In the event of the death or disability of a co-owner or partner in a business, it is not only the affected owner’s estate that can be exposed; the remaining owners or partners could also face potential problems.
The purpose of buy-and-sell insurance is to provide the remaining co-owners or partners with cash to purchase the interest of a deceased or disabled co-owner or partner.
Through effective utilisation and structuring of buy-and-sell insurance and a corresponding agreement, this risk can at least be managed from a financial point of view, without negative implications from a capital gains tax and estate duty perspective.
Why could the affected owner’s estate be exposed?
Why would the remaining owners face potential problems?
At ASL, we are not licensed to provide financial advice. However, we have the skill and experience to understand how the financial decision-making around this process works, and we have access to reliable financial advisors to assist in structuring said insurance and agreements.
Should you require more information about this matter, kindly contact your relationship director, or alternatively, Arnold Scholtz at firstname.lastname@example.org.
With acknowledgement to Fin24, Old Mutual and Sanlam for information supplied in preparing this article.