Buy Sell Agreement
Buy Sell or Buy Out Agreement Template
A Buy Sell Funding Agreement is a contract between business partners where the surviving partners buy out the other partner’s interest should a specific event occur. Specific events usually include death, and long-term disability. A Buy Sell Funding Agreement can consist of several clauses in a partnership or shareholder agreement. It can also take the form of a separate, freestanding agreement.
This suite contains free-standing agreements that can be used together with a partnership, company or unit trust.
An insured Buy Sell Funding Agreement is one in which a triggered buyout is funded with life insurance. A policy is taken out on each of the participating owner’s lives. The life insurance policy provides the surviving partners with the money to be able to buy out the deceased/disabled/departing partner’s interest. Such an arrangement is often recommended by financial planners to ensure the buy-sell there will be money when the buy-sell event is triggered. The funding aspect is covered in a separate agreement called a Buy Sell Funding Agreement.
Capital Gains Tax implications
A trauma or total and permanent disability insurance policy is subject to CGT if it is owned by the business. Only a trauma or total and permanent disability insurance policy owned by the insured is exempt. The business owner often holds the policy on themselves. As the buy/sell agreement results in the sale of the business, a CGT liability will arise to the vendor. The small business CGT concessions may operate to reduce this CGT liability.
Deductibility of Premiums
The essential characteristic of a deductible insurance premium is that it be intended to provide an income. A self-employed business owner can claim a deduction for premiums on a policy which will pay income during a period they are disabled. Normally, if a policy includes a component to pay a sum on death or disability, the component relating to death cover will not be deductible
- 1 Definitions 3
- 2 Insurance
- 2.1 Life Insurance
- 2.2 Additional cover
- 3 Payment of Policy Proceeds
- 3.1 Payment on exercise of option
- 4 Payment Amount
- 4.1 Reduction of purchase price
- 5 General Provisions
- 5.1 Insurance premiums
- 5.2 Termination
- 5.3 Costs
- 5.4 Notices
- 5.5 Counterparts
- 6 Interpretation
- 6.1 Jurisdiction
- 6.2 In the interpretation of this agreement:
Looking forward to purchasing more precedents as it’s a great service for a small legal practice just starting out.
I have used Precedents Online since starting up my business over 5 years ago. There are many documents I was able to download and use to help with the start and running of my online business.
I have found Precedents Online to be very useful for my business. I have also used them for personal legal documents. Simple and easy to use. I don’t have to fill out any forms or subscribe. I can simply download the document I need and reuse it when I need it.
WE ALSO RECOMMEND THE FOLLOWING ATTACHMENTS or SEARCH
Sale of Shares
Asset Sale Agreement
Precedents Online sells legal documents to the legal profession in Australia. The online legal documents are supplied by Kalde Pty Ltd. Most of the copyright in the works available on this site vests in Kalde Pty Ltd and the documents themselves have been created by practising lawyers.
Legal precedents sold on this site are available for immediate use. Precedents shown on this site have been drafted by practicing lawyers and kept up to date with changes in the law.
Precedents Online. Powered by Kalde & Associates Commercial Lawyers.