This document is a clause which can be inserted into a partnership agreement.
It is common for partners to take out group life insurance policies to mitigate the risk of one partner dying during the term of the partnership. The amount to be insured would generally be calculated on the basis of the amount the partnership owes any particular partner, including any capital contribution made to the business by the relevant partner.
The life insurance policy of each partner is usually placed in trust, to ensure that the trustees maintain the policies for the benefit of the partnership. (Practitioners may have to set up a life insurance trust for the partnership in these circumstances.)
Using this precedent
This clause can be used in a partnership agreement. It can be inserted into the separate precedent “Partnership agreement (short, general)”, to add the existing insurance provisions.
When inserting this optional clause into an agreement, care must be taken to ensure that the agreement remains consistent. Cross-references, definitions and schedules should all be checked.
This document has been authored for AusDocsOnline.com by Michael Heraghty, Partner, TressCox Lawyers, Rosemarie Ryan, Barrister and Elise Margow, Principal, Legally Speaking.
This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.