Considering the impact of key events on your business
Business protection is an area that is often neglected by owners and senior directors of small to medium size companies. Directors and employees with specialist skills or knowledge are key employees of the companies they work for. To lose somebody through death or incapacity can be damaging to the business and taking out the right insurance can protect the company.
Many existing corporate insurances are not set up correctly or in the most tax efficient manner. This can cause a much higher tax burden, as well as the possibility of unnecessary delays in receiving the proceeds of the plan when claims have been made.
How we can help
The starting point for any business is to review the existing Memorandum and Articles of Association, as well as any shareholder agreements to confirm the treatment of shares in the event of death or long term illness of a shareholder/director.
Where there are shareholder considerations, Director or partner share agreements may provide for the remaining directors to purchase the shares from the other directors when they die. However, this carries the risk of a shortfall in funds and one way to address this is to look at taking out life cover as a source of funding.
At McCrea Financial Services we will be happy to review existing arrangements and/or consider new plans to ensure your needs are met. With careful planning, even complex areas can be addressed. For example, the business can insure directors or key people to cover high salary costs and/or provide a lump sum to assist with replacement recruitment costs or help cash flow and business turnover. Equally, life cover as a source of funding where director or partner share agreements exist can be fully investigated with careful consideration and calculations to determine how much cover would be required.