Business Value Protection Trust
In every business, operations are usually smooth until one co-owner passes on or want to exit. When this happens, how can one maintain balance and continuity while exiting at a fair value?
A well-constructed plan is essential to protect the value of the business and provide cash for the family in the event there is a major disruption in the business due to a co-owner’s death, disability, retirement or serious major illness or any other event that jeopardizes the continuity of the business.
Ask yourself:-
- If a co-owner dies today, can you work with his family to run the business?
- Will the co-owner’s family members know how to run the business with you?
- Can they work well with you?
- Would your beneficiaries be able to get a fair price?
- Do you have the funds to buy out the co-owner’s shares/interests from the family members when there is no pre-agreed price in a written agreement?
- Can the shares/interests you are purchasing be transferred quickly to you?
PROBLEMS WITHOUT BUSINESS PROTECTION PLAN
Often these are:-
- A new partnership is created due to the inheritance of the shares/interest by inexperienced heirs. Chances are this new partnership may fail.
- There is no pre-agreed price for any sale to take place when the heirs decide to sell to the other co-owners. As a result, it may take years to settle a transaction price.
- Some of the unqualified heirs may insist on being directors of the company and be active in running the business. This may lead to serious disruptions and disputes within management.
- It is possible that the co-owners may decide to abandon the business and start their own due to disputes with the heirs.
- Loss of profits and uncertainty about the business future success.
After all your hard work in building your business, you need to avoid such problems.
THE SOLUTION – UBIZ: BUSINESS VALUE PROTECTION TRUST
Our UBiz ensures a smooth transition of the business to the other co-owner(s) and the value of your share of the business is protected against an event such as:-
- Death
- Bankruptcy
- Incapacity
- Divorce
- Ill health
- Loss of professional license
- Retirement
- Deadlock between co-owners
Our UBiz consists of:-
- Buy-Sell or Cross Option Agreement: covering the terms of the sale and purchase including the agreed value or formula, events triggering a sale, funding and mode of payment.
- Power of Attorney: authorizing us, Rockwills Trustee, to transfer the shares/interests to the other co-owner(s) upon the occurrence of the agreed events that trigger a sale.
- Trust Deed by the co-owners: instructions to Rockwills Trustee regarding the periodical distribution of the sale proceeds to prevent these being misspent by the beneficiaries.
- Life insurance policy: as the main funding mechanism to purchase the shares/interest of the outgoing co-owner.
How to set-up?
When an event occurs triggering a sale?
ADVANTAGES OF UBIZ
- Guarantees the sale of shares/interest at a full and fair value that was agreed by co-owners.
- Prevents inexperienced and unqualified heirs from being involved in the business or the selling of the deceased’s shares to outsiders.
- Smooth transfer of ownership to the co-owners is ensured by the Trustee.
- Using life insurance, the purchase of the shares/interest becomes very affordable, minimizing the need to use your savings for the purchase.
- Rockwills Trustee acts as the Trustee for UBiz protecting the interests of your beneficiaries and that of the co-owners.
- Shares/interests are easily converted.