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 RFC, @ Advanced Financial Solutions, Inc

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