This type of protection is designed to provide safeguards for the business in the event of the death of a key shareholder and usually involves a formal contract being drawn up to deal with actions to be taken in the event of death or incapacity.  Without this the Company may be exposed to unwelcome takeovers or sudden withdrawal of capital by those who inherit the shares.

Typically this involves a right to buy for the original or remaining shareholders and the insurance policy covers the cash sums required to meet that commitment.  Typically life assurance instruments may be used to cover this cost but there are many complications and factors to consider in setting these up and our expert advice is required.

The main benefits are:-

• It enables the remaining shareholders to maintain control over the business.
• It provides funds to enable the purchase of shares from the deceased’s estate.
• It safeguards the standard of living of the deceased shareholders dependants.
• It may assist the deceased’s shareholders estate to fund an inheritance tax liability.