{"id":20227,"date":"2026-10-31T13:13:37","date_gmt":"2026-10-31T02:13:37","guid":{"rendered":"https:\/\/chuatan.com.au\/?p=20227"},"modified":"2026-10-31T13:21:34","modified_gmt":"2026-10-31T02:21:34","slug":"insurance-adviser-estate-planning-australia-buy-sell-agreement","status":"publish","type":"post","link":"https:\/\/chuatan.com.au\/en\/insurance-adviser-estate-planning-australia-buy-sell-agreement\/","title":{"rendered":"Insurance Adviser Estate Planning Australia: What Advisers Should Know"},"content":{"rendered":"
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If you advise business owners and Asian families on life, TPD, trauma or key person cover, this article is written for you. It looks at the legal side of the policies you arrange, and where an estate lawyer can help your recommendations work as intended.<\/p>\n

The harder questions usually come after the sum insured is settled: who owns the policy, who receives the money, and whether the payment does what the family and business partners expect. For Asian families, policies may be held in different names, relatives may live in several countries, and the business may be run through a family company or trust.<\/p>\n\n

Policy ownership and beneficiaries<\/h2>\n

Three roles are easily blurred: the life insured, the policy owner and the person entitled to the benefit. They may be one person or three.<\/p>\n

Where a person owns a policy over their own life and has not nominated a beneficiary, the benefit is generally paid to their legal personal representative and forms part of the estate. It is then distributed under the Will or the intestacy rules, can be exposed to estate creditors, and is available to family provision claims.<\/p>\n

Where there is a valid beneficiary nomination, or the policy is owned by someone else such as a spouse, company or trustee, the benefit may be paid outside the estate. That can be faster, but the Will does not control that money. A Will that divides the estate equally between three children will not achieve equality if a large policy is paid directly to one of them. The issue is not which option is “better”, but whether ownership and nominations have been checked against the Will and the wider plan.<\/p>\n\n

Insurance inside superannuation<\/h2>\n

Much life and TPD cover is held through super. Those benefits are paid by the fund trustee under the fund’s rules and superannuation law, not under the Will. Binding death benefit nominations, dependants and tax on death benefits are covered in other articles on this site; the point here is that insurance in super belongs in the estate plan review.<\/p>\n\n

Buy-sell agreements funded by insurance<\/h2>\n

When a co-owner of a business dies or is disabled, their shares or units may pass to their estate. The surviving owners may find themselves in business with a spouse or adult children, and the family may hold an interest it cannot easily sell. Insurance can provide the funds for a buy-out, but only a legal agreement transfers the interest. Without one, the money and the shares can end up with different people.<\/p>\n

The buy-sell deed<\/h3>\n

A buy-sell deed typically deals with trigger events, the transfer mechanism, how the price is set and updated, what happens if cover is insufficient or a claim is declined, and how the deed fits with any shareholders’ or unitholders’ agreement, the company constitution or trust deed. Many deeds use put and call options rather than an automatic obligation to sell. The mechanism chosen can have legal, stamp duty and tax consequences that need advice.<\/p>\n

Ownership structures<\/h3>\n

Policies may be self-owned, cross-owned, held by the business, or held by a trustee under an insurance trust. Each affects who receives the proceeds, how premiums are funded and what happens when an owner leaves.<\/p>\n

Capital gains tax in general terms<\/h3>\n

Two CGT questions usually arise: whether the proceeds are taxed, and how the transfer of the business interest is taxed. Exemptions for life and certain illness or injury policies may apply, but can depend on who receives the payment and how the policy was acquired, so ownership changes need care. Under legislation passed in 2026, the CGT discount is being replaced by indexation and a minimum tax for gains accruing from 1 July 2027, which may affect future transfers. These are matters for the client’s accountant and registered tax agent, working with the lawyer.<\/p>\n\n

Key person insurance<\/h2>\n

Key person cover protects the business, not the family, against losing someone whose skills or relationships drive revenue. Questions include who owns the policy, whether the purpose is to replace revenue or protect capital, and how that purpose is documented. The tax treatment of premiums and proceeds can depend on that purpose.<\/p>\n\n

Offshore policies and equalisation<\/h2>\n

Some clients hold policies issued in Hong Kong, Singapore or elsewhere, which can raise Australian tax and foreign-law questions once the owner or beneficiaries are Australian residents. Insurance is also sometimes used to provide for children who will not inherit the family business. Both are covered in separate articles.<\/p>\n\n

Insurance proceeds and family provision claims<\/h2>\n

In Victoria, a family provision claim is generally made against the estate itself, so proceeds paid directly to a nominated beneficiary may sit outside it, although the facts still matter.<\/p>\n

New South Wales is different. Under the Succession Act 2006 (NSW), the Supreme Court can designate certain property outside the estate as “notional estate” to meet a family provision order. Depending on the facts and timing, this can extend to superannuation, jointly held property and insurance proceeds that passed outside the Will. Where a client has assets or connections in NSW, paying a benefit outside the estate may not put it beyond a claim.<\/p>\n\n

When to involve a lawyer<\/h2>\n

Natural referral points include significant new cover, buy-sell or key person cover for a business with several owners, marriage, separation or a second family, and assets or family overseas. Each professional stays within their role: advisers do not give legal advice, and lawyers do not give financial product advice.<\/p>\n\n

Questions to discuss with your client and their lawyer<\/h2>\n