INCOME TAX MITIGATION

In a properly designed life insurance investment vehicle, the internal cash value will grow tax deferred, the cash value may be accessed without incurring taxes, and the death benefit will pass to beneficiaries’ income tax-free, thereby converting all growth into a non-taxable event. 

The underlying policy investment can be matched with the risk/reward profile for each specific client.  As a registered Variable Universal Life (VUL) product, the policy owner has access to a platform of funds, including equities, multi-asset, real estate, fixed income, commodities, currency, etc. 

Ideal for ultra high-net-worth (UHNW) families who want to maximize the total return   of their investment strategy by deferring and potentially eliminating the drag of income taxes.  The Private Placement structure provides a tax shield for a client’s investments while also acting as a hedge against future tax increases. 

As a non-registered Variable Universal Life product, a private placement provides access to alternative investments such as private equity, private credit, hedge funds, etc., in addition to the registered funds available on the insurance company platform.

There are several approaches which integrate the acquisition of life insurance with Qualified Plans in order to reduce the after-tax cost of premiums, mitigate income and estate tax impact, or improve cash flow. 

The common elements of these approaches include clear IRS regulations and powerful economic results.

An eCLAT (Enhanced Charitable Lead Annuity Trust) is a financial strategy designed to help high-net-worth individuals, as well as clients who have unusually high taxable income in a given year, manage income taxes while simultaneously supporting their charitable causes.  It is a powerful approach to legacy planning that targets the combined personal, estate, and charitable goals.    
 
One version of the CLAT strategy provides a modest annual charitable payment with significant charitable benefit upon the death of the donor.  The payment at death is provided by a trust-owned life insurance policy which may also provide a meaningful residual benefit to the heirs. The allocation of the death benefit is determined by the charitable interests, wealth transfer goals, and value of the income tax deduction.