I recently spoke with a colleague who relayed a tale of woe about a business owner he knew who passed away recently. About 5 years ago the deceased (Partner A) and his business partners (Partners B and C) decided it would be a good idea to get some life insurance to fund a buy out in the event that one of them died. The business was growing and they were worried about raising the money to buy out a deceased partner. The intention was right…
They met with their insurance broker who organised quotes for the appropriate policies. He also organised an extra policy for the deceased to go directly to his spouse upon death. The partners organised to see a Solicitor to draw up a Business Will. Unfortunately they never went ahead with the insurance or the Business Will.
Partner B died about 2 years ago. As he did not have a Personal Will he died intestate and it has taken this long to get the insurance payout of the extra personal policy to his wife. This would have occurred much quicker if he had a valid Will.
Worse still, Partners B and C have to come up with about $6M to pay out the wife of Partner A. Guess what – they don’t have the money and can’t raise the finance! If the insurances and Business Will were put in place then the buyout would have occurred smoothly; Partners B and C would own the business without debt; and the wife of Partner A would have the proceeds of the business policy. Instead they are all now far worse off.
This story should prompt every business owner to review their personal and business circumstances and agreements. Death is inevitable and something that should be discussed.
For any queries or questions about your personal or business circumstances, including Business Wills, please feel free to contact me.
The information provided in this article is for general information and educative purposes in summary form on legal topics which is current at the time it is published. The content does not constitute legal advice or recommendations and should not be relied upon as such. Whilst every care has been taken in the preparation of this article, FC Lawyers cannot accept responsibility for any errors, including those caused by negligence, in the material. We make no representations, statements or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided on this website. FC Lawyers does not guarantee, and accepts no legal responsibility whatsoever arising from or in connection to the accuracy, reliability, currency, correctness or completeness of any material contained in this article. Links to third party websites or articles does not constitute any endorsement or approval of those sites or the owners of those sites. Nothing in this article should be construed as granting any licence or right for you to use that content. You should consult the third party’s terms and conditions of use in relation to any third-party content. FC Lawyers disclaims all responsibility and all liability (including liability for negligence) for all expenses, losses, damages and costs you might incur as a result of the information being inaccurate or incomplete in any way. Appropriate legal advice should always be obtained in actual situations.