Introduction
This precedent is designed to provide a structured framework for funding obligations under a buy sell agreement through insurance arrangements.
The document sets out how life insurance and total and permanent disability (TPD) policies are to be maintained and applied to fund the purchase of a departing owner’s interest.
It includes provisions dealing with insurance policies, payment of proceeds, and the adjustment of purchase price under the associated buy sell agreement.
This precedent provides a practical starting point for business succession planning where insurance is used to fund ownership transfers.
What is a Buy Sell Funding Agreement?
A buy sell funding agreement is a legal document that sets out how insurance policies are used to fund the purchase of a business owner’s interest when a triggering event occurs.
It is commonly used with a buy sell agreement to ensure there is a clear funding mechanism in place if an owner dies or suffers total and permanent disability.
Professionally Drafted Legal Precedent
Prepared by experienced Australian commercial lawyers, this precedent provides a comprehensive and reliable framework for real-world use.
The document is fully editable in Microsoft Word and includes an Editing Legal Documents Guide to assist with completing and tailoring the agreement.
Designed for immediate use, it can be adapted to suit a wide range of legal and commercial scenarios.
At A Glance
What This Document Covers
• Funding of buy sell arrangements
• Life and TPD insurance obligations
• Payment of policy proceeds
• Business succession funding
Key Clauses Included
• Insurance policy requirements
• Policy register obligations
• Payment and allocation of proceeds
• Purchase price adjustment provisions
Typical Use
• Business succession planning
• Partnerships and companies
• Shareholder arrangements
• Risk management structures
Download Details
• Lawyer-drafted precedent
• Suitable for Australian use
• Fully editable Microsoft Word document
• Instant download available immediately after purchase
Drafted by Legal Professionals
Our precedents are prepared by Australian legal practitioners and reflect commonly used legal drafting standards.
Practical and Easy to Use
Each template provides a structured framework that can be adapted to suit the specific transaction or matter.
Instant Access
Download immediately after purchase and edit the document in Microsoft Word to suit your requirements.
Related Precedents
Frequently Asked Questions
What is a buy sell funding agreement?
A buy sell funding agreement sets out how insurance policies are used to fund the purchase of a business owner’s interest under a buy sell agreement.
It ensures funds are available when a triggering event such as death or disability occurs.
Why is this agreement important?
Without a funding arrangement, remaining business owners may not have the financial capacity to purchase the exiting owner’s interest.
This agreement ensures funding is available through insurance proceeds.
What types of insurance are included?
The agreement covers life insurance and total and permanent disability (TPD) insurance policies maintained by the parties.
How are insurance proceeds applied?
Insurance proceeds are applied toward the purchase price of the exiting owner’s interest and may reduce the amount payable under the buy sell agreement.
Can this agreement be customised?
Yes, the document is fully editable and can be tailored to suit specific business structures and insurance arrangements.
Also Known As
This document may also be referred to as:
• Buy sell insurance agreement
• Business succession funding agreement
• Insurance funding agreement (business)
• Cross insurance agreement
Buy Sell Funding Agreement – Instant Download
• Lawyer-drafted buy sell funding agreement
• Covers insurance and funding arrangements
• Suitable for Australian legal use
• Fully editable Microsoft Word document
• Instant download available immediately after purchase
Used by lawyers, businesses and commercial operators across Australia.
Download This Precedent
Instant download. Fully editable Microsoft Word format. Includes practical drafting guidance.