Can you answer these questions in sequence?…
1. Do you own shares in your business?
2. Do you have personal life insurance/mortgage protection etc.?
3. Do you know what would happen to your shares or your fellow director(s) shares if they passed away tomorrow?
If you answered, yes/yes/no….then you may have a problem, a problem that is inconsistent with your own financial management of your affairs in your personal life.
Most business owners do not have a good response to question 3. Questions or comments that this throws up include:
My fellow director(s) would buy my family out/or I would buy their family out.
Does the company or you have the cash buy out shares that may be worth say €250,000?
Would the deceased family members come into the business as shareholders?
..Which could be a child with no knowledge of the business or a spouse that will offer no executive function (plus they will be grieving)
This is a difficult situation, as ironically most of us have personal life insurance products to cover our death, but don’t know that there are life insurance products to cover a business if a director/shareholder passes away!
This is called Shareholder Protection:
✔️It is cheap (just basic life cover)
✔️It can be paid for by the company
✔️It removes the concern and potentially difficult scenarios above that could damage you personally and business-wise
