Questions and Answers from the book “The Wit and Wisdom of Professor PPLI: How to Achieve Exceptional Asset Structuring with Private Placement Life Insurance”
Socrates and King Lear Teach Us a Lesson
Ancient Wisdom and PPLI
Section 3, Part 4
In this Part of the book, Socrates and Shakespeare’s King Lear are mentioned. Professor PPLI, please tell us more about how they pertain to PPLI?
In this Part of the book, we used the death of Socrates and the wanderings of King Lear late in his life as examples of highly charged types of exile. Socrates was put to death by state officials in Athens. King Lear was left to wander in his own country after political intrigue forced him out.
Wealthy families are not immune to dramatic forms of exile, sometimes being forced to flee their own country for political and economic reasons. At Advanced Financial Solutions, Inc., our goal is to structure your assets into a well-organized arrangement that gives you the stability to withstand disruptive cross border changes.
This is accomplished through the conservative vehicle of life insurance that is recognized in almost all jurisdictions throughout the world as a standard financial planning vehicle. Privacy, asset protection, and tax efficiency are the hallmarks of the structures that we provide for wealthy families throughout the world.
Profession PPLI, how does Socrates’s philosophy teach you to construct better PPLI international asset structures?
Achieving the ideal international asset structure requires us to be careful listeners. We zealously guard against presenting you with a preconceived plan of our own making. In the end, the plan must be a combination of your aims and desires and our knowledge of the laws and regulations that are pertinent to the plan. What worked for one family may not be a fit for you, even though the outward facts are similar.
How can we be certain that we adhere to careful listening? One method is to follow Socrates’s famous quote: “I only know that I know nothing.” Garth Kemerling’s insightful commentary in the Great Philosophers series is helpful here:
“It is one thing to state one’s opinion of how things are and should be. Powerful institutions such as religions and political systems are built upon such dogmas and the demands that others abide by them. Socrates, on the other hand, started from a position of ignorance and sought the truth. In the end. He has no dogmatic program for us to follow, just a method for seeking the truth for ourselves, without any guarantee that we will find it. Philosophy as practiced by Socrates is an open system.”
Professor PPLI, why would a citizen of a country wish to purchase a life insurance policy from a company outside the borders of their country?
The majority of jurisdictions in the world allow their citizens to purchase life insurance from companies outside their borders. PPLI serves this need very well.
For reasons to purchase a foreign life insurance policy, you need look no further than the six principles of Expanded Worldwide Planning (EWP):
- Asset protection
- Succession Planning
- Tax Shield
- Compliance simplifier
- Trust substitute
Usually several, if not the majority of these six principles, are not available in your own country. Why restrict your international asset planning to just the meager offerings that are available. Expand your vision to include the full palette of EWP. We quote the definitions of the six principles from the Wikipedia page, “International Tax Planning:”
EWP gives privacy and compliance with tax laws. It also enhances protection from data breach and strengthens family security. EWP allows for a tax compliant system that still respects basic rights of privacy. EWP 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 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 the policy.
EWP includes transfers of assets without forced heirship rules directly to beneficiaries using a controlled and orderly plan. This element of EWP 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.
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.
EWP adds ease of reporting to tax authorities and administration of assets, commercial substance to 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.
EWP creates a 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.
Please let us know how we can put these six principles of EWP to work for you. Contact us for a no-charge initial consultation that will be tailored to your own individual aims and desires.
by Michael Malloy, CLU TEP RFC, @ Advanced Financial Solutions, Inc
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