Life Settlement Planning For CPA's

In some circumstances, Life Settlements provide a no-lose way to receive value in excess of the simple cash value of a life insurance policy, while gaining a tremendous tax advantage and putting additional cash into a business or an individual's retirement.

Tax Implications of Life Settlements

In most cases, any amount paid for a policy in excess of the cash surrender value is treated as a capital gain. Example: Assume a $175,000 proceeds from a life settlement with a total face value of $1,000,000, a cumulative premiums paid cost basis of $70,000 (no tax due) and a total cash surrender value of $80,000. Then $10,000 (the difference between the cost and cash surrender value would be treated as income and the remaining $95,000 would be capital gains.

Estate Tax

As estate tax rules change and the policies clients purchased to pay these taxes become unnecessary, this trend is likely to increase. Before you decide to abandon old policies, we can help you recover the potentially significant wealth that may be trapped there. Allowing unneeded policies to lapse can be a costly mistake. Both individual and corporate clients and even employers can sell the right to collect on these otherwise dormant assets and get a substantial cash payment now.

The amount paid in excess of the cash value usually is treated as a capital gain. Clients should discuss their individual tax consequences with a professional tax advisor. With the lowered capital gains rates provided in the Taxpayer Relief Act of 1997, selling a life insurance policy becomes an even more tax efficient transaction.

  Not Registered In Texas
Life Settlement INdustry News 06/20/05

Life Settlements and Real Estate Investing Cash from Life Settlements can boost real estate holdings.Many seniors do not realize that there are no restrictions on the use of their Life Settlement proceeds...

More About Premium Financing

Premium Financing. Affluent insureds can use leverage to buy life insurance using recourse and non-recourse premium financing. After two years, the coverage may be sold as a Life Settlement, or retained....

More About Premium Financing Life Settlement Questions Call 1-877-224-2200
Site Map

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09/01/04 The End of Costly Insurance Premiums In addition to providing cash, life settlements. More...

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Life Settlement Questions Call 1-877-224-2200