
• Making sure your affairs are in order

If you need advice please email Phil Stephenson pstephenson@kbl.co.uk or call 01204 527777.