Cross Option Agreements

It is important for businesses to plan for the future and shareholders should think about what will happen to their shares in the event of a death. The death of a shareholder can have a devastating impact on a business and its surviving shareholders. Cross Option agreements should be implemented to ensure the surviving shareholders have an option to buy the deceased’s shares at market value and that the deceased’s personal representatives have an option to sell the shares. An insurance policy is also taken out to ensure the sum required to buy the deceased’s shares is readily available.

The use of a Cross Option agreement provides protection to a business and the families of shareholders. However, it is also a tax efficient method of dealing with shares upon the death of a shareholder. A properly drafted Cross Option agreement will allow the deceased’s shares to qualify for business property relief which is an inheritance tax relief of up to 100%.

It is essential that the ability to buy the deceased’s shareholding is a right and not an obligation, otherwise the agreement is arguably a contract for sale for inheritance tax purposes and business property relief will not apply.

We recommend you seek the advice of an experienced Wealth Protection lawyer: telephone our team today on 03333 058375 or email WealthProtection@psg.law.co.uk.

Our Wealth Protection team is highly experienced in the area of succession planning for businesses.

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Partner, Head of Wealth Protection
Laura Bywater
t:07939 121341

e: laura.bywater@psg-law.co.uk
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Gareth Williams
t:07497 839796

e: gareth.williams@psg-law.co.uk
Partner, Wealth Protection
Nina Sperring
t:07301 218133

e: nina.sperring@psg-law.co.uk
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Gail Galloway
t:07399 781788

e: gail.galloway@psg-law.co.uk
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Lydia Palmer
t:07399 565976

e: lydia.palmer@psg-law.co.uk
Legal Assistant, Wealth Protection
Marie Fletcher
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e: marie.fletcher@psg-law.co.uk
Paralegal, Court of Protection & Wealth Protection
Alexandra Hales
t:07957 958134

e: alexandra.hales@psg-law.co.uk
Paralegal. Wealth Protection
Suzanna Warburton
t:07946 579067

e: suzanna.warburton@psg-law.co.uk

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