Publications and Documents:

Publications and Documents


Adviser Tips:

Adviser Tips


Adviser Updates:

Adviser Updates


Individual Updates (Most Recent First):

Adverse ATO Advice on Super Buy/Sell Cover

Partnership and Trust Loan Accounts

Effect of Debt Reduction Cover on Buy/Sell Cover

Prioritising Needs

Simultaneous Deaths

Mutual Will Strategies

Joe Hockey on Trusts

Tax Treatment of Self-Ownership Agreements

Vested and Indefeasible Interest

Gross or Net Value?

Henry Report

Deemed Dividends

Super Buy/Sell Cover

Bamford in the High Court

Trauma Cover in Super

Origins of Self-Ownership


Methods of Aggregation

Valuing the Business

Duty to Give Tax Advice

Equity vs Loan Capital

Horses for Courses

Commercial Debt Forgiveness

Choice of Trustee

Simplifying the Valuation Issue

Hybrid Succession Strategy

Hedge and Wedge Strategy

Sole Proprietors and Families

Free Teleconference

Simple or Complete Succession?

Contemporaneous Agreement

Geared Premium Funding

Super Fund Ownership

Business Family Will








"Horses for Courses"


Many Insurance Companies, Advisers and Industry Consultants question whether the Clover Law Business Insurance Trust Agreement is suitable for all Businesses.

They justify and advocate alternative strategies and structures on the basis of a "Horses for Courses" argument.


Facility Agreement

One of the most important characteristics of a Clover Law Business Insurance Trust Agreement is that it is a Facility Agreement.

It is a roof or umbrella over the legal, commercial and insurance arrangements between the Proprietors of a Business.

It recognises that the Proprietors might only have some of the relevant needs at any point in time.

However, it also recognises that these needs might change over time and that the insurance arrangements might need to change as the underlying needs change.

A Succession Plan is a dynamic and ever-changing strategy. It is not a "set and forget strategy".

As a result, it doesn't matter how simple or sophisticated the needs of a Business might be initially.

The most important issue is the ability of the Succession Plan and the Agreement to facilitate predictable or likely changes in need over time.

The One Page, One Policy Strategy recognises that the aggregate needs of the Life Insured might remain the same indefinitely, what might change over time is the "mix" or "colour" of the Cover.


Self-Ownership and a Simple Succession Plan

Self-Ownership of the Buy/Sell Cover is an adequate strategy for a Simple Succession Plan.

It focuses on the Sale Price of the Life Insured's Equity in the Business.

It also requires the Insurance Proceeds to be paid to the Life Insured (or their Estate), whether or not they are the actual owner of the Equity in the Business.


When is a Simple Succession Plan Appropriate?

Ultimately, a Simple Succession Plan (documented by a Self-Ownership Buy/Sell Agreement) is therefore most suited to a Business with the following characteristics:

  • each Life Insured's Equity in the Business is owned by the Life Insured (not a Related Party);

  • it is unlikely that there will be any growth in the value of the Equity over time that might require additional Buy/Sell Cover (which could be funded by the re-allocation of surplus Personal Cover);

  • there are no Debt Reduction or other Key Person Needs with respect to any of the Lives Insured; and

  • none of the Lives Insured require additional Personal Cover (that could be re-allocated to Buy/Sell Cover as required).


When is a Complete Succession Plan Appropriate?

In all other circumstances, a Business Insurance Trust Agreement is an appropriate "Horse for the Course".

It is designed to document a Complete Succession Plan, precisely because it creates a "Facility" that can be changed as the needs of the Lives Insured change.

Its flexibility makes it a "Horse for all Courses", as well as a "Horse for any Course".


Copyright: Clover Law Pty Ltd



Adviser Tip

The One Page Strategy is designed to help you simplify Succession Planning.

It helps you understand your needs, it helps you quantify them, it helps you cost them, and it helps you prioritise them.

See more Adviser Tips




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