A case involving a partnership of three illustrates the wisdom of taking advice before making what seem to be quite simple financial transactions, as failure to do so can mean an expensive visit to the courts later to work out what should have happened. The three in partnership, as is quite common, had taken out term life assurance policies. These were written in trust for the partnership and were intended to protect the partners’ families, by providing funds to the partnership to pay to the family in the event that one of the partners died. The premiums for the policies were paid out of the partnership bank account. The partners did not, however, consider what might happen on early retirement. One of the partners suffered from ill health and had to retire. The partnership continued to pay the premiums on his life insurance policy as he was uninsurable elsewhere once he became ill. He subsequently died and the insurance policy was paid out to his ex-partners. Although it was not in doubt that the policy was written in order to protect the family of the deceased partner, his executor had to apply to the court to get the trust deed rectified.
Content by: The Made Simple Group
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