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Insurance-funded business succession

Published on 01 Mar 15 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

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

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Matthew BURGESS

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