How PPLI Negotiates for You

World Leaders Teach EWP

Negotiating is at the heart of Expanded Worldwide Planning (EWP), and Private Placement Life Insurance (PPLI).  What can we learn from the much publicized negotiation between Donald Trump and Kim Jong Un? One thing is obvious about this meeting.  We don’t really know much. The most substantive talks were held in private between the two leaders. As the saying goes, “After all is said and done, more is said than done.”

So what we read in the press about this negotiation is mostly speculation and conjecture, and another part is supplied by our own attitudes towards these world leaders and their countries. This is precisely what is avoided in EWP.  By using a properly structured PPLI policy, we are able to build a plan on a strong foundation of knowledge.

A good part of this solid foundation is insurance regulations. These regulations tend to be simpler and more straightforward than the tax codes of the world’s countries, and supply many key benefits that are not allowed under tax codes.

One definition of negotiating from the Wiktionary is “To succeed in coping with, or getting over something.” This is why we can say PPLI NEGOTIATES FOR YOU. It allows you to succeed using the key elements of EWP: privacy, asset protection, succession planning, tax shield, compliance simplifier, and trust substitute.

How this ability to succeed in planning for wealth international families plays out in detail depends on the particulars involved: where the family reside; the tax codes of the countries where the various family members reside; the nationalities of these family members; the assets involved; and most importantly, the tax and estate planning aims of the family.  All these elements are part of a successful EWP engagement, and what our firm enjoys most–giving families the most cost efficient and comprehensive plan possible.

History of PPLI

In the various press stories on the Trump and Kim Jong Un negotiation are historical perspectives going back to Kim’s father and grandfather. This made us realize that we have never given you a history of PPLI. Here is a short one courtesy of Trusts & Estates by Grant R. Markuson.

“PPLI really began as a way of customizing specific types of insurance products as part of corporate benefit planning for senior executives. Although the rank and file employees may have been happy with the benefits of more typical insurance offerings, senior executives often desired greater investment options, lower fees, and greater overall customization. This, in conjunction with the growing use of variable contracts, led to the birth of individualized PPLI products. The Internal Revenue Service (Service) initially ruled on these types of customized variable products in a series of Revenue Rulings from 1977-1982.

 

In the early 1990s, PPLI products for wealthy individuals surfaced again out of the Channel Islands. Soon after that, Cayman Island and Bermuda based products started to surface. As the hedge fund industry started to pick up steam during this period, many of the products were being specifically developed for these investments. In the mid 1990s, many of the major U.S. and European carriers entered the international PPLI market, which brought this type of planning back into the mainstream.”

To bring our brief history up to the present, we find a robust appetite for PPLI and EWP at present with the fast paced growth of wealthy international families throughout the world. Using PPLI and EWP at the service of these families can achieve bespoke solutions not possible with other methods of international tax planning.

We welcome the opportunity to negotiate on your behalf and reach a successful result for all concerned. Thank you for your continued trust and support. Please give us your thoughts.

 

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 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

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Jurisdictions Are Key to Non-953(d) Policies

PPLI: Two Sides of One Face, Part II

Understanding the jurisdictions where wealthy international families operate is essential to Expanded Worldwide Planning (EWP). EWP is the over-arching philosophy of our firm’s planning. In Part I of our topic we explored the using a 953(d) compliant PPLI policy. Here we will discuss some uses of the non-953(d) PPLI policy, and how its increased flexibility can solve many planning issues.

Sometimes we tie our blog to a current topic in the news, and this week is no exception. “U.S. on Course to Land on European Tax Blacklist: EU Official” is what caught our eye. The article is by Joe Kirwin courtesy of Bloomberg.

What the OECD finds objectionable in the U.S., can be accomplished using a non-953(d) PPLI policy, and still be fully compliant. This is the case even if the U.S. were to fully acquiesce to the OECD’s objections, and change its existing regulations.  More on this below.

We will illustrate our points with an example. Mr. LeGrand is a wealthy entrepreneur with several companies that operate outside the U.S. He wishes to pass these companies to his daughter, Angela, who resides in the U.S. Mr. LeGrand also wishes to give Angela access to the profits of these non-U.S. companies in a tax-free manner.  Angela is active in operating these companies. This can all be accomplished using a non-953(d) PPLI policy.

Key elements in this planning scenario are diversification and investor control regulations. These regulations must be strictly complied with for a 953(d) PPLI policy or all is for naught.  In the example of Mr. LeGrand, we used a non-953(d) PPLI policy, and the insurance company is domiciled in Barbados. The diversification and investor control regulations do not exist in the Barbados tax and insurance code.

Mr. LeGrand can generate profits from his companies on a tax-deferred basis, and continue to operate these companies himself.  He also does not have to diversify his holdings as he would on a 953(d) compliant PPLI policy.

Now back to our news article, and a few key paragraphs from it:

“If the U.S. doesn’t agree by June 2019 to exchange the bank account details of non-U.S. citizens with governments around the world, it will be placed on the European Union’s tax haven blacklist.

The U.S. is on the clock as the 2019 deadline nears for adopting and applying the Organization for Economic Cooperation and Development’s common reporting standard, Valere Moutarlier, the EU’s head of direct taxation, told a new European Parliament tax investigative committee May 15. The Paradise Papers panel was set up in March following a data leak of more than 13 million files detailing the way wealthy individuals and large companies avoid taxes via offshore structures, such as trusts.”

In our example of the LeGrand family, a bank account can be opened by the insurance company, who becomes the beneficial owner of the assets that Mr. LeGrand places inside his PPLI policy. Mr. LeGrand’s assets are held by the bank in separate accounts in his name, therefore, he can access the account for his own purposes.

Back to Angela.  How can she receive funds from the companies tax-free?  Since all assets are inside a properly structured PPLI policy, funds withdrawn from the PPLI have been re-characterized as tax-free loans and not profits subject to taxation.

Angela simple makes these loans for a 25 bps charge, and the loan balance is subtracted from the death benefit when the insured passes. Angela will receive the companies as a tax-free death benefit at the passing of the insured life under the policy.

All questions and comments are greatly appreciated. Please let us know how we can assist you in crafting structures similar to the one used for the  LeGrand family.

 

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 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

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EWP for Tomorrow’s Movers and Shakers

PPLI for International Entrepreneurs

 International tax planning is best done before fortunes are made.  Rarely does this occur.  Our firm is fortunate to have a case where Expanded Worldwide Planning (EWP) is benefiting one such person.  By consolidating his worldwide holdings, which are in the startup phase, inside a properly constructed Private Placement Life Insurance policy (PPLI), we are securing these benefits for him:

  • All assets inside the PPLI policy receive tax deferral, not only investments, but business income too.
  • The assets pass tax-free to the beneficiaries named in the PPLI policy. In a properly structured policy one creates a tax-free environment for these assets. Assets can be located anywhere in the world.
  • Because life insurance is used, FATCA and CRS reporting is greatly simplified, and in some cases, is eliminated.
  • Families receive enhanced privacy, because the insurance company becomes the beneficial owner of the assets inside the PPLI policy.
  • The EWP structure provides excellent asset protection.
  • The EWP structure is low cost with fees averaging 1% of assets.
  • The EWP structure is fully compliant with the tax authorities of all tax jurisdictions.
  • Should an untimely death of the wealth creator occur, his family is protected with a tax-free PPLI death benefit.

Our client has businesses in natural resources, sports, gaming, trading, content management, and investments.  His enterprises are in the U.S., Europe, and Africa.  He is a U.S. Green card holder with residence status in the U.K., and travels with a passport from a third country.  His startup businesses only generate $2-3MU.S. annually with outstanding potential to grow to $5-10MU.S. in just a few years.  He is a perfect candidate for EWP planning, and coming to us at the most opportune time.

When you work in a field you sometimes take things for granted that are really quite extraordinary.  This is the case here.  I was having lunch with a friend a few days ago, and told him what our firm was doing for this client.  My friend was astonished and said, “This is a perfect fit.”

If you know additional “perfect fits” please let us know, and we can accomplish the same for them.  Thank you for your continued trust and support.

 

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 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

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Expanded Worldwide Planning (EWP) in Pictures

PPLI + EWP = New Insights

As the saying goes, “A picture is worth a thousand words.” We have paired images with the main principles of Expanded Worldwide Planning (EWP) to hopefully give you some new insights on this planning tool for wealthy international families.  There are many possibilities for using Private Placement Life Insurance (PPLI) in connection with other entities like trusts and holding companies.

Planning with trust and foundations frequently offer only limited tax planning opportunities whereas EWP provides a tax shield. Adding a PPLI policy held by the correct entity in the proper jurisdiction creates a notable planning opportunity.

Privacy

EWP gives privacy and compliance with tax laws. It also enhances protection from data breach and strengthens family security. It allows for a tax compliant system that still respects basic rights of privacy. It addresses the concerns of law firms and international planners about some aspects of CRS related to their clients’ privacy. EWP assists with the privacy and welfare of families by protecting their financial records and keeping them in compliance with tax regulations.

EWP gives privacy and compliance with tax laws

Asset protection

Expanded Worldwide Planning  protects assets with segregated account legislation by using the benefits of life insurance. This structure uses asset protection laws in the jurisdictions of residence to shield these assets from creditors’ claims. A trust with its own asset protection provisions can still receive additional protection with PPLI.

Asset protection

Succession planning

EWP includes transfers of assets without forced heirship rules directly to beneficiaries using a controlled and orderly plan. This element provides a wealth holder a method to enact an estate plan according to his/her wishes without complying forced heirship rules in the home country. This plan must be coordinated with all the aspects of a properly structured PPLI policy together with other elements of a wealth owner’s financial and legal planning.

Succession planning

Tax shield

EWP adds tax deferral, income, estate tax benefits and dynasty tax planning opportunities. Assets held in a life insurance contract are considered tax-deferred in most jurisdictions throughout the world. Likewise, PPLI policies that are properly constructed shield the assets from all taxes. In most cases, upon the death of the insured, benefits are paid as a tax free death benefit.

Tax shield

Compliance simplifier

EWP adds ease of reporting to tax authorities and administration of assets, commercial substance to PPLI structures. In addition, the insurance company is considered the beneficial owner of the assets. This approach greatly simplifies reporting obligations to tax authorizes because assets in the policy are held in segregated accounts and can be spread over multiple jurisdictions worldwide.

Compliance simplifier

Trust substitute

Expanded Worldwide Planning creates viable structure under specific insurance regulations for civil law jurisdictions. It also creates a new role for commercial trust companies. In most civil law jurisdictions, trusts are poorly acknowledged and trust law is not well developed. As a result, companies with foreign trusts in these civil law jurisdictions, face obstacles.

We appreciate your comments, suggestions, and questions. Please provide us with a brief fact pattern and we can tell you if our firm’s tools are right tool for you.

 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

 

 

 

 

A Great Dance Couple: EWP & Trust

“Dancing Cheek to Cheek”

The films of Fred Astaire and Ginger Rogers in the 1930’s and 1940s had some sensational dance routines.  The dance couple of Expanded Worldwide Planning (EWP) and a Trust are poised for equally sensational steps in the realm of planning for wealthy international families.

Our firm specializes in just this brand of choreography: using a properly structured Private Placement Life Insurance (PPLI) in combination with an excellently drafted Trust.  We capitalize Trust(s), because there is a large variety to choose from in international tax planning, and the selection depends on the nationality of the family members, their jurisdictions of domicile, the passports they carry, the location of their assets, and all the various countries’ laws that impact these items.

At the heart of EWP is a properly structured Private Placement Life Insurance (PPLI) policy. The assets inside this policy can be anything that can held by a trust company. These assets can also be located anywhere in the world.  While these assets are inside this PPLI policy, all tax is deferred.  At the death of the insured life/lives under the policy, these assets pass tax-free to the beneficiaries of the PPLI policy.

A trust can be used in connection with other planning to lessen taxes, but by itself does not automatically confer tax advantages. For example, a trust cannot pass assets as a tax-free death benefit to future generations, as a PPLI policy can do.

For those jurisdictions in the world that recognize trust, there are innumerable techniques used by wealthy international families that favor the use of a trust.

Many advisors who draft trusts miss the opportunity of “dancing cheek to cheek” by not incorporating PPLI policies in conjunction with their trust planning.

Trust and Insurance Comparison

●    Contractually based and used by millions ●    Provides some asset protection
●    Tax deferral ●    Sometimes seen as tool for the rich
●    Insurance company is beneficial owner ●    Requires “trustee” with full control
●    Simplified or limited reporting ●    More stringent reporting requirements
●    Potentially tax free ●    Tax filings for trust and possibly beneficiaries required in some jurisdictions
●    No capital gains tax ●    Limited or not direct tax deferral on payouts
●    No trustee  
●    Asset protection  

In most civil law jurisdictions, trusts are poorly acknowledged and trust law is not well developed. This can create obstacles for those domiciled in these civil law jurisdictions that have created foreign trusts. However, in certain circumstances, a PPLI structure can circumvent these problems and achieve the planning aims one would more commonly be able to fulfill with a trust in a common law jurisdiction.

Our well-rehearsed team of advisors can truly teach you some new dance steps, that partner EWP with trusts, so “Let’s Dance.”

 

 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

 

 

 

 

 

The Pythagorean Theorem Revisited

PPLI+ Tax Treaty2  = EWP2

International tax planning must combine items from various disciplines to achieve a successful result.  We will take liberties with the Pythagorean Theorem to make our point. Tax codes do not have the exactitude of mathematical formulas, but international families must frequently combine several elements to achieve the desired results. The elements we will discuss are Private Placement Life Insurance (PPLI), Expanded Worldwide Planning (EWP), and international tax treaties.  We will have a short refresher on the Pythagorean Theorem later on, but no quiz!

In the Pythagorean Theorem once two sides are known, you can solve for the third side using the Theorem.

We wish to solve for EWP, so let us explore how tax treaties allow us to achieve a successful result in solving our equation. At the heart of EWP is a properly structured PPLI policy. The assets inside this policy can be anything that can held by a trust company. These assets can also be located anywhere in the world.  While these assets are inside this PPLI policy, all tax is deferred.  At the death of the insured life/lives under the policy, these assets pass tax-free to the beneficiaries of the PPLI policy.

According to the Wikipedia Tax treaty page, “The stated goals for entering into a treaty often include reduction of double taxation, eliminating tax evasion, and encouraging cross-border trade efficiency. It is generally accepted that tax treaties improve certainty for taxpayers and tax authorities in their international dealings.”

At Advanced Financial Solutions, Inc., we research jurisdictions that give wealthy international families the most benefits.  Let us site an example of a Chinese family, who invests in U.S. real estate through a real estate investment advisor.  Depending on their estate planning needs, the investment advisor can create a new fund as a PPLI or a Private Placement Variable Annuity (PPVA). The policy will be owned by a foreign trust established by the family.

All of the real estate income and gains within the annuity contract will not be subject to taxation or withholding taxes under Article 17 of the U.S. –People’s Republic of China Income Tax Treaty.

Using EWP and PPLI we have provided this Chinese family, tax compliance, tax efficiency, simplified reporting, and enhanced privacy.

I know those of you who enjoy math have been waiting for the return of the Pythagorean Theorem.  Here it is in its most simple form courtesy of Margaret Patterson of Dr. Math:

So if you are told that you have a right triangle whose sides are 3 and 4,
like this:

|\
| \             Then you can use this theorem to find out what the
3 |  \ c          third side is.
|   \           3*3 + 4*4 = 9 + 16 = 25 = 5*5, so c=5
|____\
4

Our firm enjoys solving your problems, so please give us one that can be solved using EWP and PPLI. 

We appreciate your continued trust and support.

 

 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

 

 

 

Tax History and PPLI

EWP: The Past Comes Home to the Present

 With the current emphasis on tax transparency, we will briefly examine the history of taxation and how it correlates to our specialty:  how international families can pay less tax and still be compliant with tax authorities.  Expanded Worldwide Planning (EWP) uses a properly structured Private Placement Life Insurance (PPLI) policy to achieve this aim.

We show you this beautiful image of Hatshepsut’s temple in Egypt, because the first known records of taxation occur there. Of course, the modern tax codes of our time did not exist then, nor did PPLI.

In its best sense, governments tax their citizens to pay for services that they cannot easily provide themselves like roads, fire protection, and security. With our global economy and modern freedom of movement governments are now grappling with taxation issues for families and companies that span over the entire globe, not just within their borders.

We are a proponent of EWP which solves many issues for families by creating simple structures using PPLI that give tax savings, along with tax compliance. One aspect of our structures that give families these valuable traits is in-kind premium payments.  Since we use insurance companies based in jurisdictions that accept in-kind premium payments, families can contribute their companies in lieu of the usual cash that is required.

PPLI is a bespoke product that is tailored made for families.  Many asset classes can become tax-advantaged under this worldwide, tax-favored umbrella that we craft for them.  In the U.S. it is popular to use PPLI mainly for securities, mostly ones that can generate high taxes like hedge funds.  In using EWP for international families, we use structures that are flexible and easily adaptable to the worldwide holdings of these families. Since these structures usual contain multiple asset classes like companies, valuables, and collectibles, and not just securities.

Now back to the history of taxation.  Courtesy of Wikipedia , “Tax,” and “Taxation in the United States,” we give you some interesting facts to reflect upon:

–”The first known system of taxation was in Ancient Egypt  around 3000–2800 BC in the First Dynasty of Egypt of the Old Kingdom of Egypt.”

 

–”Records from the time document that the Pharaoh would conduct a biennial tour of the kingdom, collecting tithes from the people. Other records are granary receipts on limestone flakes and papyrus.”

 

–”Effective tax rates were higher in Britain than France the years before the French Revolution, twice in per capita income comparison, but they were mostly placed on international trade. In France, taxes were lower but the burden was mainly on landowners, individuals, and internal trade and thus created far more resentment.”

 

–”Historically, taxes on the poor supported the nobility; modern social-security systems aim to support the poor, the disabled, or the retired by taxes on those who are still working.”

 

–”The first federal income tax [in the United States] was adopted as part of the Revenue Act of 1861. The tax lapsed after the American Civil War. In 1913, the Sixteenth Amendment to the United States Constitution was ratified, permitting the federal government to levy an income tax on both property and labor.”

As the saying goes, “There is no certainty like death and taxes.”  We cannot assist you with the former, but if you are an international family and wish to explore how your holdings can become tax compliant by using PPLI, and at the same time have tax-deferral and a tax-free death benefit, we are here to assist you in this effort.

 

 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

 

 

 

 

 

 

EWP – How Families and Governments Think

PPLI Welcomes Change

Our blog post this week is about the pursuit of happiness as it relates to tax planning for wealthy international families.  We will follow our recent posts by giving some basics of Expanded Worldwide Planning (EWP) and Private Placement Life Insurance (PPLI), then, using some recent news items to illustrate our points.

Families might define happiness differently, but in relation to tax planning, key elements that clients seek are tax efficiency, compliance with tax authorities, and to the extent possible, privacy.  With the use of EWP and PPLI, these three elements are frequently achievable.

If families are only familiar with retail life insurance, it is sometimes difficult to grasp the planning possibilities of using PPLI.  In some sense, PPLI can be considered a second trust that gives a tax-free death benefit, and tax-deferral to the assets inside the policy.  A second trust because a majority of policies are owned by a trust.  This second trust in the form of PPLI gives us both tax efficiency and compliance with tax authorities.

The privacy element comes into play because once the assets are inside the properly structured PPLI policy, the insurance company becomes the beneficial owner of these assets.

Now for some examples of how families and governments seek what they see as their legitimate interests, or what we could define as their happiness. By definition governments, including tax authorities, seek control and taxes.  Individuals wish in most cases to pay less tax and wish freedom of movement.

On the individual side, an interesting example of this is on the island of Saipan in the Northern Mariana Islands.

Courtesy of Nancy Borowick for The Wall Street Journal

“But for a certain class of Chinese parents, Saipan has become known as the latest hot spot for birth tourism, a place where women can give birth to babies who will automatically acquire U.S. citizenship. The number of American babies born here to Chinese women who entered as tourists also climbed—to 472 last year from eight in 2009.”

On the government side, our example comes in the form of a reaction to the declarations of other governments: if you impose something that I think is unfair, I will attempt to impose something on you that you won’t like.

Courtesy of the Indo Asian News Service–

PANAMA: Retaliation threatened against 20 countries

“The Panama government has named 20 countries against which it is considering retaliatory action because they have enacted restrictive trade or financial measures against it. The list includes France, which put Panama on a list of uncooperative jurisdictions after the ‘Panama Papers’ affair became public in April 2016. Others named include Brazil, Chile, Colombia, Ecuador, El Salvador, Peru, Uruguay, and Venezuela.”

 On the world stage our examples show that there is more pursuit of happiness than pure happiness.  Our firm pursues what makes our clients happy, and, in turn, this makes us happy.  Please share your thoughts with us on this topic, and any other that relates to the taxation of wealthy international families, and the use of EWP and PPLI.

 

 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

 

 

 

 

 

 

 

 

 

 

PFIC + subpart F + GILTI rules

PFIC + subpart F + GILTI rules = PPLI Opportunity 

A lot of acronyms to swallow!  Yes, the recently enacted U.S. tax reform legislation has been very unkind to those subject to these sections of the U.S. tax code.  Our good friend Private Placement Life Insurance (PPLI) in combination with Expanded Worldwide Planning (EWP) can soften, and in some cases, eliminate these taxes. We will discuss each of these tax rules separately, but first some basics on how you can achieve this success.

Distributions from a properly structured PPLI policy are distributions from a life insurance policy. Like all policies, both U.S. and issued in other jurisdictions around the world, the distributions are subject to the tax code sections that apply to life insurance.

In the U.S. context one can withdraw all basis in the policy, which are the premiums paid, tax free, and take very low cost loans to withdraw the remaining funds.  The costs of these loans is equivalent to an administrative charge, and is usually in the range of 25 bps. PPLI companies are most frequently found in Bermuda and Barbados, and have similar very friendly client access to the funds inside the policy.

The concept of a distribution is important, because a properly structured PPLI policy can hold many different types of assets, basically anything that can be hold by a trust company. More pointedly for our short blog, passive foreign investment company (PFIC) income and subpart F income can be structured inside a PPLI policy, and, therefore, shielded from tax.

It is not in the scope of this blog to discuss the technical tax aspects of these code sections, so we refer you to an excellent article by James Meadow CA, CPA (NC), LLM (US TAX), MBA published recently in Moodys Gartner Tax Law, “The US “Transition Tax” for 2017: More Sad News for Many US Citizens Residing Abroad,”

The article discusses tax from the standpoint of how it affects U.S. persons residing outside the U.S., but gives a very clear and cogent review of how PFIC holdings and those taxed under subpart F are treated under the new U.S. legislation.

The recent legislation has brought an increase in taxation for those who have subpart F income. Thus, we encourage those in this situation to explore using PPLI.  Using PPLI to shield PFIC income has been used for many years.

Section 951A gives us GILTI

The new U.S. tax legislation gives us a new section of the tax code, Section 951A. For those who have an interest in a controlled foreign corporations (CFC), particularly if they are not C corporation shareholders, there is a new opportunity to use a PPLI structure to shield this income from tax. Section 951A gives us global intangible low-taxed income (GILTI), which if held in other than a C corporation, has very unfavorable tax consequences that can be greatly mitigated by using PPLI.

We use the concept of Expanded Worldwide Planning (EWP) that allows income with unfavorable tax consequences to be reclassified as a distribution from a properly structured PPLI policy.

Your suggestions, comments, and questions are greatly appreciated. Thank you for your continued trust and support.

 

 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

 

 

 

 

 

 

PPLI + EWP = Unique Benefits

Expanded Worldwide Planning (EWP)

If a tax authority wishes to tax something, two items of concern are what type of tax to apply and was the transaction done in its jurisdiction. In our internet age this is not always so easy to clarify.  Our embrace of Expanded Worldwide Planning (EWP) makes this process of classification of tax and location simpler.

At the heart of EWP is a properly structured Private Placement Life Insurance (PPLI) policy. The assets inside this policy can be anything that can held by a trust company. These assets can also be located anywhere in the world.  While these assets are inside this PPLI policy, all tax is deferred.  At the death of the insured life/lives under the policy, these assets pass tax-free to the beneficiaries of the PPLI policy.

The news items that gave birth to our thoughts we will discuss below.  But first some more about EWP and PPLI, and how it can streamline reporting obligations to tax authorities, and bypass the need to classify the type of tax that needs to be applied to the assets. As we stated above,all tax is deferred for assets inside a properly structured PPLI policy.

Further, for reporting purposes, the insurance company becomes the beneficial owner of the assets inside the policy.  For clients not seeking to hide assets, but seeking legitimate privacy, this is an added bonus for using EWP.

What to tax and where it is located?

 Our first news item we have quoted previously, and now use it to illustrate how a new tax entity is not so easy to fit into an existing tax code that was written before this new tax entity was even invented. The taxation of property and currency occupy different sections of a tax authorities code.

 Courtesy of Mateo Jarrin Cuvi of Taxlinked.net

“Israel’s tax authorities have decided to classify Bitcoin & other cryptocurrencies as property instead of currencies. How will this affect their taxation.”

Our next quote deals with the location of the item to be taxed, and nicely illustrates how this can be challenging to governments and tax authorities.

Courtesy of Brent Kendall and Nicole Hong of the Wall Street Journal

“High Court Grapples With Case of Emails Stored Abroad”

WASHINGTON—Supreme Court justices voiced concern Tuesday that Microsoft’s resistance to U.S. search warrants for customer emails stored overseas would hamper criminal investigations, in a case that pits leading tech companies against law enforcement.

The justices were reviewing a lower-court ruling Microsoft won in 2016 that clipped the Justice Department’s authority to obtain overseas emails. The battle dates back to 2013 when the U.S. got a warrant that ordered Microsoft to hand over messages in an email account that was linked to narcotics trafficking. Microsoft argued the warrant wasn’t valid because the emails were stored in Ireland.”

Wealthy international clients are looking for simple and compliant structures that also have privacy safeguards.  Using EWP with PPLI can give this to them.  Please let us know how we can assist you further with using these unique and straightforward structures.

 by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc