View more on these topics

The Technical Quiz

Question 1: Edward and Andy are equal partners and are effecting life cover to repay business liabilities should one of them die. They are not sure about the deductibility of the premiums. Which of the following statements is true?

A) The premiums would be deductible if the cover was for one-half of the liabilities on each life (as they are equal partners)

B) The premiums will not be deductible

C) The premiums to cover any potential redundancy payments will be deductible but not for loan cover

D) The premiums will be deductible as the expenditure is wholly and exclusively for the purposes of the business

Question 2: What does automatic accrual on death in the context of business planning for partnerships usually mean?

A) The debts of the partnership automatically accrue to the remaining partners and the family get the deceased’s share debt-free

B) The goodwill element in the deceased partner’s capital share in the business will automatically pass to the surviving partners

C) That there is no need for life assurance of any type in connection with the business

D) That the entire value of a partner’s share in the business will automatically pass to the partner’s family

Question 3: Sarah and Clare are both partners effecting a share purchase arrangement and they know that a key component involves life assurance in trust. A couple of years ago they each took out a policy but never got around to arranging a trust. Should they use these policies in the new arrangement?

A) No, because a mutual transfer of existing policies into trust could result in the inheritance tax gift with reservation rules applying

B) No reason why not as long as the transaction is fully commercial

C) No, because putting existing policies into business trusts could lead to future capital gains tax liabilities

D) No, because this could give rise to adverse IHT implications on premiums

Question 4: In most cases, why is IHT not an issue on premium payments that are made into policies subject to a business protection trust?

A) The other partners will be the default beneficiaries and so any gifts will be covered by business property relief

B) The premiums are not gifts but part of a commercial arrangement

C) The premiums will frequently be paid by the business on the owner’s behalf

D) The arrangements are commercial at arm’s length

Question 5: In the absence of any agreement to the contrary, what happens to a private family company when one of the shareholders dies?

A) The business continues and the deceased shareholder’s shares form part of their estate

B) The shares are automatically divided out between the remaining shareholders in proportion to the number of shares they hold

C) The deceased’s shares are cancelled

D) The business must be wound up

Questions supplied by Technical Connection

Answers: B,B, D, D, A



Royal London profits down 38%

Royal London’s pre-tax profit fell 38 per cent to £86m in the first half of the year, while new assets under administration on the Ascentric platform fell 21 per cent to £587m. The group’s interim results for the six months to 30 June, published today, show its pre-tax profits fell from £138m in the first […]


Alan Lakey: Who are the medal winners of the past four years?

Four years of intense graft, effort and sacrifice reached its conclusion this year and, no, this is not about the FSA and the RDR experiment. I am talking about the Olympics where, as usual, there were more losers than winners. A lucky few achieved results beyond their realistic hopes, while others underperformed due to stress, […]


MacRobins warns of ‘legal and practical reasons’ against Honister bulk transfers

MacRobins has warned product providers there are “legal and practical reasons” why they will not be able to bulk transfer ex-Honister advisers’ agencies. MacRobins issued a statement today which it says aims to address key questions raised following its purchase of commissions from Honister administrator Grant Thornton. Advisers are being forced to pay up to […]


Openwork appoints ex-Honister director as recruitment head

Openwork has appointed former Honister business development director Billy Hewitt as recruitment director for Scotland. Hewitt will report to Openwork business acquisition strategy director Keith Atkinson. Openwork says the appointment will see Hewitt engaging with a significant number of ex-Honister advisers looking for a new firm after Honister went into administration last month. Openwork has […]

A modern horror story

Every day a quick scan of the news reveals some new horror that will change the lives of those involved forever – the unlucky accident on the way to work, a tragic illness that cuts a young life short or the holiday accident that leaves more than just a scar to cope with. We barely […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm