Shareholder deceased/ what happens with shares

justintimenow

Hi

Id like to know where a parent and two children (3 directors) have shares in a business and the parent passes away, what normally happens with the parents share.

My understanding is that the two other directors can have the option to buy the shares, with a likely say 20% minority discount based on market value but is there any way for those directors to acquire those shares free of charge or would revenue simply take a view that those shares are worth X and capital gains tax of 33% must be paid in order to acquire them?

I imagine that directors either (a) have insurance in place to cover the purchase of these shares in the case that they do not have the funds to buy them or pay the tax or (b) spouse of the deceased shareholder gets the shares tax free.

I am sure there are other ways this has been managed but curious to know if anyone has any thoughts

Allinall

The shares form part of the deceased’s estate, and the normal rules apply.

Whatever is specified in the will is what will happen.

If there is no will, the laws of intestacy will kick in.

Other shareholders or directors will have no preference.