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Wealth Transfer

Funds Transferred to Family or Charity

The affluent confront risks to their family or business that can impact liquidity, financial certainty and capital preservation.     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 and, if owned by an irrevocable trust, estate tax-free.


  • Dynastic Life Insurance

  • Capital Creation Mechanism

  • Large Gifting Opportunity

  • Guaranteeing Time

  • Legacy Property Preservation

  • Guaranteed Inheritance Plan

  • Intergenerational Split Dollar

  • Philanthropic Leveraging

Dynastic Life Insurance

The financial benefits of life insurance are amplified when insuring a group.


A bespoke life insurance silo mirroring the asset allocation of a Dynasty Trust and insuring multiple generations can create an evergreen fund that provides a competitive return on trust investments. 


Unlike individuals, multi-generational entities do not enjoy step-up in basis of assets.  The income tax free death benefit of life insurance is effectively a step-up in bass and therefore provides a significant long-term benefit when used within dynastic planning


This strategy is appropriate for established intergenerational trusts, particularly those involving families with divergent branches where preserving unity is an important goal.

Capital Creation Mechanism/Liquidity

Upon an insured’s death, income tax-free liquidity is provided to the designated beneficiary or beneficiaries. 


This infusion of liquidity provides the family flexibility in their planning for a host of issues including estate taxes, estate administration, preservation of assets for future generations, avoidance of “fire sales,” and estate equalization among beneficiaries.


From the perspective of the executor, there is no asset as valuable as cash.  Cash simply provides options.  Liquidity from life insurance allows the executor freedom to avoid being compelled to sell other estate assets.

Large Gifting Opportunity 

In 2024, the inflation adjusted exclusion is $13.61M ($27.22M per married couple). On January 1, 2026, the exclusion will return to $5M plus the relevant inflation adjustments from 2010 to 2026. 


Today is an exceptional wealth transfer opportunity to implement substantial lifetime planning. For those clients who have already utilized their lifetime exemption, the annual inflation adjustment can provide a meaningful opportunity for additional wealth transfer. 


Using a portion of the enhanced exemption to incorporate a life insurance strategy provides a source of non-correlated tax-advantaged liquidity.


In general, it will be the UNHW clients that are likely to take advantage of the increased exemptions.  If there is a need for tax mitigation, liquidity, asset diversification, risk mitigation or estate equalization, a variety of life insurance strategies may provide a valuable solution for these clients.

Guaranteeing Time For Strategies to Work

Most estate planning and investment strategies have one underlying common premise - these techniques need time for proper execution.  Long term planning strategies can be thwarted because of a client’s unanticipated death. 


This mortality risk poses significant roadblocks to the best laid plans.  With enough time, by employing a number of estate and investment planning strategies, significant wealth can be moved outside the client’s taxable estate, whether for the benefit of family or philanthropy or both. 


The key is assuring that there is sufficient time for these strategies to succeed.  Life insurance with guaranteed performance allows the client to hedge that time horizon.


Clients who have implemented an investment and/or estate planning strategy requiring sufficient time to successfully accomplish objectives.  They recognize the need to hedge the inherent risk of time..

Legacy Property Preservation 

Many HNW families have a vacation home or property that they would like to keep in the family for the enjoyment of future generations.   In addition to the gift, estate and GST tax concerns surrounding the transfer, the home may create financial burdens and/or cost sharing conflicts for future generations. 


A capital fund created outside the taxable estate by life insurance can generate annual cash flow to cover property taxes and maintenance expenses.  In some cases, it is advisable to eliminate transfer planning concerns by simply providing sufficient liquidity to allow the trust to purchase the property from the taxable estate.


This strategy is appropriate when there is a strong emotional attachment to a legacy property and is particularly well suited when there is a difference in the financial wherewithal of the various heirs.  Clients who consider this strategy usually are older (age 60+) and have typically implemented a comprehensive estate plan.

Guaranteed Inheritance Plan

It is important for many families to establish a legacy that survives for generations.  Life insurance structured with guarantees provides the certainty of legacy creation and sustainability. 


For many clients, this certainty provides an additional benefit.  Knowing that their family will be taken care of, these clients give themselves an “emotional permission slip” to spend their liquid assets more freely during their lifetime while still protecting their family in the future.


Clients who want to create wealth transfer certainty.

Intergenerational Split Dollar 

This strategy transfers assets to future generations on a tax-efficient basis.


The senior generation (G1) utilizes their capital to fund a cash-value insurance policy on the life of the younger generation (G2) for the benefit of future generations (G3, G4).


There are alternative structures to be utilized depending on the client.


Suitable for G1 clients who are liquid and G2 children who have achieved financial success.  It may be particularly attractive when the G1 generation is not insurable or is focused on transferring assets to grandchildren.

Philanthropic Leveraging

Successful individuals often feel a desire, even an obligation, to give back to the community that fostered their success.  Life insurance empowers these individuals to make more substantial donations and bequests than they might consider possible. 


A variety of strategies exist, but the simplest involves purchasing a policy and gifting it to a charity, either immediately or when it is eligible for a life settlement (See Life Settlement).


This strategy is appropriate for clients with charitable intent who are age 60 and above. 

Reduce the Impact of Income Taxes.

Transfer Market Risk, Guarantee Outcomes, and Reduce Taxes.

Maximize Funds Transferred to Family or Charity.

Tax Advantaged Structures to Maximize Retirement Income.

Retain and Incentivize Key Employees to Protect the Future.

A Powerful and Tax-efficient strategy to Fund Large Life Insurance Premiums.

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