2003 Heckerling Estate Planning Institute Presentation
after the New Rules and Regulations
Switch-Dollar Life Insurance?
Efficient Funding of:
Grantor Trust Installment Notes
IRS NOTICE 2002-8 + PROP.
GUIDANCE ON THE TAX TREATMENT OF SPLIT-DOLLAR LIFE INSURANCE
as Economic Benefit
as Split-Dollar Loan
Grandfather Protections for:
Plans (entered into before Jan. 28, 2002)
Plans (entered into before Final Regs.)
in Term Rates Used to Measure Annual Economic Benefit ("AEB")
Opportunities & Risks
of Opportunity for New Plans
The (Interest-Free) Loan Transaction
Mary Jones (Current Age 70)
Life (Current DB $8.4M)
Trust Is Owner & Beneficiary
QUESTIONS TO ASK YOUR INSURANCE AGENT
will you quantify the multiple tax impacts of the Notice on
both existing and new split-dollar plans?
existing plans (pre-Jan. 28, 2002 plans), what action do you
intend to take, especially to take maximum advantage of the
limited grandfather protection provided?
new plans (plans adopted after Jan. 28th but before the date
of final regs.), what action do you intend to take, especially
to take maximum advantage of the window of opportunity that
is now open?
you advise switching to a loan from a split-dollar plan (existing
or new), how will you account for loan interest for income,
gift, and generation-skipping tax purposes?
you advise against switching to a loan, how will you account
for policy equity at rollout for income, gift, and generation-skipping
is your exit strategy for the plan design you recommend?
do not express any opinion on the investment, legal, or tax consequences
of this plan, and you are responsible for consulting your own
investment advisors, legal counsel, and accountants for all such