An Update on Past Discussion of Life Insurance Planning Issues

Brody, Lawrence
October 2000
Journal of Financial Planning;Oct2000, Vol. 13 Issue 10, p32
Academic Journal
This article explains the unsecured or undocumented arrangement, a technique that will avoid the attribution of corporate incidents of ownership to controlling shareholders for estate tax purposes. In this arrangement, while there is agreement between the corporation and the trust that owns the policy, spelling out the respective rights and obligations of the parties relating to the insurance policy which it covers, there is no assignment of the policy as collateral to the corporation. The corporation's rights to reimbursement of its premium advances are merely contractual with no security interest in the policy. The argument for use of the undocumented method is that since the corporation has no direct interest in the policy, it cannot have any incidents of ownership that could be attributed to a controlling shareholder for estate tax purposes.


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