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Insurance-funded business succession


Succession planning is a critical issue for any jointly owned business, and the unexpected exit of a principal can have adverse ramifications for the business. Appropriate structured insurance funding can be an important step in mitigating these risks. Changes were recently made to the type of total and permanent disablement insurance policies which can be owned through superannuation. Total and permanent disablement policies commonly feature in insurance-funded buy–sell agreements. The purpose of this article is to review the various ways in which these agreements can be structured.

The article considers how most insurance-funded buy–sell agreements operate, the alternatives available when determining how the insurance policies should be owned, and the taxation consequences of the different ownership approaches.

Author profiles

Patrick Ellwood FTI
Patrick holds a Bachelor of Laws and Bachelor of Information Technology from the University of Queensland, a Graduate Diploma in Legal Practice, Skills and Ethics from Griffith University and has been admitted as a Solicitor of the Supreme Court of Queensland. He has extensive experience as a speaker and is a regular presenter for a range of professional organisations. - Current at 11 September 2015
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Matthew Burgess CTA
Photo of author, Matthew BURGESS Matthew Burgess, CTA, co-founded Brisbane based specialist firm View Legal in 2014, having been a partner of one of Australia’s leading independent law firms for over 12 years. Matthew’s passion is helping clients successfully achieve their goals. Matthew specialises in tax, asset protection, estate and succession planning, providing strategic advice to business owners and high net worth individuals, and was recognised in the “Best Lawyers” list for 2014 in relation to trusts and estates. As an author, Matthew is widely recognised as an expert in his field, who constantly creates bespoke revenue-related strategies for the growth, management and protection of wealth. Matthew is regularly published in Australia’s leading monthly tax journal, The Tax Institute’s Taxation in Australia (six articles since 2012), and the leading weekly tax journal, Thomson Reuters’ Weekly Tax Bulletin (10 articles since 2012). He has also written five legal books, one business book and 16 children’s books. - Current at 30 November 2017
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