For business owners, passing on a family business in the most tax efficient way should be part of your Legacy Planning. I also provide other forms of business protection including Business Powers of Attorney, Shareholders, Partnership and Cross Option Agreements. These should also be considered to ensure Business Continuity.
Business Powers of Attorney – Have you thought who would run your business if you were incapacitated by accident or illness? Unless you appoint an Attorney, everyday business operations may not be possible; access to bank accounts may be denied, suppliers and salaries might not get paid and the disruption to your company could be catastrophic!
Shareholders Agreements – With a Shareholders Agreement in place the rules regarding Shareholders rights and obligations will be agreed, rules put in place regarding the sale and transfer of shares, protection for minority shareholders will be provided and a structure to resolve disputes implemented.
Cross Option Agreement – If a shareholder passes away a Cross Option Agreement would allow shares to be bought from the deceased estate to enable the existing shareholders to keep control of the business.