The value of protecting your partnership
One of the great risks of a business partnership is that one of your colleagues may die, with his or her share of the business passing to someone else. That person may have little interest in the business or – at worst – may be hostile to your objectives. Equally a partner who suffers a serious illness may want to retain the option of continuing in the business or be compensated for their exit from the business.
The safety net is a pre-arranged scheme to ensure the surviving partners have enough funds to buy out the interest in the business, or compensate the deceased’s dependants.
The following range of options should be considered:-
* Appropriate life cover to fund the purchase of the deceased’s interest in the business
* Advice on a suitable agreement to ensure the partnership continues and the deceased’s dependants are compensated
* Arrangements for partners who retire, or who fall seriously ill and are unable to work
Benefits to partners
In the event of the death or serious illness of one of your partners, you’ll want to ensure that the business continues as smoothly as possible. Partnership Protection sets out the procedures and policies to help you retain control:
* Agreements, insurance, and trusts can be established to protect the business against the financial and practical implications of a partner’s death or serious illness
* Arrangements which ensure your partnership is not automatically dissolved
* Your business interests protected against hostile parties, or disinterested inheritors
* Funds available to buy out the deceased’s interest in the business and compensate any dependants
* Continuity of business prosperity
* Avoid the sale of assets to repay the deceased partner’s interest in the business
* Retain confidence of employees and customers.