Effectively transferring your business partner's equity share in the event of death or disability
Tony and Vince's story*
Tony and Vince are partners in a wholesale food distribution business that is very profitable and provides them and their families with a wonderful lifestyle. Both Tony and Vince have hands-on roles in the everyday operation of the business.
Tony and Vince were referred to us by their accountant who had some concerns about their structure in the event one of them suffered a disability or died. After reviewing their existing arrangements, we found that under their current structure, and in the event of the death of one of the partners, the deceased spouse would become a partner in the business.
After meeting with Tony and Vince and their accountant, we established that they both preferred if, in the event of the death of either one, the deceased’s spouse is bought out of the business, and the remaining partner owned 100% of the business.
Their accountant was able to value the business, and incorporate this into a business succession plan that we put in place for the two partners. The financial component of the plan was facilitated through the purchase of appropriate levels of insurance, which meant that there was no financial drain on the business itself.
This plan was also able to be activated in the event of either one of the partners suffering a disability.
* Names have been changed to protect client privacy.
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