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Business assurance trust

A business assurance trust is a specialist trust for shareholder/partnership protection.  This ensure the proceeds of the policy are paid to the trustees for the benefit of the other shareholders/partners so that they have the money in their hands to buy the deceased/disabled partner’s share of the business.  This should be used in conjunction with a cross option agreement to ensure the trust proceeds are used for this purpose.

We are introducing our new settlor included business assurance trust that is available subject to English or Scots Law.

Business Assurance Trust (Settlor Included) – English Law
Business Assurance Trust (Settlor Included ) – Scottish Law

Both of these trusts include the settlor as a potential beneficiary to allow the underlying policy to be assigned to the settlor free from the trust in the event that they leave the business.  The inclusion of the settlor as a beneficiary does bring the trust into the “Pre-owned assets tax” legislation; however, as the trust is designed for use with our Protect suite of products which have no surrender value, the trust is unlikely to be subject to a pre-owned assets tax charge.  Find out more about the pre-owned assets tax charge here.

This trust incorporates the flexibility for situations where not all of the shareholders/partners are participating in the arrangement.  In this scenario the beneficiaries should be identified with the percentage of the settlor’s share that they will be entitled to buy, so that the percentage totals 100%.

Discretionary Business Assurance Trust (English Law) – settlor included
Discretionary Business Assurance Trust (Scottish Law) – settlor included

To support our new trust we have a new draft cross option agreement available for consideration.  It is provided with the suggestion that legal advice is obtained to ensure it suits your clients circumstances and does not conflict with the company articles or partnership agreements.

Illustrative double cross option agreement – for plans in trust

Business Assurance Trust (Settlor Excluded) – English Law

If you do not require the flexibility associated with the new settlor included business assurance trusts we have kept this trust available for consideration.

Discretionary Business Assurance Trust (English Law) - settlor excluded

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