Nick Richardson from rhw solicitors gives us some advice for how to go, if it’s your time to go…
Nobody (not even Richard Branson) will be in business forever and it is a sensible business person who plans ahead to cover most if not all of the likely alternative scenarios.
Your exit from business will come about through one (or more) of the following:-
- You sell your business
- You sell your share in your business
- You become critically ill and decide to sell
- You die and your share is either sold or passed on
- You are forcibly removed from the business by business colleagues
- You “lose your marbles” and become mentally incapable of running the business or contributing to it.
In reality, whichever one of these happens, you should spend some time trying to make sure you understand the issues and the likely consequences for you and your family and plan to avoid them “biting” you at a time when you can least afford to deal with them.
Death can be at best highly disruptive, and interrupt normal business strategy and planning. At worst it could be absolutely disastrous for the business and cause it to stagnate and die.
Key Person Insurance Cover is a simple, effective way of getting cash back into the business at a time of disruption. It may not be enough but it will certainly help to cover the period before any recruitment campaign becomes effective.
Your Business or Share in the Business as an Asset – leaving it in your Will
The best course of action will depend on what type of business you have. For example, with a limited company, it is the shares in the company that will be left.
The process for dealing with this is covered partly by the constitution of the company (Articles of Association) and partly by your Will.
It is likely that the company’s Articles will set out how shares may validly be left. Simply drawing up a Will without reference to the Articles runs the risk that the wishes cannot be followed.
Accordingly, we always recommend that when a Will is drawn up, consideration is given to what the Articles of Association say to avoid any difficulty.
A little hindsight in advance can save a lot of pain later.