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What happens if a shareholder dies?
If one of your fellow shareholding directors
were to die, who would inherit their shares?
Answer - THE ESTATE, which ultimately means a spouse and/or
family. What are the possible repercussions for the
company of this transfer?
- The company’s direction may now be questionable,
as the surviving spouse will become a shareholding director. This
could cause problems if the spouse has no knowledge of
the business.
- What would happen if the deceased's estate prefers a
cash settlement instead of shares? If the other directors
cannot, or will not, buy the shares, the estate could consider
selling the shares to a third-party. The surviving directors
may find themselves working with this third-party against
their will.
- How do you, as a surviving director, retain control of
the company shares, now in possession of the deceased's
spouse or another party?
- If you wish to purchase these shares, how will you raise
the funds?
- What are the effects on your long term profitability
as a result of not finding these funds?
A life assurance policy written in trust for the surviving
directors, costs very little and would prevent any awkward
situations arising.
What happens if a shareholder retires?
When a director retires, he may wish to sell his shares. However,
if the other directors do not have funds available to buy
them, there is a risk that the shares will be sold to a third-party. An
investment strategy will ensure that funds are available
at such times.
What happens if a shareholder becomes critically
ill?
In some cases, a director may consider selling his company
shares, if he is affected by a critical illness. If
the other directors want to buy the shares in these circumstances,
they will need funds which would be available at that time.
Again a simple life policy written in trust for the surviving
directors costs very little and would provide the funds required
at this difficult time.
We can help you put a strategy in place that will alleviate
all the above issues. If you would like further information,
please feel free to call us on 0207 407 8787 or simply complete
the form below:
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