Fiduciaries can take some preliminary steps to identify at-risk clients, starting with asking clients three questions that will help them quickly uncover who may
need help:

  1. Are you considering lapsing or surrendering your life insurance policy. If so, why? Their answer will help the fiduciary understand their need(s).
  2. If yes, is this policy a UL policy?
  3. Have you had any changes in health since the policy was issued?

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. It’s almost a certainty that a provision to repeal the federal estate tax will be included in the initial tax reform proposal considered by Congress.

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.

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