Tax Adviser: Spotlight on Life Settlements
Jun 08, 2019
Tax practitioners who are wary about discussing life settlements are not alone. Learn more about getting the best value in a life settlement transaction.
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Tax practitioners who are wary about discussing life settlements are not alone. Learn more about getting the best value in a life settlement transaction.
Two provisions in the 2017 Tax Cuts and Jobs Act, the doubling of the estate tax exemption and more favorable tax treatment for the policy owner selling their policy, are the reasons the life settlement community is excited about the Act.
The new tax law increasing estate tax exemptions is one in a series of recent changes that are impacting seniors who’ve previously deployed life insurance strategies for estate and tax planning.
Any determination regarding whether to move forward with the purchase of new life insurance or how to handle existing coverage greatly depends on what happens with federal estate tax repeal.
Senior plans may “go awry” because of increasing longevity, but with a customized life expectancy analysis, planners will be able to help their clients make midcourse adjustments to minimize potential damage.
Life insurance has long been considered a hard to value asset. Practitioners and planners have dealt with a variety of definitions of fair market value (FMV), depending on the particular application that’s being addressed.
Similar to appraising real estate, we use current market data to determine if a life insurance policy has any value beyond the cash surrender value if sold today.