CASE STUDY #6
Dr4 died and his wife was to receive
the proceeds of his $1M life
insurance policy.
Four doctors were equal partners in a
surgery. At a partners meeting, they
agreed to have self owned life
insurance in four separate policies.
By the time MrsP4 received the
funds, she had begun a relationship
with a lawyer.
They never put a legal agreement in
place as to what would happen to
these funds in the event of one
partners death.
Dr2
Dr3
The practice then had to pay another
$600K to Mrs4 to settle for the
capital, profits and interest that MrsP4
had not received.
During probate on the will of Dr4, she
sought a valuation of the business.
Instead of $1M the practice was
valued at $1.4M per partner.
Doctor’s surgery
Dr1
After the initial settlement, Mrs 4’s
new partner discovered that the
Surgery also had a service entity
through which capital, profits and
interest flowed.
Service Entity (Unit Trust)
Dr4
$1 million
Mrs. P4
4 Doctors &
a Lawyer
Dr1
Dr2
Dr3
Dr4
Mrs. P4
Change of
directorship
to Mrs P4