I’m a bit concerned…
My desk phone rang. “Good morning, it’s Arthur.”
“Hi Arthur, It’s Colin here.”
After the usual banter, Colin said, “Arthur, I’m a bit concerned. Margaret and I were just talking last and she said to me: What would happen if you died Colin? How would Bill, your business partner, find enough money to buy out your share of the business and how would we get the money that would be owed to our family? She’s got a point, Arthur, and I wondered if you could help?”
“Sure” I said. “We had a brief discussion about this when we first met two years ago, but you had just started the business and money was tight if I recall.”
“Oh, yes”, he replied. “I vaguely recall something like that. How about if we meet up and have that discussion again. Would next Tuesday at 10:00 suit you? My office?”
“That’s fine”, I said. “See you then. Bye.”
“Bye,” said Colin.
Our meeting duly took place and I explained to Colin the mechanics of the process. After establishing the Value of the Business, and the Shareholding of the two Business Partners, we would put in place two Life Assurance policies, written in trust with a Cross Option Agreement which would ensure that the right amount of money went to the right persons at the right time, in a tax efficient manner.
“That sounds good Arthur,” said Colin. “But how much is that going to cost.”
“That depends on age, smoking status, the term of the plan and of course the Sum Assured.”
“Fine,” said Colin. “Can you do us some quotes?”
The outcome of our conversation was that we set up the two plans for the two directors and Margaret is now much more relaxed (as is Bill’s wife, Irene) in the knowledge that should Colin die, she and the two boys would be looked after financially.
At our next meeting, I said to Colin, “Remember when we last spoke, I brought to your attention, the need for protection in the event of you suffering but not dying from a serious illness. Have you thought any further about it?”
Colin said, “Yes, Bill and I did have a chat about it”. How much was it again?” …
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