Guarantee that you control your business

If you have a business partner, and you do not have a written agreement covering succession plans for your business, then quite simply your business at risk.

What if one partner dies?

If there is no written agreement, then it’s highly likely that the estate of the deceased will receive the shareholding of the business that your partner had. There are past scenarios whereby the estate representatives may seek an immediate payment for the shareholding in the business.

Indeed, their estimation of the value of that shareholding could be significantly higher than you believe to be true. So if this is the case, you may have to enter into a legal battle with the estate, find the money to pay out the estate or sell the business. What if the spouse’s partner decides to come in and replace the deceased in the business? It could well be within their rights to do so.

This is where a written buy-sell agreement between business partners is crucial. This type of agreement can establish what occurs if a business partner is disabled, no longer works or passes away. Your accountant can assist in providing a method for ongoing valuations of the business which the agreement includes. Keyperson Partner insurance can then be taken as a cost effective mechanism to fund the agreement, if it is implemented in the future.