Once the policy is in force, one question remains, and it is a legal one: will the money reach the people the client has in mind, on the terms they expect? Ownership, nominations, the Will, any trusts and the business documents all play a part.
This article is for life and risk insurance advisers who refer clients to a lawyer, or are thinking about it. It explains in general terms, under Australian law, what we look at and how the work runs from introduction to review. A separate article sets out the underlying legal issues for advisers; this one is about how the work is shared.
Many of the clients we see through advisers are Asian families and business owners with relatives or assets in Singapore, Malaysia, Hong Kong, mainland China or Taiwan. That raises further questions about where the money will be paid, who will manage it and which country’s law may apply.
You arrange the cover; we check the structure around it
We aim to make sure the policy owner, the life insured and any beneficiary nomination line up with the client’s Will, any family or testamentary trusts and the company structure. Gaps tend to be ordinary rather than dramatic: a nomination made before a separation or second marriage, a policy owned by a company the family may not control after a death, or a trustee whose deed may not allow it to pay the person the client has in mind. Each can affect who benefits from a claim.
Where should the proceeds go?
Proceeds can be directed in several ways, and each has legal consequences that depend on the facts:
- To the estate, where the Will governs the money, but it may be exposed to estate debts and claims and is paid only once the executor can act.
- Into a testamentary trust created by the Will, which can give flexibility and some protection. The tax treatment of income paid to minor beneficiaries can depend on whether the trust property came from the estate, so how the proceeds reach the trust may matter.
- To a family trust, where the trust deed and whoever holds the appointor role decide what happens next, and that may not be the person the client expects.
- To a business partner under a buy-sell arrangement, or directly to a person, which can be quick but leaves the money outside the Will and its protections.
Minors, vulnerable and overseas beneficiaries
A child generally cannot manage a large sum, and who holds the money until adulthood may depend on the policy terms and any trust in place. A beneficiary living with disability, addiction, financial pressure or a fragile relationship may need the money held in a protective trust rather than paid outright, and a lump sum can affect some government entitlements. A beneficiary overseas may face identity and transfer requirements, currency controls in some countries, and tax or inheritance rules in their own country that treat the payment differently.
Insurance inside super, briefly
Cover held through a super fund is paid by the fund trustee under the fund rules and super law, not the Will. Whether a binding nomination should direct the benefit to the estate, so that the Will’s trusts can apply, or to a dependant directly is part of the same review. We cover super death benefit nominations in a separate article.
Buy-sell and key person cover
Where cover is meant to fund the purchase of a co-owner’s interest, it usually needs a matching legal agreement. Our companion article on buy-sell agreements explains what that agreement may need to cover, and our article on shareholders’ agreements explains how it fits with the wider business documents. The purpose of key person cover is often worth documenting too.
Explaining the plan to the family
A plan the family does not understand can create the dispute it was meant to avoid. We explain the structure to clients and, where they want it, to family members in English, Mandarin or Cantonese. That may include a family meeting about why a policy goes to one child, how insurance balances an inheritance (the subject of a separate article), or who will manage money for a grandchild.
Working with the accountant and lawyers in Asia
With the client’s consent, we coordinate with their accountant on how premiums, proceeds, trust distributions and later transfers may be taxed, including the effect of the CGT changes from 1 July 2027. For clients with family or assets in Asia, we look at how Australian documents sit with Wills and policies elsewhere, work with local lawyers where needed, and our notary public can prepare documents for use overseas. Offshore policies held by Australian residents are discussed in another article.
How we work with you
- Introduction and consent. You introduce the client. We confirm who we act for and ask the client for written consent before we share information with you.
- Initial review. We review the policy schedules, nominations, Will, trust deeds, company documents and any overseas documents the client provides.
- Issues identified. We explain to the client, in plain terms, where the documents and the cover may not match.
- Documents prepared. Depending on instructions, this may include Wills with testamentary trusts, trust deed amendments, buy-sell deeds and board resolutions.
- Signing. We supervise signing, including for clients overseas.
- Policy settings confirmed. With consent, we tell you what ownership and nominations the plan assumes, so you can check the policy settings with the insurer.
- Periodic reviews. Major life or business events can prompt a fresh look by both of us.
Who the client is, and who advises on what
We act for the client, not the adviser. You remain responsible for insurance advice and product recommendations; we give legal advice and do not recommend financial products. Where several business owners are involved, we consider at the outset whether we can act for all of them or whether some should be separately advised.
Fees and referrals
Each client receives a costs disclosure from us, as the law requires.
Questions to bring to us
- Who owns each policy, who is the life insured, and who is nominated?
- Does the Will, trust deed or company constitution point the money in the same direction?
- Could any proceeds be paid to a minor, a vulnerable person or someone overseas?
- Is there a signed agreement behind any buy-sell or key person cover?
- Does the client have family, assets or other Wills in Asia?
Frequently asked questions
Should life insurance be paid to the estate or a nominated beneficiary in Australia?
There is no single answer. Each route affects control, timing, protection from claims and tax in different ways, depending on the family and the documents. The choice needs advice on the client’s circumstances.
Can a lawyer share a client’s estate plan with their insurance adviser?
Only with the client’s consent, which we ask for in writing so the client controls what is shared.
Every family’s situation is different, and the answer often turns on details. Book a consultation so we can review your documents and circumstances before you act.
How Chua Tan Associates can help
Chua Tan Associates has practised in Melbourne since 1990 and works with life and risk insurance advisers whose clients are business owners and Asian families with interests in Australia and overseas. Justin Chua trained in accounting (Bachelor of Commerce, accounting major), is an affiliate member of STEP (the Society of Trust and Estate Practitioners), and advises on the legal and tax structure of family wealth together. He is a Nationally Accredited Mediator and an Accredited Family Business Advisor. We work with the client’s accountant and registered tax agents, and with lawyers in Asia, and we advise in English, Mandarin and Cantonese.
Important: This article is general information only and must not be relied on. It is not legal, tax or financial advice, does not take your circumstances into account, and may not reflect changes in the law after publication. Laws of other countries may also apply. Do not act or refrain from acting on the basis of this article. Reading it or contacting us does not create a lawyer–client relationship. Please book a consultation for advice on your situation.
Related reading
Chua Tan Associates acts for families, executors, trustees and their professional advisers in estate planning, estate administration and estate disputes in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
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