Because the Life Insured is the "beneficial owner" of the Policy under the "roof" of the Trust, Trust Ownership obtains a CGT exemption for both Death and Non-Death Benefits.

Payment to Appropriate Vendor

One of the advantages of Trust Ownership is that it can pay the Purchase Price to the correct Vendor in cases where the Owner of the Equity is not the Life Insured.

In other words, the Life Insured (in its capacity as "beneficial owner") can direct the Trustee to pay the insurance proceeds to the appropriate Recipient.

In contrast, Self-Ownership must pay the Purchase Price to the Life Insured or their Estate.

This might not be appropriate from a commercial or family point of view if the owner of the Equity is not the Life Insured.

For example, the owner of the Equity might be a Company, Family Trust or other family member (who should be entitled to receive the Purchase Price of their Equity).

Third Party Recipients

The Business Insurance Trust Agreement can distribute the Insurance Proceeds directly to Third Parties both securely and tax-effectively.

The ATO Ruling with respect to the Clover Law Business Insurance Trust Agreement states that:

"the payment of an amount by the trustee to a nominated recipient in accordance with a nominated beneficiary's direction, will not be the discharge or satisfaction of an asset under CGT event C2."

Trust Ownership Agreements

Please click here to read about Trust Ownership Agreements.

Adviser Tip

Trust ownership is an indirect form of self-ownership.

The Life Insured is the "beneficial owner" for legal and tax purposes under the roof of the Trust.

See more Adviser Tips

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