Running a business can take up all our time and and energy and can leave little time to think about anything else!  A business grown from small beginnings to a successful enterprise can be a source of great satisfaction and pride in seeing all one’s hard work coming to fruition.   And such a business, hard earned and for which you work hard for, should be given every chance of surviving in the event of your illness, accident or untimely death.

It’s not a topic any of us willingly focus on but it is necessary to consider the implications and prepare for them in order to ensure the continuity of one’s business.

On the practical side, there are plans you can make that may ensure the continuation of the business in the event of your illness or death.

If you are the sole owner of a business, you may wish to think about bringing family members into the management team if you want them to continue to be involved in running the business. If family members are not suitable, are there key staff members that can be retained and empowered to run the business?

If the business cannot survive without you, are there steps you can take to maximise any value in the business, which can provide capital or an income in the future?

If you are a co-owner of a business, the above same points apply, though you will have the advantage of the co-owners’ interest in potentially continuing a successful business in your absence.

Any such plan will need to be discussed with management/key people of course so that everyone is comfortable and know in advance what would be expected of them.

Such a Succession plan for your business is vitally important; it can create a structure to pass the management and control of your business into safe hands and ensure that all your hard work and your business does not die with you.

However not only will the death of a keyperson/director of the company cause major problems for the company, the impact on one’s family is arguably, even more important.

What will happen to the deceased’s share of the business?

The personal representatives/family of the deceased director may find themselves with a shareholding in a company in which they want no involvement. They have shares for which they have no ready market. The company’s Articles of Association may give the other shareholders the right to block the sale of the shares to an outside party. They may also be experiencing cash flow difficulties with the loss of the deceased’s salary and potentially a Capital Acquisitions Tax liability.

The ideal scenario is that the personal representative/family have a legal agreement in place, by which they have the option to sell the share of the business, if they so wish, and financial provision is available to the company, by means of a life assurance plan on the deceased’s life to purchase the shares at a fair market price.

So how is this possible?

A Life assurance protection plan can be put in place on the life of each Director/Partner.  A legal agreement is put in place so that under this arrangement, the surviving partners/co-directors purchase their deceased colleague’s shareholding from their estate.

This agreement is known as a Buy/Sell agreement. It usually places;

An obligation on the personal representatives of the deceased’s estate to sell


An obligation on the surviving owners of the business to buy the holding at a price, which is calculated in accordance with the terms of the agreement.


A Double Option agreement is an alternative arrangement to a buy/sell agreement, the difference being that if both parties (i.e. the deceased’s estate and the surviving owners) are in agreement, they do not have to exercise their respective options at that time.

As a result, the share(s) can pass to the deceased’s estate, if so desired. This could be useful in a situation where all parties agree to a member of the deceased’s family succeeding to the share(s) and joining the business.

Another example is where a member of the deceased’s family is already working in the business and this person simply takes over the share(s) and becomes more involved in the business.

In assisting to put a Business Succession Plan in place, for our clients, we do always advise that independent legal and tax advice should be taken to ensure that the agreement most appropriate to the particular circumstances of each case is put in place.  We can work with your Accountant/Tax Consultant and Solicitor in this regard.

If you would like more information on this topic, or wish to speak to one of our Advisors, please contact us at 053 9233640.

This is an opinion only and does not constitute advice as individual circumstances will determine all financial advise given.