The Role of Life Insurance for Private Clients
Gateway Financial’s private clients are financially sophisticated, high net-worth individuals, business owners, senior executives and dynastic families.
The primary reason that private clients buy life insurance is to pay certain costs that are coincident with death, including:
- Fund federal and state estate taxes for estates with valuable non-liquid assets such as real estate, business interests, farms, art collections, etc.
- Protect against the untimely liquidation of assets when the market is down.
- Provide a legacy for family members and charities.
- Replace wealth gifted to charities.
- “Equalize” inheritances for children not involved in a family business.
- “Equalize” the inheritances of blended family members.
- Assure that each descendant of large families receives a meaningful inheritance.
- Care for children and grandchildren with special needs.
- Repay outstanding debt.
Private clients often fund the life insurance using:
- Annual Exclusion Gifts
- Lifetime Exemption Gifts
- Distributions from Qualified Retirement Plans
- Intra-Family Loans at the Applicable Federal Rate (AFR)
- Sale to an Intentionally Defective Grantor Trust (IDGT) (Gift and Loan Combination)
- Self-Cancelling Installment Notes (SCINs)
- GRAT Remainder
- Proceeds from Value Realizing Event (Sale or IPO)
- Commercial Premium Financing
- Business Paid Premiums (Executive Bonus / Split Dollar)
- Business Split Dollar Loans
- Private Split Dollar Loans
The primary reason that they buy life insurance is to pay certain costs that are coincident with death, including:
- Fund federal and state estate taxes for estates with valuable non-liquid assets such as real estate, business interests, farms, art collections, etc.
- Protect against the untimely liquidation of assets when the market is down.
- Provide a legacy for family members and charities.
- Replace wealth gifted to charities.
- “Equalize” inheritances for children not involved in a family business.
- “Equalize” the inheritances of blended family members.
- Assure that each descendant of large families receives a meaningful inheritance.
- Care for children and grandchildren with special needs.
- Repay outstanding debt.
Private clients often fund the life insurance using:
- Annual Exclusion Gifts
- Lifetime Exemption Gifts
- Distributions from Qualified Retirement Plans
- Intra-Family Loans at the Applicable Federal Rate (AFR)
- Sale to an Intentionally Defective Grantor Trust (IDGT) (Gift and Loan Combination)
- Self-Cancelling Installment Notes (SCINs)
- GRAT Remainder
- Proceeds from Value Realizing Event (Sale or IPO)
- Commercial Premium Financing
- Business Paid Premiums (Executive Bonus / Split Dollar)
- Business Split Dollar Loans
- Private Split Dollar Loans