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Guide to Long Term
Care & Paying Care Fees
Business
Protection
Introduction
This guide briefly considers three aspects of business protection:-
-
Protecting your business in that
event that a partner/key shareholder (herein called ‘partner’)
suffers death or is incapacitated through an illness
or disability.
-
Protecting your business from loss in the event of
a key employee suffering death or is incapacitated through illness
or disability.
-
Protecting your business from loss in the event of
the public, residents or your employees suffering harm or loss related
to your business.
Partner Protection
This provides two things:-
-
Insurance which pays out in the event of a partner/key shareholder
dying or being incapacitated through illness or disability
to buy his or her share/s.
-
A legal agreement for the share/s to pass to the
remaining partner/s in exchange for the insurance proceeds.
A brief example of why this is important from an
existing case is as follows:-
A few years ago we received a new client
who was a recent widow. Her husband had built up
a substantial company with
two business partners
and the business was worth well into seven figures.
The widow inherited her husband’s share
of the business, but
this created problems for her and the business:-
-
The remaining partners did not want her involved in the running
of the business as she was not qualified to be so.
-
The firm was now missing a key person who contributed
substantially to the income and increasing capital value of the business.
-
The business had to pay the widow ongoing dividends – again
getting nothing back in return.
-
The
widow wanted to realise her husband’s assets
and use them to move on with the life of her and her children,
but couldn’t.
-
The remaining partners did not have the capital
to buy out her share of the business, and a loan would have been
punishing.
-
Although the remaining partners were
not happy with the status quo,
they also were not happy with, and vetoed, the sale
of her inherited share to any
potential partners.
-
Both the business/remaining business partners
and widow/family
were unable to move on.
If her husband had suffered an incapacitating illness or disability,
the financial problems would be virtually the same for the
business, but probably worse for the wife as the husband would
be drawing family resources without contributing to them.
Key Person Protection
This is often confused with partner
protection. However, key person protection protects
the firm in the event of a non-shareholding
key employee suffering a death or a serious
illness. This could be an employee:-
-
Who substantially contributes to the profits and stability
of the company.
-
Whose loss would cause customers to go elsewhere.
-
Whose loss would damage the ability to receive necessary
credit, or place the firm in default for existing credit.
-
Whose loss would cause substantial costs to the company.
An Independent Financial Adviser from
Retirement Planning Associates Limited can talk you
through these and all other aspects of business
protection relevant to your
business.
Public, Resident & Employee Liability
Some liabilities are required to be covered by law, others
are just good business practice. The two main liabilities for
most businesses are:-
-
Public Liability, this protects your care home/company and
residents or members of the public if they are caused harm
or loss due to your business or employees.
-
Employee Liability, this protects your care home/company
and employees if they are caused harm or loss due to working
for you.
Medical Negligence
Public liability is increased for care
homes via the potential for medical negligence claims.
Medical Negligence Insurance protects your care home/company
and residents if
residents suffer
harm due to perceived medical neglect
or faulty care. This is a common claim for care
homes, and one that is often not properly covered
by public liability
insurance. Many homes ignorantly think their public
liability insurance, via its medical extension clause,
adequately covers medical
negligence when it often does not. Medical extension
clauses are often extremely limited and/or 'woolly'
in what they
cover. Claims can be sustantial.
Medical negligence claims are booming in the care market,
with 'no win no fee' solicitors openly boasting across the
internet of their victories over care homes and their parent
companies. Claims have included bed sores becoming infected,
injuries using care home equipment or being supervised by care
home staff - such as when transferring from a bed to a chair
etc., inadequate dressings, picking up infections and so on.
Our preferred
partner for liability and negligence insurances can
talk you through these and all other aspects of GI
relevant to your business, and will conduct
a free assessment of your
existing needs and cover, and provide you with
a written report of their findings and recommendations.
Summary
There are many aspects of business protection. We will pleased
to discuss them with you.
22/02/08 Revision
Notes & Disclaimers
- Guides (which includes all information, data and views expressed) on this site are brief introductions, as such they cannot be relied upon: full
research needs to be conducted or professional advice sought
before investment and financial decisions are made.
- In the case of new investments,
pensions, insurances or mortgages, literature from the
investment provider needs to be read and understood: including product guides, key features and illustrations, which give details of product aims, benefits, risks, commitment needed, charges and commissions, before financial decisions are made and action taken.
- Guides published on this site
express the opinions of the authors which may not always
concur with our own if from other organisations.
- Guides are published by the permission
of the authors and/or copyright holders.
- You will be leaving our website to access some of the above.
We may not always concur with data and opinions expressed
and are not liable for the content.
- Your home is at risk if you do
not keep up repayments on a mortgage or other loan
secured upon it, this can include some forms of equity
release.
The FSA do not regulate some types of mortgage.
- Past performance is not an indication
of future returns.
- The price of bonds, properties
and shares, income from them and investments in them can
rise and fall.
- Investments in bonds, property
and shares should be deemed mid to long term, meaning at
least five years. Early surrender increases the risk of
the investor receiving back less than invested.
- Investments in capital protected
funds are only as good as the ability of the investment
provider and/or any guarantors to meet their liabilities.
A default on their part may mean that the investor receives
back less than invested.
- Tax concessions and legislation
may change and reduce the benefits of investments.
03/01/07
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