WILLS AND ESTATES
BUSINESS SUCCESSION
All businesses will eventually come to an end. They at some point will be voluntarily sold or shut down. But what happens when an owner or director dies or suffers a life changing event meaning that they must exit the business (an involuntary exit)?
For example, where the owner dies, suffers a trauma (e.g. car accident) or temporary or permanent disability (known as TPD).
A business succession plan may include:
BUSINESS SUCCESSION
PLAN AHEAD
An effective estate plan should encompass a business succession plan which may include a Buy-Sell Agreement – a document entered into by your business whereby the key person’s (generally owners and directors) cross insure each other so as a surviving director/owner is not left holding a business that has lost a key person and is forced to be the purchase the deceased/retiring directors/owners shares or interest in the business, or alternatively be forced to continue in operation with the deceased/retiring directors/owners relatives who may have no experience or business aptitude.
A buy sell agreement provides for the sale of shares to the remaining owners or directors in consideration for the exiting owner or their estate receiving insurance monies.
