Have you thought about how your business partnership or company might affect your estate planning? For example, how will you fund the pay out of your business partner’s family if your business partner dies or becomes incapacitated?
Many people who are involved in a business with someone else fail to plan for the aforementioned eventuality. Many they think nothing will happen to the partner or them before the business is sold or closed (but none of us have a crystal ball).
One solution is to enter into written agreements with each other, whereby each partner must take out insurance on themselves (over and above what they personally hold to protect their family) with the business paying the premiums. If an adverse event occurs, the family of the partner who dies or becomes incapacitated must then sign over their share of the business to the remaining partner when the insurance pays.
The issues you need to consider are:
1. Can you both get life and permanent incapacity insurance?
2. Are the premiums affordable for your business?
Another important aspect of the agreement is that it must stipulate that the insurance cover be evaluated regularly to ensure that it remains in line with the value of the business.
We recommend you discuss this with your business partners and then with us. If you have any questions in relation to estate planning, feel free to email our team at info@gpla.com.au.