The Murrays

Business protection

We helped the Murray brothers protect their business and their families against the death of one of them.

The Problem

The Murrays own a successful, second generation, family business in rural County Down. The owners are three brothers, who also comprise the senior management team, on whom the business is very dependent. If any one of them was to die, the business would probably survive, but there are two problems:

  • There are substantial loans owing to the directors, which should be repaid on death; each brother’s wife and family would need funds from the company in order to survive. Funding this, especially at a time of great stress, would create a cashflow problem for the company
  • The absence of a senior figure in the business would almost certainly affect the business in other ways, as the bank, suppliers, staff and customers would worry about what happened next

The Solution

We considered a number of different options, looking at cost, flexibility and tax efficiency. In an ideal world, one would completely cover all eventualities, but in this case, the brothers are in their forties and fifties, the sums needed were quite large, and there comes a point where the cost outweighs the benefit.

The company insured the lives of each brother for the approximate amount of that director’s loan account, plus £150,000. In the event of the death of one brother, the company would immediately be able to pay the debt owing to the deceased’s family, alleviating any immediate financial pressure caused by the death of a breadwinner.

The company would be able to use the funds over and above the director’s loan to fund cashflow for a while, giving time to recruit a manager to replace the deceased or bring in another family member.

We also made sure that wills were changed to make sure that the shares will pass in the most Inheritance Tax efficient way to the deceased’s family.

The Outcome

The owners of the company, and their families, have the reassurance that, should one of them pass away unexpectedly, not only would their loved ones be looked after in the short term, but the company would have the funds to be able to survive, and provide an income from profits for years to come.

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