Inheritance equalizer—Parents of three children, upon their last deaths, wish to leave the family business, worth approximately $35 million, to their Child No. 1 who is working in the business. Yet they wish to make equal bequests to their other two children. To accomplish such, they create and fund an Irrevocable Life Insurance Trust (ILIT), to acquire two PPLI policies with $35 million of death benefit each and designate Child No. 2 and No. 3 as equal, 50/50 revocable policy beneficiaries of each policy. Upon the deaths of the parents, Child No. 1 receives the family business worth $35 million pursuant to parents' estate planning documents, with Child Nos. 2 and 3 also each receiving $35 million in cash from the PPLI policies/ILIT as death benefits free of estate and income taxation. Prior to death, the cash value of the PPLI policy can be allocated by the ILIT trustee to a well-managed diversified SMA portfolio at a name-brand custodian, in alternatives, or in IDF hedge funds, growing inside the PPLI policies on a tax-deferred basis. The remaining assets of the parents are available for further bequests to the children net of estate taxes, or for charitable bequests.

How do you partner with advisors on how to best deploy this wealth management tool for their clients?
We introduce and educate wealth advisors on the topic and flexibility of PPLI as an investment tool, as well as how to utilize the death benefit. We then show them some examples on how they can manage the money utilizing a non-comingled custodial account at their favorite custodian. All of these attributes add up to very good wealth management tool that is 7702 compliant (the tax code that governs private placement is within IRC 7702).

Once the RIA wealth advisor becomes comfortable with the product and planning applications, they then feel more comfortable discussing the concepts with their UHNW clients who appreciate being offered new bespoke wealth planning options.

Any other thoughts or recommendations you would like to share with advisers?
We want to invite advisors to learn more about PPLI as a valuable UHNW wealth management tool. Our firm offers a wide variety of internally created and third-party-generated educational resources and tax materials, plus we provide an advisor orientation that lasts about an hour and is well received.  Contact us to learn more about the resources available.

Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation, and unique client/community engagement strategies. The institute was launched with the support and foresight of our founding sponsors—Ultimus Fund Solutions, NASDAQ, Pershing, Fidelity, Voya Financial, and

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