Insights

We treat a life insurance policy as an asset in a family’s plan, and nearly everything we do follows from taking that seriously.

A family has a real and permanent insurance need. The policy is sized correctly, the trust is drafted, and the trustee is the right person. Then someone runs the premium, and it turns out to be well beyond what annual exclusion gifting can absorb. The family would rather not spend lifetime exemption on payments that will continue for twenty years or more.

Split dollar can allow an organization to provide a significant life insurance benefit to a particular executive while retaining an economic interest in the dollars it contributes. Done well, that solves a problem a simple bonus cannot. Done badly, it leaves both parties managing an arrangement nobody knows how to unwind.
When does PPLI make sense and when should we walk away?
That’s changed.

Private equity entry does not just change who owns a professional services firm. It changes the questions the management team needs to be asking about their benefit programs, and the urgency with which those questions need to be answered.Attorneys want to know when it fits into estate plans. CPAs want clarity on the tax mechanics. Wealth managers want to understand how it’s actually implemented. And nearly everyone asks the same underlying question:

When does PPLI make sense and when should we walk away?
That’s changed.

Most law firm partnership agreements include a buyout or equity redemption arrangement; a mechanism for compensating retiring partners for their ownership interest. The structure varies and may include lump sum payments, installment arrangements, formulas based on years of service or origination credit. What most of these arrangements share is that they are unfunded.
Attorneys want to know when it fits into estate plans. CPAs want clarity on the tax mechanics. Wealth managers want to understand how it’s actually implemented. And nearly everyone asks the same underlying question:

When does PPLI make sense and when should we walk away?
That’s changed.

The executive benefits conversation usually starts in the wrong place. It starts with products: someone proposes a deferred compensation plan, or a life insurance arrangement, or a cash balance structure. What rarely happens first is the more fundamental question: what are we actually trying to accomplish, for whom, and over what time horizon?Since then, we’ve received more questions about PPLI than any other topic we’ve written about this year.

Attorneys want to know when it fits into estate plans. CPAs want clarity on the tax mechanics. Wealth managers want to understand how it’s actually implemented. And nearly everyone asks the same underlying question:

When does PPLI make sense and when should we walk away?
That’s changed.

Private Placement Life Insurance (PPLI) is getting more attention from professional advisors and affluent families. Attorneys want to know when it fits into estate plans. CPAs want clarity on the tax mechanics. Wealth managers want to understand how it’s actually implemented. And nearly everyone asks the same underlying question: When does PPLI make sense and when should we walk away?
Since then, we’ve received more questions about PPLI than any other topic we’ve written about this year.

Attorneys want to know when it fits into estate plans. CPAs want clarity on the tax mechanics. Wealth managers want to understand how it’s actually implemented. And nearly everyone asks the same underlying question:

When does PPLI make sense and when should we walk away?
That’s changed.

For the past several years, families and business owners have been planning in a fog. Estate tax exemptions were uncertain. Interest rates were volatile. Tax legislation seemed to change with every news cycle. In that environment, postponing major planning decisions often made sense as you couldn’t plan confidently for a future you couldn’t predict.

That’s changed.

For many families and business owners, life insurance is something they know they should have, but often view as a task to complete. Just another item on the long list of financial responsibilities. But when you strip away the misconceptions and look at how insurance functions in sophisticated planning, a very different picture emerges.