Cross Option Agreements

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

Google Rating
5.0
Based on 202 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 202 reviews
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Couldn't be happier with the service from Frog, they made an incredibly stressful time in me buying my first property feel much more manageable and were always available to talk through any queries I had. Would highly recommend ☺️
Ian
Ian
1755527927
Craig is an excellent advisor, we had relatively unusual requirements for 2 mortgages and he spent a lot of time explaining our potential options so we would end up with the best fit for us.Ruth was also fantastic at following things up for us and keeping us informed of how applications were progressing.Would definitely recommend Frog to anyone looking for a mortgage or insurance.
Tim Moult
Tim Moult
1754857993
Gracias a Danni West ( Frog Financial Management ), pude asegurar mi casa en Inglaterra pues, Danni, muy cortés y profesionalmente, me puso en contacto con una compañía de seguros inmobiliarios que, se interesará a ofrecerme un seguro ya que, Yo vivo en España por lo tanto, soy un propietario ausente y según parece esto es un impedimento para muchas aseguradoras.Estoy muy agradecido con Danni por su invaluable ayuda, ha sido una gran experiencia.
mario alvarez botero
mario alvarez botero
1754595807
Advise etc on our finances and mortgage suggestions
Ruth Corner
Ruth Corner
1754578680
Found the service to be extremely helpful and efficient in dealing with my property portfolio. I've been with them many years and I'm always satisfied with their mortgage quotes
Rendell Willett
Rendell Willett
1754399682
Frog has provided a great service to me and my partner as we arranged our first mortgage.As FTB, it is a daunting process, with a lot of questions from us on the hows, whens, and whats. Greg made this less so, answering all questions clearly, and helping us to understand things. Not only this, Frog helped us to find the best rate available to us.Lastly, Greg & Danni helped us to understand which personal insurance policies were best for us, taking the time to explain in layman's terms how each one could benefit us (or not), depending on our needs.All in all, Greg & Danni have been a valuable part of our mortgage journey, and I would not hesitate to work with them again in the future.
James Devine
James Devine
1754387178
Greg and team were incredibly helpful in guiding us through the process of securing our first mortgage at the best possible rate. Everyone we interacted with at Frog Financial was friendly and always available to support and answer any questions we had - we are first time buyers so their advice and expertise was much appreciated! Greg and Danni also gave us all the information we needed to choose the right options for life insurance and income protection that is tailored to our needs. We couldn't be happier with our experience and would definitely recommend their services.
Tia Mirshahi
Tia Mirshahi
1754218942
Had a great experience with Frog with our recent remortgaging after being recommended to them by Frosts in Amersham.Greg was extremely knowledgable and made a daunting process significantly easier - he was friendly, extremely clear and answered any questions or concerns we had throughout the entire process.Greg really listened to our circumstances and it was clear he wanted an outcome for us that fit our needs, there was never any sense of trying to upsell or push us towards something that did not fit our needs and we reached an outcome we were extremely happy with.Greg’s approach was extremely fair and it was clear that Frog Financial is far more interested in building a lasting relationship ship with their clients. I would not hesitate to approach Greg and Frog Financial again and will absolutely be using their services again when we come to our next application!
Joe and Katherine O'Donnell
Joe and Katherine O'Donnell
1753865940
Grey was the ABSOLUTE BEST!!!!! He was so fun, let us have aux and made us feel so comfortable and showed us around the area and gave his favorite recommendations!! Will be calling him all week!
Sage Kershaw
Sage Kershaw
1753583642
Gray was THE BEST driver and made sure that our ride was safe and fun!!!
Clare Marshall
Clare Marshall
1753583505
Frog Financial Management have been excellent throughout the process. Craig and Ruth provided clear advice, quick communication, and a very professional service from start to finish. Nothing was ever too much trouble, and they made everything straightforward and stress-free.Would highly recommend to anyone looking for trustworthy and efficient financial advice.
Paul Murphy
Paul Murphy
1751274702
Greg and the team at Frog were brilliant in helping us prepare our finances and then arrange the porting of our mortgage for our recent house move. Greg provided consistent support and tailored advice whenever needed, and made the mortgage process as stress free as possible. The Frog team also helped us with setting up some better life protection for ourselves and our kids. We would highly recommend Greg and the team at Frog to anyone looking for mortgage specific or broader financial advice.
Chloe Taylor
Chloe Taylor
1746859208
As a first-time buyer, I had a lot of questions—and Greg was absolutely brilliant at answering every single one with patience and clarity. He was always super responsive and made the whole mortgage process feel much less overwhelming. Charley was also fantastic, helping me sort out buildings insurance quickly and efficiently while walking me through all the details. Danni took the time to explain all the insurance options thoroughly and in a way that made sense. Everyone I dealt with was friendly, knowledgeable, and incredibly supportive. I can’t recommend them highly enough!
Samah Hussain
Samah Hussain
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We were recommended Frog Financial by some friends who had recently bought their first house, and we couldn't be happier! Greg was amazing from start to finish, keeping us informed throughout the process and always on hand to answer any questions we had. Charley also helped us find the right Buildings & Contents insurance for us, and had everything sorted & ready for exchange. We'll definitely be recommending the Frog team to any friends buying their first place!
Megan Griffin
Megan Griffin
1744626325
Frog were incredibly helpful when I approached them for a mortgage recommendation. Craig really took the time to understand what I needed and was very supportive throughout the process. Mortgages and the jargon around them can seem very overwhelming, especially to a first time buyer, but Frog made it a lot less stressful. Would definitely recommend!
Carla van der Sluijs
Carla van der Sluijs
1743416068
I can’t recommend Charley highly enough! From the very start, she made the process of getting my building and contents insurance seamless. She provided me with a list of options, sent detailed and informative emails, and was incredibly flexible, kind, and patient throughout.The whole experience has been fantastic, professional, efficient, and stress-free. The member portal is another great addition, making everything even more accessible and straightforward.I was so impressed that I even told my solicitor to recommend Charley to her clients. If you’re looking for someone who truly goes above and beyond, Charley is the one to trust. 100% recommend!
Tannaz Rastegar
Tannaz Rastegar
1742216810
I went to Frog for mortgage advise on buying a second property. Initially Greg provided me with various options available to me and spent the time explaining the pros and cons of each. This made choosing the right option very easy, feeling confident with my choice. Likewise, Charley was a great help with finding me the right insurance for my new property and landlords insurance.
Denis Bywaters
Denis Bywaters
1742048349
Thoroughly professional and superbly efficient service. Moving home is stressful enough. My buildings insurance was at least one thing I did not have to worry about.
Se7en Group
Se7en Group
1741021620
I cannot recommend Frog enough. They have been so helpful and supportive.They have helped us to buy our first home and they were a huge helping hand when we had no idea where to start.Thank you so much for making the house buying process almost completely stress free.
sophie Stockton
sophie Stockton
1739186324
We were recommended Frog by a family friend, and they have been absolutely brilliant through the whole house buying process. As first time buyers, the whole team has been so supportive always answering phone call and emails. Greg was so supportive when it came to our mortgage inquiries, very helpful and personable. Charley and Danni have been so helpful with insurances and Will writing, and we look forward to using them again in the future.
Sammy Isaacs-Johnson
Sammy Isaacs-Johnson
1739185463
Frog Financial are definitely well worth a 5 star review, Greg and the team are fast, efficient and professional and always seem to put the customer first.
Nick Jones
Nick Jones
1738007477
Frog financial management services provided us excellent help during purchase of our sweet first home in UK. Greg our advisor was very helpful, soft spoken person. Despite of my limited visa, Greg helped us to get mortgage with best available rate in the market.Highly recommended
Mukesh Singh
Mukesh Singh
1737024771
I couldn’t recommend Frog Management more. Greg made the mortgage application process really easy for my boyfriend and I who were first time buyers. I’d first been in touch with Greg a year prior when we started our property search and once our offer was accepted I got straight back in contact with Greg who was prompt to get everything moving for us. I would highly recommend Frog Management!
Danielle Louise
Danielle Louise
1735329775
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
Aaron
1734177339
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
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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?