Split
dollar life insurance is an extremely effective estate planning technique that
this blog has discussed in the past.

It is
especially useful for those individuals who would like to have their life
insurance policies owned in an irrevocable trust, yet do not have the necessary
annual exclusion amount available ($15,000 per year per beneficiary) to pay the
full premium amount. Thus, the purpose of such arrangements are to reduce the
tax consequences of paying large premiums on policies owned by irrevocable life
insurance trusts.
A
drawback of split dollar arrangements is that each year the loans continue to increase,
thus becoming a burden as many years pass.
Under
the new tax regime, the lifetime estate and gift tax exemption has been doubled
to $11,200,000 (as indexed for inflation in 2018). This increased exemption may
remove the need for many individuals to have such arrangements and provides the
flexibility to terminate them.
By using
a portion of the newly increased exemption, the insured could terminate the
split dollar arrangement utilizing cash gifts to the trust which owns the
policy in order to repay the amounts owed to the premium provider.
Please
do not hesitate to contact Morris Law Group if you have any questions about
split dollar life insurance or the newly enacted tax plan.
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