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Welcome: Site Map: Adviser Updates: Publications and Documents:
Business Succession Planning: Need for Asset or Buy/Sell Strategy Need for Liability or Key Person Strategy
Simple Succession Plan:
Complete Succession Plan:
One Page Strategy: Simplifying the Valuation Issue
Multiple Policy Approach:
One Page, Two Policy Strategy:
Other Issues:
Sole Proprietors and Families: Third Party Buy/Sell Strategies Estate Equalisation Strategies
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The "One Page, Two Policy Strategy”
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. 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. 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". Self-Ownership of Buy/Sell and Personal Cover Alternatively, they might require:
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”.
Two Policies Therefore, these strategies effectively require at least two Policies:
Possible Third Policy for TPD and Trauma Cover Where Super Fund Ownership is required, it might also be necessary to obtain a third Policy, if Own Occupation TPD and/or Trauma Cover is required for any Buy/Sell or Personal Needs.
Super Fund Ownership Click here to read about the implications of Super Fund Ownership. Click here to read about Super Fund Ownership of Buy/Sell Cover.
Hybrid Agreement In these cases, a Hybrid (or Multiple Policy Owner) Agreement will enable the cover for each Life Insured to be split between two or more separate Policies owned by different parties:
This version of the Agreement would reduce some of the security concerns about the use of a Non-Arm's Length Trustee, because in most cases the intended Recipient of the benefit of the Insurance Proceeds will be the Policy Owner.
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.
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Traditionally, Advisers have arranged a separate Policy for each separate need, often owned by different Policy Owners. After a few years, nobody knows what Cover they have, what it's for, whether it's for the right amount or whether the Insurance Proceeds will be paid to the right Recipient.
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