With a partnership protection strategy, it is possible to reduce the impact of the loss of a key partner on a firm, says Matt Haswell.
If a business partner dies or becomes ill, failure to protect a firm and its partners could have dire consequences.
The death or critical illness of a business partner can cause considerable disruption to a firm. In addition to the emotional turmoil and potential knowledge gap triggered by a death, there are the financial implications to consider.
A partnership may have debts repayable upon the death or critical illness of a partner, including bank overdrafts, hire purchase agreements, bank loans and a partner’s capital account. Therefore the remaining partners will need to decide what happens to the deceased’s share of the business and resolve any problems relating to the deceased’s spouse or estate.
