Background

Two director shareholders had successfully built a business that had become very profitable. In the early years they were entirely focused on making the business work and they accepted the risks as part of being an entrepreneur.

As time went by they began to consider what if something went wrong that led to them losing everything they had built up.

The solution

The client’s Murray Smith Partner helped the directors analyse the risks and identified a package of solutions which included:

  • Creation of a Holding Company so that excess cash could be paid up from the trading company through a dividend, without any adverse tax consequences.

  • Introducing the directors to a Murray Smith Financial Adviser to review their investments and pension provision and produce a low risk plan for the future,

  • Asked the Murray Smith Financial Adviser to implement a cross option agreement backed by insurance policies so that if one of the directors died there would be a mechanism and sufficient funds for the surviving director to buy the deceased shares.

Results

After taking the above actions the directors felt much more comfortable that they had protected themselves and their families from major business risks and that they would not lose all that they had worked so hard for.

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