Split Dollar Life Insurance

Presented By:

*Richard Harris, BPN Montaigne LLC, Clifton, New Jersey
*Martin Shenkman, of Martin M. Shenkman, P.C., Paramus New Jersey

Presentation outline:

Before 2001, who did what with life insurance:
split-dollar?
equity split dollar?
loans to fund life insurance premiums?

From 2001, who has done any form of split-dollar?
What happened? (New rules and complexity) – two pounds of rules and regulations

Why should I be interested in split-dollar now?
GRATs and discounts under attack
Taxable term – 44 & 48 year old – odds of dying in the same year 3 in 1Mil
Loan – no gifts or GST

What is split-dollar?
History
Expansion of split insurance concepts
Estate Planning and life insurance with split-dollars
Challenges by IRS
IRS Notice 2001-10
What is split-dollar – short course
Final Regs. The final 2003 Treasury Regulations
Definitions
Insurance company one-year term rates
Equity split-dollar and how the abuse of equity split dollar affected later changes
Special rule
Non-equity
Material modification – hang-nail v. pedicure - material modification of split dollar arrangements.
Split-dollar loan –
Definitions of split loans
Corroboration and documentation
Gifts and gift consequences of split dollar loans
Traps
Employer employee and split dollar
Collateral assignment issues
Estate Planning for loan split transactions and equity split dollar (economic benefit)
Introduction to estate plans
Benefits of loans
Exit strategy
PLR’s
Intergenerational split-dollar (GST planning with Split Dollar)
Business planning with SD
Pre- 2003 Employee SD – what can be done?
Post 2003
Cross-Purchase agreement and split dollar
Stock redemptions
S Corps – Special implications of S corporations using split-dollar insurance
Corp – ILIT – doing a plan with a corporation and irrevocable insurance trust
Misc. IRC Sec. 409A and spit dollar
EOLI – 101(j) and split dollar insurance
CAVEAT – Notice 2009-48 Q & A 2 (not in handout)
Income & payroll tax