SMALL businesses run the risk of major upheaval if one of the owners dies without carefully planning what would happen to their shares.
A survey by financial services giant Legal & General discovered that 51% of Britain’s small and medium-sized enterprise (SME) bosses have not left any instructions in their wills or made other special arrangements regarding the disposal of their shares.
It also revealed than 59% of the 800-plus SMEs questioned had no shareholders’ agreement in place and 36% of SMEs worth over £5m had no share protection insurance.
So, what can go wrong? Beneficiaries could become involved in the business, which the other shareholders may not be entirely happy about, or they may sell the shares to a third party – maybe to a competitor. Shares could be tied up in probate for a considerable time, which could paralyse the day-to- day operations if the deceased was a majority shareholder. Or surviving shareholders may be forced to buy the shares using their own money.
Make sure your shares – and your partner’s – are protected and that your company can flourish after your death by considering a life policy or share protection insurance or a shareholders’ agreement.
Contact Heritage Will Writing on 02380 879243 for advice.