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Adviser Updates

Publications and Documents:

Publications and Documents


Business Succession Planning:

Business Succession Planning

Need for Succession Plan

Need for Asset or Buy/Sell Strategy

Need for Liability or Key Person Strategy

Negotiating a Succession Plan


Simple Succession Plan:

Simple Succession Plan


Complete Succession Plan:

Complete Succession Plan


Financial Needs

Insurance Funding

Retirement Funding


One Page Strategy:

One Page Strategy

Asset Needs

Liability Needs

Personal Needs

Who Pays the Premiums?

Valuing the Business

Simplifying the Valuation Issue

Equity vs. Loan Capital


One Policy Strategy:

One Policy Strategy


Dual Role of Personal Cover

Dual Role of Debt Red'n Cover

Security & Tax-Effectiveness

Cost Savings

Pre-Agreed Purchase Price

Apportionment of Premiums

Methods of Aggregation


Multiple Policy Approach:

Multiple Policy Approach

Super Fund Ownership

Tax Disadvantages

Cost Disadvantages

Other Disadvantages

Geared Premium Funding

Super Buy/Sell


One Page, Two Policy Strategy:

One Page, Two Policy Strategy


Other Issues:

Tax Deductibility

Inadequate Insurance Proceeds

Vendor Finance

Changing Needs

Future Growth of Equity

Trauma Buy/Sell Strategy


Sole Proprietors and Families:

Sole Proprietors and Families


Family Ownership

Sale Strategies

Third Party Buy/Sell Strategies

Estate Equalisation Strategies

Family Buy/Sell Strategies

Second Generation Strategies

Debt Reduction Strategies




A Complete Succession Plan


Purpose of a Complete Succession Plan

The purpose of a Complete Succession Plan is to ensure that:

  • you sell your Equity in the Business for the full, pre-agreed value;

  • you are released from any Personal Guarantees with respect to Business Debt;

  • any Loan Accounts between the Business and the Proprietor are repaid; and

  • there is scope or provision for future growth in the value of your Equity in the Business.


Scope of a Complete Succession Plan

A Complete Succession Plan documents a strategy with respect to both:

"Simple Succession Plan"

When a Business Succession Plan deals solely with the sale of a Proprietor's Equity in the Business in the case of an Insured Event, Clover Law describes it as a "Simple Succession Plan".

A legal agreement that documents a Simple Succession Plan is often called a "Buy/Sell Agreement".


"One Page, One Policy Succession Plan"

Clover Law is able to document a Complete Succession Plan for Insurable Events, so that all of the Cover required by a Proprietor is held on One Policy.

This strategy is called a "One Page, One Policy Succession Plan".

One Page Summary

Click here to see an example of a "One Page, One Policy Succession Plan" for Insured Events.

Alternative to Multiple Policy Approach

The One Policy Strategy is an alternative to the traditional Multiple Policy approach.


Asset and Liability Strategies

In contrast to a Simple Succession Plan, a Complete Succession Plan does not just focus on your Asset. It looks at your Liabilities as well.

In other words, when you leave a Business, it helps you to leave both the Asset and the Liability sides of the ledger.

Click here to read about the nature of a Simple Succession Plan and how it differs from a Complete Succession Plan.


Personal Strategy

Because the future growth of your Equity in the Business could utilise your Personal Cover, a Complete Succession Plan can also embrace Personal Needs.

Click here to read about the relationship between your Business and Personal Needs.


The Need for an Asset (or Buy/Sell) Strategy

Click here to read about the need for an Asset (or Buy/Sell) Strategy.


External Debt

Many Businesses have external Debts owing to Banks or other Creditors.

In some cases, the Creditor might require Personal Guarantees or other Securities (e.g., a mortgage over personal residential property) by way of Security for the Debt.

If you retain your liability under any Personal Guarantees when you die, then the Sale Proceeds and other assets in your Estate will remain available to the Creditor to satisfy the Debt of the Business in the event of a default.


Loan Accounts

In many cases, the Proprietors of a Business lend funds to the Business to fund working capital, particularly in the early stages of the Business when it might not be able to obtain external debt.

If no insurance arrangements are made to repay any Loan Account owing by the Business, then it will remain owing after you have left.

The Business will need to negotiate and agree the terms of repayment with your Estate.

Whatever the terms of repayment, the Business and the Continuing Proprietors will need to utilise future cash flow of the Business to repay the Loan Account, potentially in priority to their own profit distributions.


Retirement Strategies

A Complete Succession Plan adapts some of the strategies developed for Insurance-funded Succession Planning and applies them to Retirement-based Succession as well.

See Issue 1 to read about the strategic basis of a Complete Succession Plan (the Relationship Between Business and Personal Needs).

See Issue 4 to read about the application of these concepts to Retirement Strategies.



Click here to see a Worksheet that demonstrates a typical Complete Succession Plan.

Note how the needs of the Proprietor change over the five year period.

Imagine what you would have to do if you had separate Insurance Policies for each different Need.

Wouldn't it be easier if you could have just One Policy that would cover all of these Needs?


One Page Summary

Click here to see a one page summary of how a typical Complete Succession Plan works.


Standard Clover Law Agreement

Click here to learn more about the standard Business Insurance Trust Agreement used for a Complete Succession Plan.

A Business Insurance Trust Agreement is designed to achieve four principal goals:

  • It avoids Capital Gains Tax with respect to the Insurance Proceeds in the case of both Death and Non-Death Benefits;

  • It can distribute the Insurance Proceeds to a number of different Recipients (not just the Life Insured or their Estate);

  • It can aggregate different Business and Personal Cover onto one Policy with respect to each Life Insured; and

  • When the Life Insured’s needs change, it might only be necessary to change the allocation of the Sum Insured in the Agreement (rather than changing the different Policies with the Insurance Company).


Sole Proprietors and Family Businesses

The Succession Planning Strategies on this web site are most relevant to Multiple Proprietor Businesses in which there are arms-length Proprietors or Owners.

However, they can also be relevant to Sole Proprietor and Family Businesses.

Click here for strategies for Sole Proprietors and Family Businesses.


The Four Planning Issues

Set out on the following pages is an overview of four basic planning issues that help understand and design a Complete Succession Plan:


Where to Start

Issue 1 is a good starting point to understand the unique benefits of a Complete Succession Plan and how it differs from other approaches to Succession Planning.


Free 20 Minute Teleconference

If a Client is uncertain whether to attend a Client Meeting or use the Clover Law Documentation Service, Clover Law offers a free teleconference (of up to 20 minutes) with the Client to explain the purpose and benefits of a Complete Succession Plan and the "One Page, One Policy Strategy".


Copyright: Clover Law Pty Ltd



Adviser Tip

A Complete Succession Plan is not just about Death, it's not just about Insurance and it's not just about selling your Equity.

See more Adviser Tips







Please contact us to arrange a meeting or teleconference.