Ch. 23: Advanced Life Insurance and Annuity Strategies

• Notice Regarding Proposed Changes - Some Private Annuity Transactions Restricted, But Many Transactions Remain Advantageous Proposed Tax Changes regulations that provide guidance on the taxation of the exchange of property for an annuity contract. Stokes v. Commissioner In a case involving the National Association of Financial and Estate Planners, the court held that the private annuity trust in that particular case "constituted a sham trust that lacked economic substance". Not only did Mr. Stokes not receive the promised tax benefits, but he also got slammed with an accuracy-related penalty!

  Life Insurance

Synopsis: Discusses the advantages of life insurance as relating to certain state’s statutory creditor exemptions.

A state-by-state guide to creditor exemptions including those relating to life insurance begin at http://www.assetprotectionbook.com/ state_resources.htm

• Offshore Private Placement Variable
  Universal Life Insurance (OPPVULI)

Synopsis: Discusses the basics of Offshore Private Placement Variable Universal Life Insurance.

Definition: Offshore Private Placement Variable Universal Life Insurance (OPPVULI or more commonly “Offshore PPLI”) – A variable universal life insurance policy that is offered by a foreign insurance company on an private placement basis, and which is highly customized for the specific needs of the policyholder.

• Installment Sales and Annuities

Synopsis: Discusses the asset protection advantages of installment sales and annuities under certain state’s statutory creditor exemptions, and the difficulties of creditors in garnishing the sale proceeds in other states.

• Self-Canceling Installment Note (SCIN)

Synopsis: Discusses the basis of self-canceling installment notes.

Definition: Self-Canceling Installment Note (SCIN) – A method of selling an asset where the buyer provides a promissory note to the seller with a fixed payment period, but which note and obligation to pay the seller is canceled if the seller dies.

• Private Annuity

Synopsis: Describes private annuities, their operation, their tax treatment, and their asset protection benefits.

Definition: Private Annuity – A method of selling an asset whereby the seller (obligee) sells the asset to the buyer (obligor) in exchange for the buyer agreeing to make certain payments to the seller until the seller dies. To qualify as a Private Annuity for U.S. tax purposes, in addition to other requirements, the buyer (obligor) must not be in the business of issuing annuities.

• Offshore Private Placement Deferred Variable Annuities

Synopsis: Discusses the tax treatment of Offshore Private Placement Deferred Variable Annuities

Definition: Offshore Private Placement Deferred Variable Annuity (OPPDVA or more commonly “Swiss Annuity”) – A variable annuity with annuity payments initially deferred that is offered by a foreign insurance company on a private placement basis, and which are typically customized to the specific needs of the policyholder.