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.

If underwriting with respect to any Life Insured has been deferred by the Insurer, the Agreement should be finalised with respect to the other Proprietors, so that there is no uncertainty with respect to the other Policies.

Variation of Draft Agreement as a Result of Underwriting Decisions

If a Life Insured is unable to obtain the required amount of insurance (e.g., because of health or premium cost), Clover Law will not charge for the drafting of any consequential amendments to the draft Schedules for the relevant Life Insured.

For example, the Life Insured might be unable to obtain:

sufficient Cover for a particular Insurable Event;
any Cover for a particular Insurable Event (e.g., TPD); or
any new Cover (and might therefore have to use a pre-existing Policy).

In some cases, the available Insurance Proceeds might fund only part of the Pre-Agreed Purchase Price.

No Additional Drafting Fee

The standard Fixed Fee for all Clover Law Agreements entitles the Business to the drafting of Vendor Finance or other Provisions that deal with the payment of any shortfall in the Sum Insured.

This means that if a Proprietor is unable to obtain the required amount of Buy/Sell Cover for the Purchase Price of their Equity, they will still have a pre-agreed Succession Plan.

As a result, the Proprietors are not prejudiced by the payment of the Legal Fee before the Policies have been underwritten.

Additional Meeting and Advice Fee

If additional Meetings or Advice are required to formulate the terms of a Vendor Finance or Retirement Strategy, Clover Law will quote an alternative Fixed Fee.

Example

For example, if the Pre-agreed Sale Price was $600,000 and the only Cover available was for $400,000, the Vendor Finance Provisions could provide that the shortfall of $200,000 would be paid in four annual instalments of $50,000 per annum (plus interest).

Changes Because of Underwriting Decisions

This ensures that decisions made in the insurance underwriting process do not necessarily frustrate the formulation of a Complete Succession Plan for all Proprietors.

Change of Fee Policy

Clover Law reserves the right to change the Fee Structure from time to time.

Any change will not affect any Fixed Fee quotation for the preparation of an Agreement that has been accepted and paid in accordance with the quotation.

Adviser Tip

The standard Fee allows for up to two (2) hours’ consultation with the Adviser or Client with respect to the Client’s needs and the completion of the Questionnaire.

See more Adviser Tips

Please contact us to arrange a meeting or teleconference.