I need to protect the value of my business

John shares ownership of a thriving chain of corner shops on the South Coast with his Partner Paul. John is an Accountant by trade and Paul comes from the grocery industry and is the main buyer for the company. Paul’s wife, Mary, was recently in a serious car accident and, unfortunately will be an invalid for the rest of her life.

Paul was very concerned that if anything happened to him, his wife should be adequately cared for and came to us to talk things through.

How we could help

Paul had already identified his main priority but we still needed to understand his thoughts on the future, assuming he continued to live a healthy life, to enable us to produce a cohesive plan. Paul admitted that the recent events had made him think, he would really prefer to work less, so he could spend more time with his wife, but felt that was impossible to achieve at the moment.

We pieced together all of the pensions Paul and Mary had accumulated as well as the cash they had on deposit. We then helped them establish how much their expenditure was likely to be, both together and should Paul die. This enabled us to ascertain the capital sum that Mary would need, if Paul were to die, as well as look at the future they might have together.

After discussing the situation with Paul, it became obvious that the business would be severely affected in the event of his death or serious illness. Paul’s grocery connections were critical to continuing profitability and the business was the only capital asset that could be used to support Paul’s wife.

At this stage some serious discussions with John needed to take place. He could see the need to have in place some sort of contingency plan. They needed a solution that could replace reduced business profits in the short term and also produce a capital lump sum to “buy the deceased's family out” at the appropriate time. We had already worked out the capital sum Paul needed and John asked us to do the same for him.

The outcome

Having established a range of suitable options including permanent health, key man and partnership protection insurance we discussed these with John and Paul to find a cost effective solution. We made sure that the policies were set up in the most inheritance tax efficient way. Following this we liaised with their solicitor to ensure that the partnership agreement was amended to take account of the new policy.

Realising the businesses reliance on Paul’s contacts, John also agreed that a younger person should be brought into the business, with a view to Paul gradually passing over the benefit of his business contacts. This was something that they are now actively working on together to achieve.

Paul is now confident that should anything happen to him his wife will be well looked after, which has given him enormous peace of mind. He is also hoping to be able to move to a four day week within the next year.