What would happen if one of your directors, partners or a key employee dies?

When one of the directors or partners dies, it is common for their share in the business to pass to their spouse.

This can cause problems, both for the surviving spouse and business partners.

In this scenario, the surviving spouse would now hold shares in a business that they no doubt have little knowledge of, and less interest in.

However, the business will still need to operate, but the new shareholder will not necessarily have the expertise to help run the business.

Also, they may wish to sell their share of the business. Can you be sure that the surviving partners or directors can buy out this share? If not, this could be a disaster for the business, since part could be sold to an outsider.

A solution could be for the business to insure against the death of the key employees so that if one of them dies, the share of the surviving spouse could be bought out.

Such cover could also provide money to pay the costs of replacing that employee