BUSINESS OWNERSHIP. If the business is run under a company structure, the insurance policy could be owned by the company. The business succession agreement then compels the company to purchase back the departing owner’s shares and cancel them. The insurance policy is added to the capital of the business and will be subject to Capital Gains Tax, when the remaining owner’s shares are eventually sold. Under this option, the policy is controlled by people other than the insured individual. The insurance cover on that life insured can be cancelled if not required by the business. The premiums are not tax deductible and the proceeds will be taxable if there is a claim for disability or ownership is via a company. A change to business ownership will affect the ownership of the policy, so will also be subject to tax.
Appears in 4 contracts
Samples: Buy/Sell Agreement, Sell Agreement, Buy/Sell Agreement
