Cross Option Agreements

How do Frog Wealth Management’s Company
Wills and Cross Option Agreements Differ?

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5.0
Based on 179 reviews
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Frog Wealth Management offers business Estate planning, tailor-made to suit you and your business. It takes the standard planning options available on the High Street, a significant step further.

Frog Wealth Management’s planning provides this significant protection to your business and reduces the possible impact of IHT dramatically. Furthermore, the business and proceeds from a future sale are protected for the Bloodline from IHT, remarriage, divorce, separation, creditor claims and Nursing Care Fees.

Our planning leaves each partner or Director’s share of their business, to their own Family Trusts through appropriate Clauses written into their own Wills.

Furthermore, the proceeds from the appropriate Life Cover will also be protected, ensuring that these do not impact on the surviving individual’s Estate, which happens all too often.

Once the Cross Option has been executed, our planning ensures the proceeds from any Life Assurance policy also do not form part of the Beneficiary’s Estate.

These funds are now protected against any of the risks named above, yet the surviving spouse and Beneficiaries still have full access to the Trust assets.

Some of our Google Reviews

Frog Financial Management
5.0
Based on 179 reviews
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The team at Frog have been fantastic throughout the entire process. Providing great advice and having a proactive approach, I can't recommend them enough!
Aaron Simpson
Aaron Simpson
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The whole team at Frog were outstanding for us. Greg was our contact for our Mortgage application and he couldn't have been more helpful. He was always available and happy to help with anything, very knowledgeable and we really felt like he wanted the best for us. Charley and Danni also assisted us with insurance cover and they were very helpful and knowledgeable when it came to understanding the policies. They regularly checked in to see if they could help with the whole process, which was greatly appreciated. All the team made the house moving process that bit less stressful and are thoroughly recommended.
Sam E
Sam E
1734009636
I recently worked with Charley to set up my contents insurance, and I couldn’t be happier with the experience. She was incredibly knowledgeable, professional, and took the time to explain all the details of the policy, ensuring it met my needs perfectly.The process was smooth and efficient, and Charley made sure I understood exactly what was covered and how the policy worked. She also provided excellent customer service, answering all my questions promptly and with patience.I highly recommend Charley to anyone looking for reliable insurance advice and support. Thank you for making this process so easy and stress-free!
Maliha Zaidi
Maliha Zaidi
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I can't recommend Frog Financial Management enough!They were friendly, helpful and really responsive. It really felt they went above and beyond for us (saving us a few extra quid too).
Tom Roberts
Tom Roberts
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Had a great experience with Frog Financial management. They work proactively, give good advise and are always quick on the ball. Would very much recommend.
Jolijn Bronneberg
Jolijn Bronneberg
1732717048
If you're looking for mortgage, insurance or any other financial protection advice, you really couldn't do any better than Greg, Charley and the rest of the Frog team. Since putting our house on the market, Greg was very quick to respond and generous with his time - always explaining things clearly and what our options were. With Frog's support, we had trust that we were making the right choices for our family.
Owen Adkins
Owen Adkins
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The team at Frog are oustanding. A big thanks to Charley (who is amazing) at helping with my home insurance.Thank you very much
John Vassallo
John Vassallo
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I can't thank Frog Financial enough! They made buying our first home so easy and stress free. Greg was so helpful throughout the whole process and really took time to explain things in detail. The rest of the team were also super helpful and proactive and so responsive to our emails and phone calls. I honestly cannot recommend them enough!
Tom Harding
Tom Harding
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Greg, Ruth & the whole team at Frog Financial have been amazing at securing mortgages for myself and my sister. We have had lots of changes & challenges and they have been very helpful & quick at responding to multiple questions! For myself, being self employed, Greg worked wonders to find a lender that worked. Fingers crossed until it all completes!
sarah heduan
sarah heduan
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I highly recommend Frog Financial Management. Charley is fantastic, so helpful and sorts us out every year. Than you
Lesley Ashton
Lesley Ashton
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Can't recommend Craig and his team enough! Amazing family ran business who will work tirelessly to provide you the best service. Got us exactly what we wanted and was always just a phone call away if we had any queries or needed some advice and support.Will definitely be using them again.
Sacha Podda
Sacha Podda
1724067412
I could not recommend using Frog financials more!They are quick to reply to any queries via email and on the phone. They provide well informed advice and are exceptionally friendly when answering questions.I will definitely be using them again in the future!
Katie Bryden
Katie Bryden
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Greg and the team have been super helpful throughout the whole mortgage process! Greg has explained each part of the application with great detail to make sure we understand it fully. They were prompt in their replies and made this a completely stress-free experience, highly recommend!
Emma Hooley
Emma Hooley
1722871153
Very professional and knowledgeable service with great detail and kindness, I have been using frog services now for 12 years and am very happy with the products they find for me
Paul Singh
Paul Singh
1721049224
After trying various agents and insurers, Frog FM was able to secure exactly what I needed and for a reasonable premium. Professional and friendly service. I know who to go to first next time!
Simon Gardner
Simon Gardner
1720201499
I first contacted Frog several years ago and they are now my "go to" company for all financial matters and advice. I have always found them friendly, efficient and easy to deal with, and I applaud their ability to convert "financial jargon" into everyday understandable language.I also especially appreciate that they will contact and remind me when I need to review some aspect of my finances. I can without hesitation fully recommend Frog and all their team members
Roger James
Roger James
1719570412
Charley and Danni have been exceptional in assisting me with managing my insurance requirements. They offer an outstanding and effortless service.
Alex Woodford
Alex Woodford
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Amazing.Charley and Greg were amazing in listening to my needs and being able to offer the best solution for me.Thank you Charley for your patience with me. You have been incredible.I like the fact that they are a local company.I strongly recommend them.
mireille lavollee
mireille lavollee
1718203179
I have used Frog Financial for several mortgages and cannot recommend them enough. Extremely helpful, professional and efficient and always going above and beyond to make the process as smooth as possible and finding the best options for me. Everyone in the team is brilliant to work with and I will of course be using them for all future mortgages! Sam x
Samantha Simpson
Samantha Simpson
1713710984
I dealt with Greg to get a mortgage on my first property - he was fantastic, helped educate me on the process as well as coming up with outside of the box solutions, really happy with the service and will 100% use him again in the future.
Tom Evans
Tom Evans
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An exceptional service given. Everyone we have spoken with has gone above and beyond to help us and answer all questions we have. Can not recommend Frog financial management enough and will be using them again in the future.Helena & Jason
Jason Benn
Jason Benn
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Greg and the team at Frog Financial have been excellent with finding me a mortgage a couple of years ago and managing the renewal recently. They have been able to find the best deals in the market and provide good options and advice based on our conversations. They are friendly, attentive and responsive and I highly recommend them.
Carl Goodman
Carl Goodman
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Amazing team could not have done it without them.
Grace Kearns
Grace Kearns
1711487336
Excellent service from Charley on a non-standard building and contents insurance. She was prompt, and knowledgeable, and helped clarify various issues
andrew grant duff
andrew grant duff
1709556163
Phenomenal service. I have and will recommend Frog Financial to everyone. Informative, helpful, great communication, so kind, and we really felt like the whole team cared about us. Took so much of the stress out of the process. We have no doubt that we will use Frog again! 🐸
Elena Prokopiou
Elena Prokopiou
1708805074
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The corrently prepared Cross Option Agreement is essential. Check out the other signficent advantages here

What about the impact a standard cross option agreement has on someone’s Estate?

If you or a business partner dies their share will pass to their spouse or Beneficiaries through their Will. This is now deemed to be part of their Estate. Whilst this share is held and the business continues trading, then the assets could be exempt from IHT, assuming they qualify for Business Property Relief (BPR). Once the Cross Option has been affected then BPR is no longer available on the proceeds, i.e. from any life assurance pay-out. The spouse’s assets have now increased by the funds received from the life assurance policy, risking 40% of their proceeds to IHT, which depending on the size of the business could be a significant loss.

These assets are also at risk from attack from any future remarriage claims, creditors or bankruptcy and Long Term Care costs.

What are the consequences a standard Cross Option agreement for the surviving business partner?

With a standard Cross Option Agreement, the surviving partner now owns 100% of the company. This is fine whilst the business is still trading and whilst BPR is still applicable.

What would happen if they decide to sell the business?

Their personal Estate will increase to include the proceeds from this sale. Furthermore, the spouse is wide open to attack from IHT, creditors, bankruptcy, divorce and Long Term Care costs.

(i) Each Director leaves their share of the Business to their Beneficiaries via their Will.
(ii) Cross Option Agreement established to enable one Director to purchase the other Director’s share of the business in the event of their death.
(iii) Life Assurance policies taken out by the company in order to fund the purchase of the shares / partnership.

(iv) On the death of Director, A, his share of the business passes through the Will to his Beneficiaries. The Life Assurance policy pays out. The company can then execute the Cross-Option Agreement, using the Life Assurance proceeds to purchase Director A’s share of the business.
(v) This results in Director A’s Beneficiaries receiving the life assurance proceeds, and Director B owning 100% of the company.

Consequences to
Director A’s Beneficiaries		 Consequences to
Director B
Beneficiaries now have the funds from the Life Assurance policy.

These funds are now part of their Estates and so will be assessable for IHT when they die.

These funds are also at risk from claims from divorce, remarriage, bankruptcy and long term care.

 3rd Party Claims
Director B will now own 100% of ABC Ltd which is at risk from divorce, remarriage, bankruptcy and long term care.IHT
Whilst trading, Business Property Relief is applicable. However, if he sells the business, the cash proceeds will then be part of his Estate and so will be assessable for IHT when he dies.CGT
On sale, the growth in Director B’s share has increased and hence more CGT payable than necessary.

Example of potential Tax Liability:

If we assume that the business is eligible for Entrepreneurs Relief, then the CGT (CGT) rate is 10%.

CGT payable on sale = £180,000

Example of potential Inheritance Tax (IHT) liability:

Director A and Director B each own 50% of ABC Ltd which is valued at £1,800,000.
Director A dies leaving 50% of the business to his Beneficiaries. The Cross-Option Agreement is executed resulting in £900,000 entering the Beneficiaries’ Estate.

When the Beneficiaries die, the potential IHT bill on these funds is 900,000 x 40% = £360,000
Subsequently, Director B decides to sell the business resulting in £1,800,000 entering his Estate.
When Director B dies, he leaves a potential IHT bill of £1,800,000 x 40% = £720,000

A combined tax bill for the surviving director of £720,000 + £180,000 = £900,000

The potential combined IHT bill = £360,000 + £720,000 = £1,080,000

Please note, the Financial Services Authority do not do not regulate some forms of Trust products and services.

Making a Company Will in your lifetime could not be easier, if set out correctly. All the objectives and aspirations of the shareholder or partners are taken into consideration. With our bespoke service and trained team, we will ensure every aspect is covered to ensure your business Will follows your wishes of your personal Will.

Most adviser’s advice ends at this point and promise to review the protection and needs of the shareholders annually. But what about “beyond-death-planning” of a shareholder, that’s where Frog Wealth Management really specialise and are proud to be head and shoulders above the rest.

As an existing business owner, you’ll have a clear vision of what you want to achieve from it and more importantly what you want when you retire or sell your shares. To maximise the value, you receive for your business it’s essential to think about how you’ll leave it further down the line.

Carefully planning your exit from the business can help you to:

  • Mould your business into the ideal shape for your chosen exit option – maximising the value you get from it.
  • Groom successors if they’re coming from within the business – whether they’re a family member or part of your management team.
  • Exit at a time of your choosing, when the business is doing well and the market conditions are advantageous.

Ideally, you should include an exit strategy in your start-up business plan. It can then be reviewed and revised whenever you work on your annual business plan and budget – and you can steer your business in the direction that your exit option demands.

If you manage an existing business and don’t have an exit plan, you should now think about what your preferred exit option might be – and consider whether you could change the way you run your business to help you achieve it.

The way in which you exit can affect:

  • The value you and other shareholders realise from the business.
  • Whether you receive a cash deal, deferred or staged payments.
  • The future success of the business and its products or services.
  • Whether you retain any involvement in or control of your business.
  • Your tax liabilities.

Presently, shares within your Company can present an issue if the company was to be sold in the future.

Capital Gains Tax (CGT) would usually be charged to the shareholder upon sale. The current full rate is 28%. Entrepreneur’s relief may be available up to the first £5 million for each shareholder. This is dependent on any previous disposals since 6th April 2008 and the trading status of the company. The latter can be affected by the nature of assets held by the company.

Whilst the shares may qualify under current Business Property Relief and so be free from Inheritance Tax (IHT), when sold these shares are replaced by cash, which will be included in an individual’s Estate for IHT purposes and thus taxed at 40%.

Taking appropriate advice from our advisers can maximise the tax efficiency of how you exit from your business and take the proceeds on the sale of your shares, using a Share Release Trust, Shares enter a separate Trust, The Share Release Trust.

This allows:

  • The shares to be sold free of CGT (Shareholder retains his full Entrepreneurs Relief to be used later maybe).
  • Reinvestment can be made CGT free.
  • Income returns are Income Tax free.
  • Share sale proceeds fall outside of the Estate and so, no future IHT liability.
  • The benefit of the tax-free environment means the assets pass down the generations, as the structure is retained for at least 125 years.

Once again, the use of Trusts ensures that the surviving business partner, still retains their original share of the business and still has complete control on the whole business as he/she is named as a Trustee of the Trust(s) which now own the deceased Director’s shares.

This same Trust(s) are also utilised further, as a very efficient income tax planning tool. Now that a proportion of the business is held in Trust any dividends paid into the Trust(s) can be distributed to Beneficiaries of the Trusts, who may well have a nil or low rate income tax liability, such as children, spouse/partner, etc.

Should the surviving Director(s) decide to sell the business only their original share of the business will enter their Estate. The remaining share belongs to the Trust, for which the surviving Director and his/her family are Beneficiaries.

This share is also protected and cannot be assessed for IHT purposes and provides protection from attack by Long Term Care Costs, divorce, and bankruptcy.

If you would like to know how our Cross Option Agreements will benfit your business
PLEASE GET IN TOUCH WITH US TODAY?