Publications and Documents:
Business Succession Planning:
Simple Succession Plan:
Complete Succession Plan:
One Page Strategy:
Multiple Policy Approach:
One Page, Two Policy Strategy:
Sole Proprietors and Families:
A Complete Succession Plan
Purpose of a Complete Succession Plan
The purpose of a Complete Succession Plan is to ensure that:
Scope of a Complete Succession Plan
A Complete Succession Plan documents a strategy with respect to both:
"Simple Succession Plan"
When a Business Succession Plan deals solely with the sale of a Proprietor's Equity in the Business in the case of an Insured Event, IGS describes it as a "Simple Succession Plan".
A legal agreement that documents a Simple Succession Plan is often called a "Buy/Sell Agreement".
"One Page, One Policy Succession Plan"
IGS is able to document a Complete Succession Plan for Insurable Events, so that all of the Cover required by a Proprietor is held on One Policy.
This strategy is called a "One Page, One Policy Succession Plan".
One Page Summary
Click here to see an example of a "One Page, One Policy Succession Plan" for Insured Events.
Alternative to Multiple Policy Approach
The One Policy Strategy is an alternative to the traditional Multiple Policy approach.
Asset and Liability Strategies
In contrast to a Simple Succession Plan, a Complete Succession Plan does not just focus on your Asset. It looks at your Liabilities as well.
In other words, when you leave a Business, it helps you to leave both the Asset and the Liability sides of the ledger.
Click here to read about the nature of a Simple Succession Plan and how it differs from a Complete Succession Plan.
Because the future growth of your Equity in the Business could utilise your Personal Cover, a Complete Succession Plan can also embrace Personal Needs.
Click here to read about the relationship between your Business and Personal Needs.
The Need for an Asset (or Buy/Sell) Strategy
Click here to read about the need for an Asset (or Buy/Sell) Strategy.
Many Businesses have external Debts owing to Banks or other Creditors.
In some cases, the Creditor might require Personal Guarantees or other Securities (e.g., a mortgage over personal residential property) by way of Security for the Debt.
If you retain your liability under any Personal Guarantees when you die, then the Sale Proceeds and other assets in your Estate will remain available to the Creditor to satisfy the Debt of the Business in the event of a default.
In many cases, the Proprietors of a Business lend funds to the Business to fund working capital, particularly in the early stages of the Business when it might not be able to obtain external debt.
If no insurance arrangements are made to repay any Loan Account owing by the Business, then it will remain owing after you have left.
The Business will need to negotiate and agree the terms of repayment with your Estate.
Whatever the terms of repayment, the Business and the Continuing Proprietors will need to utilise future cash flow of the Business to repay the Loan Account, potentially in priority to their own profit distributions.
A Complete Succession Plan adapts some of the strategies developed for Insurance-funded Succession Planning and applies them to Retirement-based Succession as well.
See Issue 1 to read about the strategic basis of a Complete Succession Plan (the Relationship Between Business and Personal Needs).
See Issue 4 to read about the application of these concepts to Retirement Strategies.
Click here to see a Worksheet that demonstrates a typical Complete Succession Plan.
Note how the needs of the Proprietor change over the five year period.
Imagine what you would have to do if you had separate Insurance Policies for each different Need.
Wouldn't it be easier if you could have just One Policy that would cover all of these Needs?
One Page Summary
Click here to see a one page summary of how a typical Complete Succession Plan works.
Standard IGS Agreement
Click here to learn more about the standard Business Insurance Trust Agreement used for a Complete Succession Plan.
A Business Insurance Trust Agreement is designed to achieve four principal goals:
Sole Proprietors and Family Businesses
The Succession Planning Strategies on this web site are most relevant to Multiple Proprietor Businesses in which there are arms-length Proprietors or Owners.
Click here for strategies for Sole Proprietors and Family Businesses.
The Four Planning Issues
Set out on the following pages is an overview of four basic planning issues that help understand and design a Complete Succession Plan:
Where to Start
Issue 1 is a good starting point to understand the unique benefits of a Complete Succession Plan and how it differs from other approaches to Succession Planning.
Free 20 Minute Teleconference
If a Client is uncertain whether to attend a Client Meeting or use the IGS Documentation Service, IGS offers a free teleconference (of up to 20 minutes) with the Client to explain the purpose and benefits of a Complete Succession Plan and the "One Page, One Policy Strategy".
Copyright: Ian Gray Solicitor
A Complete Succession Plan is not just about Death, it's not just about Insurance and it's not just about selling your Equity.
Ian Gray travels to most capital cities regularly throughout the year and is available for Meetings.
Please click here to see his availability in Brisbane, Sydney, Melbourne, Adelaide and Perth.
Please contact us to arrange an appointment or teleconference.