What happens if your colleague’s clogs are well and truly popped?
What happens if your colleague’s clogs are well and truly popped? By putting in place a strategy and implementing the necessary changes, we Business Doctors are very often responsible for helping get a company ready for succession as part of a planned retirement or handover of business ownership. But what happens if the worst comes to the worst and a key shareholder dies or falls critically ill prematurely?
In these cases, we are able to access expert contacts from our extensive network of contacts. As this question arose recently, we wanted to find out more for ourselves so we interviewed Darren Pickersgill of 2plan wealth management. Darren has been a financial adviser for 22 years, so we thought he’d know the answers and we weren’t wrong.
Neil: Darren, tell us what problems can arise in the event of death or critical illness of key business partners or shareholders?
Darren: If a business partner or shareholder dies or becomes critically ill, the default position is often that the shareholder’s next of kin is the beneficiary. Sometimes this isn’t a desirable situation at all for the remaining business partner. We can provide what’s called ‘shareholder protection’ cover in these cases.
Neil: What is shareholder protection cover and how does it work?
Darren: In these cases, the cover can make funds available for the surviving business partner to be able to buy the holding of their deceased or ill colleague.
Neil: I see. How does it work?
Darren: Well, needless to say, it involves seeking out a bit of professional advice, including a solicitor for wills and cross option agreements.
Neil: I haven’t heard of cross-option agreements, what are they?
Darren: Cross option agreements ensure that business partners and next of kin both have the right to sell or buy out. Think of it this way, does a remaining business partner want their ex partner’s wife running their business?
Neil: Ah, yes, I can see that, Business Doctors have lot of experience of helping family businesses and can see how introducing personal relationships can be detrimental to the business as a whole. Darren, thanks for filling us in!
Darren is aged 43 and lives in West Yorkshire, near Bradford. He has 2 daughters.
A financial adviser working with clients across Yorkshire for the last twenty two years, Darren has been running his own independent financial advice practice for the last two. He offers an initial consultation without charge or commitment and works on a fee and/or commission payment basis and can meet in his offices in Leeds, your home or your business premises to suit. Darren is geared up for the changes coming to the industry next tear, having his diploma and statement of professional standing ahead of the 31/12/12 deadline.
2plan wealth management
Set up in 2007, 2plan wealth management is a national, independent, whole of market, firm of independent financial advisers (IFAs) and is authorised and regulated by the Financial Services Authority. 2plan provides structure and complete compliance and technology services to self-employed financial advisers across the UK. The IFAs are equipped with the latest technology services available in order for them to provide enhanced services to their clients, build professional business relationships and ensure that they always treat their customers fairly.
Wills and Cross Option Agreements are not regulated by the Financial Services Authority.
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