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Publications and Documents:
Adviser Tips:
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 Tax Treatment of Self-Ownership Agreements Vested and Indefeasible Interest Simplifying the Valuation Issue Simple or Complete Succession?
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Simple Succession or Complete Succession?
IGS offers a number of alternative Business Succession Agreements on a Fixed Fee basis. There are two main alternative types of Agreement:
Choice of Agreement Depends on Choice of Succession Plan These alternatives give the Business a choice of Agreement, depending on whether it requires a Simple Succession Plan or a Complete Succession Plan. Click here to read about the difference between the two types of Succession Plan.
The Purpose of a Business Succession Plan The purpose of a Business Succession Plan is to pre-agree a strategy that will enable a Business Person to exit a Business upon Retirement or the occurrence of an Insured Event.
A "Simple Succession Plan" A Simple Succession Plan tends to focus on the sale of the Business Person's Equity in the Business. Self-Ownership Business Succession Agreement A Self-Ownership Business Succession Agreement is most suited to a Simple Succession Plan which is restricted to the sale of each Life Insured's Equity in the Business. By definition, Self-Ownership must pay the Purchase Price to the Life Insured or their Estate. Therefore, preferably, each Life Insured should own the Equity in the Business in their own name (rather than in the name of a Related Party). Super Fund Ownership IGS also uses this Agreement if the Lives Insured require the Buy/Sell Cover to be owned by a Public Offer Super Fund, where considered appropriate by the Adviser and Business. If this structure is used, the Insurance Proceeds must be distributed by the Policy Owner or Trustee of the Super Fund in accordance with the terms of the Trust Deed or any binding Nomination of Beneficiary (regardless of whether the Recipients are the actual owners of the Equity). Click here for an overview with respect to Super Fund Ownership.
A "Complete Succession Plan" The purpose of a Complete Succession Plan is not only to sell your Equity in the Business, but to ensure that:
In other words, it helps you to leave both the Asset and the Liability sides of the ledger. It is not necessary for each Business Person to have all of the Needs in order to derive a benefit from the One Page, One Policy Strategy or Complete Succession Plan. The Strategy will benefit most Business People who have any two or more of the Needs. Business Insurance Trust Agreement (Single Policy Owner) The most appropriate vehicle for a Complete Succession Plan is a Business Insurance Trust Agreement. It allows all Business and Personal Cover to be included on one Policy. It deals with all Cover (including Debt Reduction and Key Person Capital Cover) securely and tax-effectively. Hybrid Insurance Trust Agreement (Multiple Policy Owners) In some cases, the Business might wish to obtain the benefit of a "One Page Succession Plan". However, the Lives Insured may require some of the Buy/Sell or Personal Cover to be owned by a Public Offer Super Fund, where considered appropriate by the Adviser and Business. Alternatively, they might require the Buy/Sell or Personal Cover to be owned by a Related Party of each Life Insured and the Debt Reduction or Personal Cover to be owned by the Business. In these cases, the Hybrid Insurance Trust Agreement can be used to document a “One Page, Two Policy Succession Plan”. It enables the cover for each Life Insured to be split between two or more separate Policies owned by different parties:
Fixed Legal Fees IGS quotes Fixed Legal Fees, so that the Business can make a decision with respect to its Succession Plan and insurance arrangements on the basis of a known transactional cost. The Fixed Fee depends on the choice of Agreement. Click here to download a PDF of the current Fees. It is not necessary for an Adviser to have a Marketing Licence under the IGS Adviser Support System for a Client to obtain any IGS Business Succession Agreement. However, in most cases, Clients of Licensed Advisers obtain a Concessional Legal Fee. The standard Non-Concessional Legal Fee is still designed to be reasonable, having regard to the benefits of the Agreement.
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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.
Ian Gray travels to most capital cities regularly throughout the year and is available for Meetings. Please click here to see his availability in Brisbane, Sydney, Melbourne, Adelaide and Perth. Please contact us to arrange an appointment or teleconference.
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