Tax Insider Tip: Business Agreements For Shareholders - Or Is Your Will Sufficient?
The shareholders’ agreement normally spells out the terms of the passing of the shares, usually to other shareholders. It is common for the shareholders to insure each other so that on the death of a shareholder, cash is available to buy the shares from the deceased shareholder’s estate. The use of a shareholders’ agreement enables the surviving shareholders to keep control of the business without new outside shareholders coming in.
Tony Granger considers whether a business agreement is better than a will for the passing of shares on death and highlights some of the consequences.
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