|
|
|||||||||||
|
The Underwriting Team at The Potomac Group is dedicated to working closely with the industry's top carriers so that we can obtain the best possible offers for your business. I am pleased to introduce you to our experienced staff in this week's Underwriting Corner section. At our 2007 Annual Meeting in Scottsdale, AZ we will be hosting an On-site Underwriting Event comprised of both our internal staff as well as key Underwriting representatives from nine major carriers. This event will give you the unique ability to spend direct time with our carriers to discuss both formal applications as well as inquiries that you are looking to place. More information will follow shortly to those who have registered for the meeting. We look forward to seeing you there!
Lincoln Benefit
Principal Life
Prudential
Case of the Week: Leveraging a Sale of Assets to a Defective Trust with Premium Finance The Situation – Very wealthy client whose estate is almost entirely illiquid assets such as commercial real estate. The Problem – The value of the real estate continues to grow in the gross estate and when the client dies it is likely the real estate will have to be sold to pay estate taxes. The Solution – To freeze the value in the estate a “sale to a defective trust” is used. After an initial gift to seed the trust, a note is placed to purchase the assets from the client and the income stream from the properties pays the interest payments on the note. At the end of the note’s term, the trustee pays off the note with assets inside the trust or renegotiates the note. Although this structure helps minimize the estate’s size, it does not solve the liquidity issue. Thus, it is common to purchase life insurance within the same trust to offset the estate taxes. Any trust income greater than the note’s interest can be used to pay premiums without gifting (and/or taxes) typical in most traditional ILITs when a grantor gifts large annual premiums.
Solution PLUS Financing
–
What if the commercial real estate has a very limited income
stream and there is little to no cash above the interest payment on
the note? Such a situation confronted one of our agents recently. In
her situation, the client purchased the insurance using premium
financing. For those years in which there will be no income, the
interest will be accrued. In other years when there is extra income,
the trustee will pay the interest on the premium financing loan so
that the outstanding loan balance remains in check. Since the real
estate will be in trust, there was plenty of collateral for this
loan. For the insurance carrier, they were happy because we had a
solid exit strategy to get out of the premium financing if the
client lives too long or interest rate assumptions change
significantly.
Exclusively for Potomac Group Producers: |
Teleconference:
John Hancock VUL is Simply Better!
Teleconference:
Underwriting Enhancements at
Register Online!
American National
Call
The Potomac Group at |
||||||||||
|
For Producer use only - not intended for use in solicitation of sales to the public. Products and programs offered through BISYS are not approved for use in all states. As a BISYS producer, you will receive emails occasionally to update you on BISYS services and carrier news. In the future, if you no longer wish to receive these email updates, please click here to unsubscribe. 09.07 TPG.128.1 The Potomac Group, 6550 Rockspring Drive, Suite 320, Bethesda, MD 20817 |
|||||||||||
-
-