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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 co-founded specialist firm View Legal in 2014, having been a lawyer and partner of one of Australia’s leading independent law firms for over 17 years. Matthew’s passion is helping clients successfully achieve their goals. Matthew specialises in tax, estate and succession planning, providing strategic advice to business owners and high net worth individuals. He has been recognised in the ‘Best Lawyers’ list since 2014 in relation to trusts and estates and either personally or as part of View in ‘Doyles’ since 2015 in relation to taxation and since 2017 in relation to wills, estates and succession planning. In part leveraging off the skills he has developed working in the SME market space, Matthew has been the catalyst for a number of innovative legal solutions for advisers and their clients, including establishing Australia’s first virtual law firm. - Current at 21 February 2018
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