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Overview:

Fixed Legal Fees

 

Terms and Conditions:

Legal Fee Policy Concessional Legal Fees

Concessional Legal Fees

Reduced Legal Fees

Original Beneficial Ownership

 

Additional Service Fees:

Additional Fact-Finding Fees

Variations of Draft Agreement

 

Initial Agreements:

Initial Agreements

Content of all Agreements

Current Legal Fees

Inadequate Insurance Proceeds

Trauma Buy/Sell Strategy

 

Alternative Initial Agreements:

Complete (BITA)

Complete (Hybrid BITA)

Simple (Self-Owned BSA)

 

Proprietors Agreements:

Proprietors Agreement

 

Debt Reduction Agreements:

Debt Reduction Agreement

 

Other Services:

Variation Agreements

Meetings and Advice

 

Cost Savings:

Cost Savings

 

 

 

Complete Succesion Agreement

(Multiple Policy Owners - Hybrid Business Insurance Trust Agreement)

 

Hybrid or Composite Agreement

The body of the standard Complete Succession (or Business Insurance Trust) Agreement contains provisions that allow the ownership of the Buy/Sell Cover to be either:

  • Self-Ownership; or

  • Trust Ownership.

This means that, simply by changing the wording of the Schedules to the Agreement to document the Client's arrangements, the Agreement can operate as either (or both):

  • a Self-Ownership Buy/Sell Agreement; and/or

  • a Trust Ownership Buy/Sell Agreement.

As a result, the Agreement effectively forms a roof over any type of Policy Ownership selected by the Client and Adviser for the Buy/Sell Cover.

The Agreement itself does not prescribe the method of Policy Ownership.

Exclusive Buy/Sell Cover

The Agreement allows the Clients to document Self-Ownership Buy/Sell arrangements, even if they do not require any Key Person or other Cover.

Thus, an Adviser who prefers Self-Ownership of the Buy/Sell Cover can utilise either:

 

One Page, Two Policy Succession Plan

In some cases, the Business might wish to obtain the benefit of a "One Page Succession Plan".

However, it might not wish to use the One Policy Strategy.

The usual motivation for not using a One Policy Strategy is the desire to hold some of the Cover in the name of a Superannuation Fund and/or the Life Insured.

Super Fund Ownership of Buy/Sell and/or Personal CoverCover

The Lives Insured might require some of the Buy/Sell or Personal Cover to be owned by a Public Offer Super Fund or Self-Managed Super Fund, where considered appropriate by the Adviser and Business.

This practice is known as "Super Buy/Sell".

The purpose of the Superannuation strategy would be to obtain a tax deduction with respect to some of the Premium.

The Superannuation strategy is limited to the Buy/Sell and Personal Cover.

It is not appropriate to hold Key Person or Debt Reduction Cover in the Superannuation environment, because it would breach the "sole purpose test".

Click here to read more about Super Fund Ownership of Buy/Sell Cover.

Self-Ownership of Buy/Sell and Personal Cover

Alternatively, they might require:

  • the Buy/Sell or Personal Cover to be owned by the Life Insured or a Related Party of each Life Insured; and

  • the Debt Reduction or Key Person Cover to be owned by the Business.

One Page, Two Policy Succession Plan

In these cases, the Hybrid Insurance Trust Agreement can be used to document a “One Page, Two Policy Succession Plan”.

 

Identity of Policy Owners and Trustee

This Agreement enables the cover for each Life Insured to be split between two or more separate Policies owned by different parties:

  • the Purchase Price and/or Personal Cover might be owned by the Life Insured or a Related Party (or a Super Fund, where appropriate); and

  • the Debt Reduction and Key Person Cover might be owned by the Business (on the terms of the current tax-effective Trust Structure).

 

Complete Succession Two or Three Policy Worksheet

Click here to see a Risk Analysis Worksheet completed for a Complete Succession Plan held on Two or Three Policies pursuant to the terms of a Hybrid Business Insurance Trust Agreement.

 

Client Summary of Agreement

Click here to see a brief Summary of the purpose and effect of the Agreement.

Click here to read about your choice of Trustee.

 

Super Fund Ownership

Click here for an overview with respect to Super Fund Ownership.

Click here for an analysis of the tax and other disadvantages of Super Fund Ownership.

Click here for a more specific discussion of the issues that affect Super Fund Ownership of Buy/Sell Cover .

 

Fixed Legal Fees

The Fixed Fee charged by IGS depends on the choice of Agreement.

Click here to see the current Fees for all Agreements and Services.

These Fees apply subject to the Legal Fee Policy.

 

Concessional and Reduced Fees

The IGS Legal Fee Policy offers substantive reductions in the Fixed Legal Fees to:

 

Concessional Fee Structure

The Concessional Fees only apply to Clients of Advisers with a current Marketing Licence which entitles the Adviser to use the IGS Adviser Support System.

The Adviser Support System requires an Adviser to undertake training, which enhances their ability to give Succession Planning Advice both time- and cost-effectively.

Click here to read more about the Concessional Legal Fees.

Timeframe for Payment of Concessional Fee

The Concessional Fee is only available if complete instructions and payment are received before the Policy Owners apply for the Cover.

 

Standard and Reduced Legal Fees

The IGS Legal Fee Policy distinguishes between Standard and Reduced Fees.

The difference between the two Fees is usually $990.

The difference reflects the extent to which the IGS Documentation Procedure has been complied with.

The Reduced Fee is only available to Clients whose Adviser is entitled to a Concessional Fee.

Click here to read more about the Reduced Fees.

Availability of Reduced Fee

The Reduced Fee is only available if complete instructions and payment are received before the Policy Owners apply for the Cover.

 

Concessional Legal Fees (Current Licence)

Legal Fee (Up to Four Individuals)

Standard Legal Fee: $3,960

Reduced Legal Fee: $2,970

NSW and Victorian Agreements

In the case of NSW and Victorian Agreements, the Business will also need to pay Stamp Duty of $220 in addition to the Standard Legal Fee.

IGS will bear the cost of this Stamp Duty, if the conditions of the Reduced Legal Fee are satisfied.

 

Non-Concessional Legal Fees (No Current Licence)

Legal Fee (Up to Four Individuals)

Standard Legal Fee: $3960

Reduced Legal Fee: $3,960

NSW and Victorian Agreements

In the case of NSW and Victorian Agreements, the Business will also need to pay Stamp Duty of up to $550 in addition to the Standard Legal Fee.

IGS will bear the cost of this Stamp Duty, if the conditions of the Reduced Legal Fee are satisfied.

 

Legal Fee (More than Four Individuals)

The above Fees apply for the first four individuals.

There is an additional Fee of $330 per individual for each individual exceeding four individuals.

 

Additional Fact-Finding Fees

It is not always possible to complete all of the details of the Business Structure and Liabilities of the Business in the Client Meeting or Teleconference.

If the information is not supplied in the Questionnaire, there will be an additional Legal Fee of $440 to collect the information from the Business or its Advisers, review it and incorporate it into the Succession Plan and Documentation.

Click here to read more about the Additional Fact-Finding Fees.

 

Any Variation of Incomplete Draft Agreement

There will be an additional Fee for the finalisation of an incomplete draft Agreement not finalised within six months of the first draft:

  • After six months from first draft: $440

  • After 12 months from first draft: the standard Fee for an Initial Agreement

Failure to finalise any Agreement promptly can have serious adverse commercial, legal and taxation implications for the Business and the other parties to the Agreement.

 

Original Beneficial Ownership of Policies

The Policy Owner is intended to hold the Policy on behalf of the Beneficial Owner (usually the Life Insured) on the terms of a Trust Agreement.

As a result , any delay in the instructions to prepare the Trust Agreement can result in Capital Gains Tax being paid on the Insurance Proceeds at the time of a subsequent claim.

Click here to read about the importance of establishing the Original Beneficial Ownership of the Policies in accordance with the IGS Documentation Procedure.

 

Copyright: Ian Gray Solicitor

 

 

Adviser Tip

The Hybrid Agreement is the appropriate engine for a One Page, Multiple Policy Strategy where the Business requires some of the Cover to be held in the Super environment.

This might entitle the parties to tax deductions for some of the Premium, but might also expose the Insurance Proceeds to a tax liability in some cases.

See more Adviser Tips

 

 

Current Marketing Schedule

Current Marketing Schedule

Ian Gray travels to most capital cities regularly throughout the year and is available for Meetings.

Please click here to see his availability in Brisbane, Sydney, Melbourne, Adelaide and Perth.

Please contact us to arrange an appointment or teleconference.