Business Protection – Case Study
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.
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.
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.
Ensuring adequate money is available for immediate daily needs as well as a reserve being set in place are just a couple of fundamental principles that are prerequisites to investing any sum of money.Investment.
Arranging care for yourself or a member of your family can be a complicated process as well as being very emotional. There’s a lot to consider, and the process can feel overwhelming if you don’t have the right assistance to find the best possible care for you or your loved one.
Vance Financial Management offer an extensive range of advice with pension planning depending on when you start your plan.
At Retirement, the advice needed is essential as the options available are wide and varied. Many of which are irreversible once selected, such as signing up to an annuity
Life Insurance provides you financial peace of mind insuring you and/or your family are protected in a range of circumstances including ill health, critical illness and death.
Could you and your family cope financially if you were not become critically ill and could not work? It’s not a nice question to consider, but it’s an important consideration. If you think you and your loved ones would struggle to pay the mortgage or meet the cost of other household bills, you should consider critical illness insurance.
It’s important for businesses to insure their company’s property, equipment and fixed assets. However, it is far too common for businesses to overlook the people who drive the business. Many businesses fail to recognise the potential impact the death of a key employee, shareholder, or partner could have on the financial security of the business, not to mention on their surviving family.
The current allowance whereby no inheritance tax is charged is on the first £325,000 (per person) of someone’s estate – which is the value of their total assets they leave behind when they die.
There are a number of ways in which you can avoid a high inheritance tax…
Do you need assistance managing your money so it can be used to help someone after you die or to contribute towards your care in later life? A trust is a great way to do this.
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