Director (Shareholder) Protection
Director Protection or Shareholder Protection provides life cover, which is put in trust, for the co-shareholders to enable them to buy the shares of a deceased shareholder.
A formal scheme is usually drawn up to enable the purchase of the shares of a deceased director from the deceased's estate. Similar to a Partnership Agreement (see below).
A Partnership Agreement will normally be drawn up which ensures that the surviving partners can purchase the deceased partner's share of the business. There are three main forms of agreement: Buy & Sell Agreement, Cross-Option Agreement or the Automatic Accrual Method.
Advice must be taken when setting up an agreement.