Business Succession Agreements


Types of Agreement:

Types of Agreement

Cross Ownership:

Cross Ownership

Self Ownership:

Self Ownership

Related Party Vendors

Deemed Dividends

Risks If No Agreement

Trust Ownership:

Trust Ownership

Tax Implications

"Business Family Will"

Changing Needs


Choice of Trustee

Super Buy/Sell


Drafting Issues:

Put Options

Call Options

Put and Call Options

Conditions Precedent

Put and Call Options vs. Conditions Precedent


Other Issues:

Pre-Agreed Purchase Price

Inadequate Insurance Proceeds

Trauma Buy/Sell Strategy

Simultaneous Deaths


Debt Reduction Agreement:

Debt Reduction Agreement





Cross-Ownership Agreement

A Cross-Ownership Agreement requires the Proprietors (other than the Life Insured) to own each Buy/Sell Policy.

The Purchasers receive the Insurance Proceeds and exchange them for a transfer of the Equity in the Business at completion.

It is no longer normal for the Business or the Purchasers to own Buy/Sell Insurance, because of the CGT liability with respect to Non-Death Benefits.

As a result, it is no longer normal to use Cross-Ownership Agreements.


CGT Implications

Click here to read about the CGT implications of Cross-Ownership.  










Copyright: Clover Law Pty Ltd



Adviser Tip

Most Advisers and Accountants are aware that Cross-Ownership can result in a capital gains tax liability with respect to Buy/Sell Cover.

However, they don't realise that it can also result in a CGT liability for Debt Reduction and Key Person Capital Cover.

Unfortunately, Self-Ownership can solve the problem for Buy/Sell Cover, but it can't solve it for Debt Reduction or Key Person Capital Cover.

See more Adviser Tips



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