Financial Planning

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8 Year-End Planning Tips

The 2018 tax return will be the first tax season under the 2017 Tax Act.  Below are 8 tax tips to consider as you sift through opportunities to maximize tax savings.


Premium Financing

For many years Premium Financing was used by the Property & Casualty industry to allow employers to finance hefty commercial liability premiums. Fast forward to the last two decades and Premium Financing has evolved to fund a client’s large life insurance needs.

Premium Financing refers to the funding of premiums through a third-party lender, like a bank.

Clients who need a large life insurance policy to create liquidity for estate planning, wealth transfer or business succession may consider establishing a loan for the annual premiums through a commercial lender.  This type of loan is similar to other loans: the arrangement requires approvals from both the bank and the insurance company issuing the policy, a fair market rate of interest is charged, and collateral in the form of the life insurance policy and additional personal assets must be posted.


When Does A Non-Qualified Benefit Plan Make Sense?

Both business owners and executives can benefit from non-qualified benefit plans. When considering which options make the most sense, the questions revolve around:


Foreign Nationals Spent $153 Billion in 2017 on U.S. Residential Real Estate: 4 Ways to Identity Them

The Foreign Nationals market is a large one if its appetite for all manner of U.S. real estate is any indication of size.

Consider that foreigners spent $153 billion in 2017 on U.S. residential real estate, or approximately 285,000 properties; this represents 10% of all of the U.S.’s existing home sales in 2017.  The majority of home purchases by foreigners were made in Florida, California, Texas, New Jersey and Arizona, by buyers from China, Canada, U.K., Mexico and India.  


Top 5 Responsibilities of An ILIT Trustee: The Importance of Policy Reviews

An ILIT is an Irrevocable Life Insurance Trust, created primarily to own life insurance, and sometimes other assets. The trustee of an ILIT is the fiduciary of the trust assets. The trustee can be a family member (who is not the creator or ‘grantor’ of the trust), or an independent trustee at a bank, for example. Regardless of who is named trustee, the trustee has a fiduciary responsibility to manage assets for the benefit of trust beneficiaries.


3 Options for Dealing with Policy Loans

While conducting a policy review, advisors may uncover an older policy that has accumulated considerable cash value from which a significant loan was taken. On many of the older policies, if the loan remains, it may cause the policy to lapse prematurely. Not only will the policy lapse, but in the event the loaned policy has a gain on it, there will be taxes due. In this scenario, there are 3 options:


Keeping It ‘All in the Family’ with Life Insurance: Post 2017 Tax Act

Even after passage of the 2017 Tax Act, several common estate planning techniques that work well with low interest rates continue to be helpful for ultra-high-net-worth (UHNW) families to transfer legacies to future generations at minimal income, gift, estate and other transfer tax costs.  Even more importantly, and despite the estate tax cuts under the new tax act—which are set to expire in 2026– many affluent families, UHNW or not, desire liquidity for needs other than taxes– such as to repay debt, buy-out assets from one another, to equalize an inheritance, take care of a special need or circumstance, transfer a business interest, or even to replace wealth transferred to charity, for example.  To these ends, life insurance continues to work swimmingly with these strategies to create family liquidity efficiently.  Each of the approaches may have some of the following effects:

  • Discounting, if not completely eliminating, the value of the transfer for tax purposes;
  • Freezing an asset’s appreciation so it remains outside the taxable estate, creating an opportunity for additional tax-free gifts of the appreciation to be made;
  • Leveraging an asset’s income to create estate liquidity;
  • Minimizing income taxes by preserving basis, and;
  • Addressing non-tax issues, such as equalization, buy-outs, special circumstances and money management.

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