What is a Double Option Agreement?
This is a legally binding agreement where the spouse has “option” to force remaining shareholders to buy the shares, and the remaining shareholders have “option” to force spouse to sell the shares.
The transaction must take place if either party exercises their option within a stated timeframe, or if both parties agree, nothing has to happen.
This route retains 100% Business Property Relief for inheritance tax purposes.
What is a Single Option Agreement?
This is a legally binding agreement used where critical illness is being effected (claim proceeds paid on the diagnosis of a serious illness such as heart attack, cancer, stroke).
This allows the shareholder who has suffered a critical illness to force the remaining shareholders to buy his/her shares.
It gives no right (unless specifically noted in the agreement) for the remaining shareholders to force a critically ill shareholder to sell his/her shares.
It allows for sale / purchase to take place at a specified price or market value.