Who Would Buy Your Shares If You Died? How UK Business Owners Plan to Fund a Buyout
No pressure, no jargon. A short call to work out whether this cover fits your business.
What happens to your shares when you die? Your shares pass into your estate and go to whoever inherits them under your will. Unless there is an agreement in place, your co-owners have no automatic right to buy them, and your family has no automatic right to sell. That can leave everyone stuck.
Most business owners know what they would like to happen, but far fewer know how it would be paid for. New research by Scottish Widows, carried out by YouGov with 2,019 business owners in 2026, found that 32% have no idea how their shares would be bought if they died.
Key facts
- When a shareholder in a private limited company dies, their shares pass into their estate and are inherited under their will.
- 32% of UK business owners do not know how their shares would be bought if they died (Scottish Widows / YouGov, 2026).
- 23% of UK business owners expect surviving co-owners to fund a buyout from their personal wealth.
- Only 14% of UK business owners have a life policy set up specifically to fund the purchase of their shares.
- A cross option agreement gives surviving shareholders and the deceased's estate the right to require the sale once cover pays out.
What happens to company shares when a shareholder dies?
When a shareholder in a private limited company dies, their shares become part of their estate. Their executors deal with them, and they pass to the people named in the will. If there is no will, the intestacy rules decide who inherits.
Your company's articles of association or a shareholders' agreement may change this, for example by giving co-owners first refusal. But first refusal only helps if the co-owners have the money to buy.
What do business owners want to happen to their shares?
The most common wishes are for family to keep the shares without working in the business, or for co-owners to buy them. These two outcomes pull in opposite directions, which is exactly why planning ahead matters.
| What owners want to happen to their shares on death | Share of owners |
|---|---|
| Beneficiaries keep the shares without taking an active role | 16% |
| Partners or shareholders buy the shares from beneficiaries | 15% |
| Beneficiaries become active in the business | 10% |
| Beneficiaries receive nothing; shares pass to other owners | 7% |
| Shares are sold to a third party | 3% |
Source: Scottish Widows Business Protection Research, conducted by YouGov, March 2026 (2,019 GB business owners and senior decision makers).
How do business owners expect a buyout to be funded?
This is where most plans fall down. Almost a third of owners do not know where the money would come from, and nearly a quarter are relying on their co-owners having enough personal wealth at the time it is needed.
| How owners expect the purchase of their shares to be funded | Share of owners |
|---|---|
| Don't know | 32% |
| Personal wealth of the remaining owners | 23% |
| Business cash reserves | 18% |
| Life policy taken out for this purpose | 14% |
| Remaining owners' pensions | 4% |
| Bank loan | 3% |
Source: Scottish Widows Business Protection Research, conducted by YouGov, March 2026 (2,019 GB business owners and senior decision makers).
What does each funding route look like in practice?
Take a company valued at £900,000 with three equal shareholders. If one dies, their stake is worth £300,000. Here is what each funding route would mean for the people left behind.
| Funding route | What it means for a £300,000 stake |
|---|---|
| Personal wealth | Each surviving owner finds £150,000 from savings, or borrows it personally |
| Business cash reserves | The company needs £300,000 of spare cash, which could leave it short of working capital |
| Bank loan | The survivors or the company take on £300,000 of debt, just after losing an owner |
| Shareholder protection | A £300,000 lump sum pays out, funding the purchase without new debt |
| No plan | The family may keep the shares with no role in the business, or sell to an outsider |
Source: Illustrative example only.
How does a cross option agreement help?
A cross option agreement makes the sale happen. It gives the surviving shareholders an option to buy the shares, and the deceased's estate an option to sell them. Once cover pays out, either side can require the purchase to go ahead. It sits alongside shareholder protection insurance, which provides the money.
The result is certainty for both sides. Your family receives a fair value for your shares in cash, and your co-owners keep control of the business.
How is shareholder protection set up?
Shareholder protection can be arranged in three ways: own life in trust, life of another, or a company share buyback. Each has different legal and tax consequences. If you are weighing up the company route, our article on company share buyback with shareholder protection covers it in detail.
The company can pay the premiums, but company-paid premiums create a benefit-in-kind charge for each insured shareholder. Cover is usually set at the current value of each stake and should be reviewed as the business grows.
Business ownership is just one of the gaps the 2026 research uncovered. Our roundup of business protection statistics for 2026 covers key people, debt and income too. A specialist adviser can help you, your co-owners, your accountant and your solicitor put a funded plan in place. Executive Life is authorised and regulated by the Financial Conduct Authority.
Frequently asked questions
What happens to shares in a private limited company when a shareholder dies?
The shares pass into the shareholder's estate and go to whoever inherits under their will, or under intestacy rules if there is no will. The company's articles of association or a shareholders' agreement may give the other shareholders a right or an obligation to buy them.
Do surviving shareholders have to buy a deceased shareholder's shares?
Not automatically. Surviving shareholders only have to buy the shares if a legal agreement requires it, such as a cross option agreement. Without one, the deceased's family can keep the shares, even if they have no role in the business.
How do most business owners plan to fund a share buyout?
32% of UK business owners do not know how their shares would be bought if they died. 23% expect surviving owners to use personal wealth, 18% would use business cash reserves and only 14% have a life policy taken out for the purpose (Scottish Widows / YouGov, 2026).
What is a cross option agreement?
A cross option agreement gives the surviving shareholders an option to buy a deceased shareholder's shares, and the deceased's estate an option to sell them. Once shareholder protection cover pays out, either side can require the sale to go ahead.
Can the company pay for shareholder protection?
Yes. The company can pay shareholder protection premiums, but company-paid premiums create a benefit-in-kind charge for each shareholder who is insured. This is different from relevant life insurance, which has no benefit-in-kind charge.
Last reviewed: September 2026. Next review: April 2027. Tax rates and thresholds are subject to change.
Written by
Alex Ogden DipFA | Director | Executive Life
Alex Ogden DipFA holds the Level 4 Diploma for Financial Advisers (DipFA) awarded by the London Institute of Banking and Finance (LIBF), the FCA's benchmark qualification for retail investment advisers. He is authorised by the FCA, Ref: AJO01072 (FCA register).
Executive Life is authorised and regulated by the Financial Conduct Authority. This article is for information purposes only and does not constitute financial advice. Tax treatment depends on individual circumstances and may be subject to change. Always seek professional advice before making financial decisions.