+ Insurance Trusts

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Insurance Trusts - why have them?

It is true that the premiums for life, TPD and trauma cover are generally not deductible where the polices are held by a trustee under an insurance trust, and many therefore seek to avoid using an insurance trust by inserting into a standard buy-sell agreement a provision that (some of) the proceeds of the relevant insurance be paid to nominated third parties in an agreed fashion.

However, where one party is exiting the partnership and others are staying, there is often some degree of tension and dispute about the third party payments.

Accordingly where third party payments are required, it is our preferred view that an insurance trust be used. This should ensure that the third party payments are made without having to have recourse to the Courts to enforce those payments.

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