Sarah ran a small successful real estate company with his business partner John. John unfortunately developed cancer and died suddenly. John left everything to his wife Kate, and she inherited John’s interest in the real estate business. Kate had never been involved with the business.
She did not want to learn the business and told Sarah she would camp on her doorstep until she purchased John’s half from her.
Kate had relied heavily on John’s wage. She needed money to support herself and her 3 children. Sarah would have been happy to pay Kate her share of the value of the business if:
- She knew what the business was worth;
- Kate agreed with the value;
- Sarah could find the money to pay her.
Sarah and John – with their adviser, accountant and lawyer – could have prepared a Business Succession plan to deal with a principal:
- Becoming disabled
Kate could have then required Sarah to purchase her share of the business for the pre-determined price. Alternatively Sarah could have required Kate to sell her share of the business for the pre-determined price.