What happened to Ted’s shares in his business when he died…
You would be forgiven for thinking that when a shareholder dies and the will bequeaths shares to the spouse that that would be the end of the matter.
Unfortunately, it’s not so straight forward and a family can be left with real difficulties.
This is about one such family – Ted and Sally and their children.
Harry and Ted were 50% shareholders in the business they founded.
Ted died suddenly and unexpectedly. He left behind his wife Sally and 2 young children. He had bequeathed his shares to Sally who was left reeling from Ted’s death but also from financial pressures as Sally need to ensure stability for the children and stay in the family home.
Sally wanted to sell the shares to Harry and he jumped at this but pitched in with a low offer. And that is when things got really messy. Sally was under increasing financial pressure but knew that the price Harry offered was low.
Sally tried to negotiate but Harry would not budge. She tried to hold fast but Harry’s response was to ignore her. Sally could not mentally or financially endure the pressure and felt she had no choice but to agree the price Harry had offered.
If only Ted and Harry had had a shareholder’s agreement in place. There were so many pragmatic and fair solutions that could have been pre agreed and dealt with in a Shareholders Agreement and Ted’s family would have been looked after fairly as Ted intended.
Secure the Business
You need to make sure that the necessary processes are in place to deal with the ‘what ifs’ in life and business. It is essential to have clarity and the proper protections in place for you, your family and your business – a process that falls into place when the ‘what ifs’ happen.
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