"'The only disadvantage to owning life insurance in the estate,' said D'Addona, 'is that it is in the taxable estate and would be in the estate at the death of the second to die. However, when looked at holistically, if I were worth $10 million in assets built by the sweat of my brow AND I had $10 million of life insurance on my life as well, one could say that if I were to die now and my wife were to die in the same moment (obviously from grief), our total gross estates would be $20 million leaving a net $10 million to my children. This is the same result as if I were worth $10 million and had $5 million of survivorship life and we both died in the same fashion.'"
Thursday, July 7, 2011
The ILIT Remixed
From FinancialCounsel.com - The ILIT Remixed: A Workshop With Vincent M. D'Addona:
Applying Winning Fantacy Sports Strategies to Insurance Sales
From LifeandHealthInsuranceNews.com:
Sound like anyone you know? :)
"More of a competition of mathematics, analytics, and gamesmanship than an appreciation or devotion to actual sports, fantasy sports has become a phenomenon since its advent 32 years ago, with an estimated 29 million participants in the US and billions of dollars exchanged annually."
Sound like anyone you know? :)
Monday, June 20, 2011
On Wall Street: New York Life's Insurance Sales Soar 24% in 1Q
Pretty amazing ...
By Larry Barrett
New York Life Insurance Company said its individual life insurance sales rose 24% in the first quarter, helping the firm garner 12.1% of the overall market share among life insurance providers."
Thursday, June 9, 2011
The value of your business based on the two rules of overriding American business values
This short, well written piece explains what a buyer is willing to pay and how much a buyer is willing to put down to purchase business.
First, is a general desire to see an investment repay itself within five years. Second is a desire to have a fall back position in the way of liquidation should an acquisition not work out as planned. These can be represented by two rules.Read the entire piece at the website of The Podolny Group, Inc.
Wednesday, June 8, 2011
GOP softening its position on estate tax - NYPOST.com
While it's still early, leaders in both parties appear comfortable with the $5 million exemption, the source said.
The chief difference is that the Democrats would like the rate on the taxable portion of the estate to return to 2009's 45 percent level, while Republicans want to keep it at 35 percent, the source said.
Read more: http://www.nypost.com/p/news/business/senate_eyes_compromise_on_estate_B55ToJLp1amtEFceexHyfO#ixzz1Ohvh1Omp
Saturday, June 4, 2011
Another Good-Facts Case Helps Deliver a Taxpayer Victory
The recent Tax Court case of Estate of Shurtz v. Commissioner provides an example of a good facts case that resulted in a taxpayer victory
When Mrs. Shurtz died in 2002, her 87.6% limited partnerships interest was valued at just over $6.1 million and her general partnership interest at $73,500. Because her estate plan disbursed nearly its total value – over $8.7 million – to qualified marital and other trusts, her estate claimed that no estate taxes were due.
... the court found that the FLP “was carried out in the way that ordinary parties to a business transaction would do business with each other.”... with no additional estate taxes due.From an article on the website of Kotzin Valuation Partners, LLC.
Friday, June 3, 2011
Is there a good web-based Life Insurance Calculator?
I have three web-based calculators to suggest as a starting point. One of them is carrier-neutral in that it is hosted by the Life Insurance Foundation for Education non-profit website. (Then again, the L.I.F.E. organization is funded primarily by life insurance carriers.) The Prudential tool is particularly interesting in that includes a tab labeled “The Value of All You Do” which is intended to help quantify the economic value of a spouse who may work as many hours as her high-income husband but without whom the family would be lost.
The following two calculators are hosted on an ugly, ad-supported website. They may be of interest, however, because of their quite different approaches. The first attempts to be very comprehensive by accounting for a wide variety of a family’s economic circumstances and expectations. The second goes in quite the opposite direction by eliminating all the distractions and approaching the problem as one of quantifying the present value of the income earner’s future stream of income. (Personally, I tend to favor this approach in circumstances where the clients are sufficiently affluent that speaking of the survivors’ “needs” makes little sense. In such cases, the idea is to replace the contribution to the family’s expected wealth accumulation which is lost due to the premature death of a high-income earner.
Thursday, May 26, 2011
A modest proposal for Millionaires suffering "Investment Fatigue"
A blog post on Private Wealth Magazine's blog reports on studies indicating that "Many millionaires no longer enjoy doing their own investing..." Among ultra-high-net-worth investors ($5-$25M net worth,) only half of those age 65 and up say they enjoy doing their own investing; fewer still among younger investors want to be actively managing their investments.
Happily, those younger ultra-high-net-worth investors have an attractive option for part of their portfolio that their older counterparts probably don't - allocation into an instrument that behaves like a zero-coupon bond ... put in $X now, and over a long time span the maturity value will represent yield comparable to respectable fixed-income benchmarks. Unlike the zero-coupon bond, however, this instrument is a wrapper around a professionally managed conservatively allocated strategically laddered bond fund, and the wrapper comes with benefits that naked zeroes don't have. The wrapper is a medically underwritten cash value life insurance policy, which means:
Happily, those younger ultra-high-net-worth investors have an attractive option for part of their portfolio that their older counterparts probably don't - allocation into an instrument that behaves like a zero-coupon bond ... put in $X now, and over a long time span the maturity value will represent yield comparable to respectable fixed-income benchmarks. Unlike the zero-coupon bond, however, this instrument is a wrapper around a professionally managed conservatively allocated strategically laddered bond fund, and the wrapper comes with benefits that naked zeroes don't have. The wrapper is a medically underwritten cash value life insurance policy, which means:
- Accelerated maturity in the event of premature death
Wealth accumulation plans, when done well, are structured to reliably deliver a targeted increase in a client's wealth over a long period of time. Even better are plans that address the unlikely circumstance of the time horizon suddenly being cut short; providing that hedge is a task to which life insurance is uniquely suited. - No tax liability on "phantom interest"
Unless comprised of relatively lower-yielding Treasury issues or held inside a qualified plan, zeros generate an annual tax liability on the imputed interest earned even though no interest income is actually received.)A life insurance policy's cash value increases are not taxed unless actually withdrawn from the contract (and even then, possibly not until basis has been returned.) - No tax liability if held to "maturity"
When paid out as a death benefit, the proceeds of the life insurance policy are income-tax free to the beneficiaries, even though increases in the contract's cash values were tax-deferred. - Discretion and creditor protection
The cash value balances of a life insurance contract do not appear on a brokerage account statement; nor are policy values subject to routine reporting to the IRS. In most jurisdictions, a cash value life insurance enjoys significant creditor protection relative to other assets owned outright. And unlike most other assets owned outright at death, the death benefit proceeds of a life insurance policy will not be subject to probate.
Thursday, May 19, 2011
An insurance solution for a very niche demographic
From the online magazine Private Wealth's, an article titled The Next Step In Alternatives:
"One tax management solution, in fact, has come to be recognized by some high-net-worth investors as a perfect complement to their hedge fund investments: private placement insurance—in the form of both life insurance and annuities.
These products essentially allow accredited investors to put alternative investments inside a tax-free insurance wrapper. The products take advantage of long-standing tax rules that allow income earned on assets inside insurance or annuity policies to accumulate free of taxes. Moreover, gains remain tax-free when distributed as life insurance proceeds—as a death benefit or the cancellation of loans made to a policy owner—and tax-deferred if distributed as annuity benefits.
These features are of great value to hedge fund investors, who understand the impact ordinary tax rates have on gains derived from short-term trading and credit-oriented investments, phantom income produced by market-to-market elections by fund managers (often to justify fees), and PFIC treatment of offshore fund investments. Hedge fund investors have learned that taxes paid on current gains are not recovered if losses are suffered in later years. Those losses can only be carried over to future years when or if gains are realized."
"One tax management solution, in fact, has come to be recognized by some high-net-worth investors as a perfect complement to their hedge fund investments: private placement insurance—in the form of both life insurance and annuities.
These products essentially allow accredited investors to put alternative investments inside a tax-free insurance wrapper. The products take advantage of long-standing tax rules that allow income earned on assets inside insurance or annuity policies to accumulate free of taxes. Moreover, gains remain tax-free when distributed as life insurance proceeds—as a death benefit or the cancellation of loans made to a policy owner—and tax-deferred if distributed as annuity benefits.
These features are of great value to hedge fund investors, who understand the impact ordinary tax rates have on gains derived from short-term trading and credit-oriented investments, phantom income produced by market-to-market elections by fund managers (often to justify fees), and PFIC treatment of offshore fund investments. Hedge fund investors have learned that taxes paid on current gains are not recovered if losses are suffered in later years. Those losses can only be carried over to future years when or if gains are realized."
Monday, May 2, 2011
Monday, March 14, 2011
Financial Planning: Bank-Owned Life Insurance Continues Surge
Financial Planning: Bank-Owned Life Insurance Continues Surge
Bank-owned life insurance assets reached a record $140.24 billion in the third quarter of 2010-a 4.8% increase from $133.87 billion in the third quarter of 2009, according to the Michael White/Meyer-Chatfield Bank- Owned Life Insurance (BOLI) Holdings Report.
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