The death of a company director can have a serious impact on the surviving directors and the deceased’s successor. Ideally, if there is sufficient cash in the business, the surviving directors would buy the shares of the deceased director from the deceased’s estate.
Co-Directors Protection ensures that this cash is available. There are two ways of setting up this insurance;
- Life of Another – Each director received the proceeds of a policy for which he/she personally paid the premiums. There is no liability for Capital Acquisitions Tax.
- Own Life in Trust – Each director takes out a life assurance policy on their own life in trust for the surviving directors. In order to have no liability to Capital Acquisitions Tax in the hands of the surviving partners, certain Revenue guidelines must be met.
If a director dies, the surviving directors would then have the cash to enable them to buy back the shares from the deceased’s estate.