Publications and Documents:

Publications and Documents


Adviser Tips:

Adviser Tips


Adviser Updates:

Adviser Updates


Individual Updates (Most Recent First):

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








A "Business Family Will"


Many people describe a Buy/Sell Agreement as a "Business Will".

This is only partly true in the case of Self-Ownership Buy/Sell Agreements.

In reality, a Business Insurance Trust Agreement is a better example of a Business Will or a "Business Family Will".


Who Controls the Distribution of the Insurance Proceeds?

Self-Ownership Buy/Sell Agreement

In the case of Self-Ownership Buy/Sell Agreements, the person in control of the Insurance Proceeds (and therefore the implementation of the "Business Will") will be the Executor of the Life Insured's Estate (or the Life Insured personally in the case of a Non-Death Benefit).

The Executor is a Trustee appointed by the Life Insured. This means that an appointee of the Life Insured (or the Life Insured personally in the case of a Non-Death Benefit) will have physical control of the Insurance Proceeds.

Business Insurance Trust Agreement

In the case of a Business Insurance Trust Agreement, the person in control of the Insurance Proceeds will be the Trustee appointed by all of the parties to the business relationship.

This means that physical control of the Insurance Proceeds (and therefore the implementation of the "Business Will") is in the hands of a custodian that must comply with the obligations contained in the Trust Agreement.

The Trust Agreement is a "Business Family Will", not just a "Business Will".


Protecting the Interests of All Members of the Business Family

A Will administers the Life Insured's Estate for the benefit of the Life Insured and the Beneficiaries nominated by the Life Insured.

A "Business Family Will" administers the Insurance Proceeds not just for the Life Insured or the Business, but for all of the parties that have an interest in the Business and the proper distribution of the Insurance Proceeds (e.g., the Proprietors, any Related Parties and the Creditors of the Business).

The aim of this structure is to ensure that the pre-agreed expectations of all members of the Business Family are honoured after the death or departure of one of them.

Just as a Will manages the distribution of net assets within the Testator's family, a Business Insurance Trust Agreement manages the distribution of Insurance Proceeds within a broader Business Family.

In both cases, it is paramount that the pre-agreed intentions of the parties to the arrangement are honoured.

It is too late to try to "fix things up" when one of the parties has died.

Where the Insurance Proceeds are for business purposes (not just personal needs), there will always be an element of risk if the parties entrust the Insurance Proceeds solely to one Life Insured (or a Executor and Trustee appointed solely by one Life Insured).

More information about the "Business Family Will" can be found here.


Copyright: Ian Gray Solicitor



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.

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