Income Protection

If a shareholder dies or becomes disabled and when share agreements are in place, they are often wrongly constructed. If a funding mechanism is in place to maintain control of the shares (and the control of the company that comes with them) it is usually inadequate or badly structured.

- The business may have to welcome the next of kin as the new shareholder and business partner – with quite possibly no skills or experience in the business.
- The remaining partners would all have increased liability.

This situation affects as many as 20% of New Zealand businesses!

A plan needs to be in place to ensure shares stay within the company and the deceased estate is remunerated. 

A corporate agreement needs to me implemented in conjunction with appropriate professionals that can properly advise on structure and content. This must include (among other things);
- How the share value is to be established.
- An understanding that the company will buy the shares.
- An understanding that the next of kin will sell the shares to the company for the agreed price.

An appropriate funding plan needs to commence with;
- Adequate funds available when needed.
- Appropriate ownership.
- Regular reviews.

This commitment provides a win/win for both the company and estate to ensure the business can continue uninterrupted and the estate is not disadvantaged.
 
As a business owner you can now protect your company against the liability of a Partners inability to function within the company, which on average affects 20% of businesses.