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Case Studies

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Business Protection - Case Study

Background:

Mr H owns a large Nursery, has two children and is married.

There are two shareholders; Mr H who owns 85% and his sister who owns the remaining 15%.

Currently the way the limited company is structured, Mr H's shareholding (worth around £1.275million) will be inherited by his wife via his will- she plays no part in the running of the company.

Objective:

Mr H wanted to ensure that the business could continue to trade beyond his lifetime and that sufficient capital would be available for his sister to buy the shares from his wife in the event of his death.

Solution:

A life insurance policy with a sum assured of £1.275m was set-up funded by the company with Mr H as the sole life assured. The policy was written in trust with a cross-option for the benefit of Mr H's sister. In the event of Mr H's death, the proceeds of the policy would be paid to his sister and the cross option agreement would ensure that the £1.275m is used solely to purchase the shares from Mrs H.

A structure was now in place to ensure that the business could continue to trade beyond Mr H's lifetime without the additional stress of requiring finance. An addendum was made to the will and a Power of Attorney was also set-up.

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