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

 

 

 

 

 

PPLI and Cryptocurrency–Together A Winner

Expanded Worldwide Planning (EWP) Embraces Change

Properly structured Private Placement Life Insurance (PPLI) gives the assets inside the policy tax deferred growth for the life of the policy.  When the insured life/lives under the policy pass on, the assets pass as a tax-free death benefit to the beneficiaries under the policy.  If some of the assets inside the policy are cryptocurrencies, they also receive this tax-advantaged treatment. Essentially PPLI is more of an income tax and estate tax planning tool than it is a product.  Many asset classes are supported in an open architecture EWP structure.

We will discuss some more basics on structuring with PPLI in the context of EWP, then, something more on how cryptocurrencies and PPLI both occupy a similar space on the international scene for wealthy clients.

Any asset that can be custodied by a reputable trust company can go into the PPLI structure. Many policies are owned by trusts which can be domiciled in jurisdictions in keeping with the client’s planning needs. In terms of asset management, it is an open architecture model where the assets can be located in multiple jurisdictions with multiple asset managers. PPLI insurance costs generally average about 1 percent of the cash value of the policy, over the life of the policy.

The cost of the death benefit varies with the health and age of the insured person, and generally policies are designed with the lowest death benefit possible. Tax and enhanced privacy benefits outweigh the costs of using a PPLI structure. Asset management fees will depend on the asset manager(s) selected to manage the assets inside the policy. The policy is fully transparent to the client, as all fees and costs are disclosed.

How are cryptocurrency, EWP, and PPLI similar? All three have qualities that a wealthy homeowner would be looking for in an ideal home: architectural elements that truly “speak” to the owner; privacy; a climate that suits the owner; and a sense of security, both emotional and physical. These may seem like strange bedfellows, but what we all seek in the world, whether it is a home or a structure for our financial affairs, can be quite similar in nature.

We will illustrate this point by a few recent news items about cryptocurrencies:

Courtesy of Anne Kadet in The Wall Street Journal.

“NewYorkCoin, created in 2014 by an unknown developer, has enjoyed a surge of support in recent months. More businesses are accepting the currency and there’s a growing interest among cryptocurrency developers. There’s even a new Meetup group where enthusiasts who frequent online forums can gather in person to discuss their altcoin adventures.”

We all enjoy having a local identify and simultaneously having the sense of belonging to something larger than ourselves.  The NewYorkCoin, EWP, and PPLI have these characteristics.  The open architectural elements of EWP and PPLI can incorporate both the local and international in a structure that speaks to the client’s individual planning needs.

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?”

We are not qualified to comment on the taxation issue, but wish to use this invitation post comments to raise a salient point: the use of blockchain technology as the basis for a currency throws into question the very nature of what constitutes a currency.  Or put another way, in the future will currency continued to be issued by governments or by individuals?  The answer to this question is being played out currently on the world stage.  In the meantime, if you are concerned about the tax on cryptocurrencies, you can use a properly structured PPLI policy to shield the tax.

For some readers we may have stretched some analogies, but hopefully we have equally stretched your minds on our topics.  We appreciate your comments and are thankful for your continued trust and support.

 

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

 

 

 

 

 

Company Review – Advanced Financial Solutions Inc

“A Secure Island in a Tax-Hungry World”

About Us

The roots of Advanced Financial Solutions, Inc. reach back over 30 years, and its mission addresses the current, keen paradox of striving to achieve full compliance in tax transparency while also providing clients both privacy and tax savings.

How do we accomplish this?

By diligent, worldwide tax research, and scrupulous attention to clients’ individual needs.
We specialize in insurance solutions to achieve our results, because in most countries the use of insurance is well-established and straightforward to implement.  Within the insurance structures we create, we can usually accommodate most asset classes, and the assets can be located worldwide.

We are proud to be included in the Wikipedia article on Private Placement Life Insurance in the References and Additional Resources section with a link to our website in note number five.

We are referenced as an example of Expanded Worldwide Planning (EWP).  For a visual display of a typical structure, we have contributed a chart to Wikipedia Commons.

Private Placement Life Insurance (PPLI) is essentially an insurance transaction that occurs within a private placement offering. The private placement component adds extensive flexibility to pricing and asset management offerings. Because PPLI is sold through a private placement memorandum, every situation can be individually negotiated and custom designed for the client.

Any asset that can be custodied by a reputable trust company can go into the PPLI structure. Many policies are owned by trusts which can be domiciled in jurisdictions in keeping with the client’s planning needs. In terms of asset management, it is an open architecture model where the assets can be located in multiple jurisdictions with multiple asset managers. PPLI insurance costs generally average about 1 percent of the cash value of the policy.

The cost of the death benefit varies with the health and age of the insured person, and generally policies are designed with the lowest death benefit possible. Tax and enhanced privacy benefits outweigh the costs of using a PPLI structure. Asset management fees will depend on the asset manager(s) selected to manage the assets inside the policy. The policy is fully transparent to the client, as all fees and costs are disclosed.
Our office locations are as diverse as our clients.

In California, clients are hosted in a rural setting in the oak, savannah region of the Sierra Nevada foothills.  This charming setting is about one hour’s drive from the Sacramento airport.  In New York City, 40 Wall Street is our home at the tip of Manhattan.  Our administrative office in the British Virgin Islands serves the needs of clients throughout the world.

We draw from some of the greatest expertise in the field. Our staff is composed of highly qualified financial professionals who can call upon many years’ experience in their respective fields. We believe wholeheartedly in teamwork in order to serve clients in the most beneficial and efficient way possible.

Typically, our clients are high net worth individuals and their families, who rely on us to manage their assets using a long-term yet flexible structure that suits their unique needs and wishes. We also act for banks, companies and international organizations who value our ability to provide innovative solutions quickly and reliably.

Crafting the best possible solution for a client involves bringing together knowledge from many fields, and keeping current by constant study.  Working with legal and financial experts in the fields of tax, estate planning, asset protection, investments, and insurance is what sets us apart.  We welcome the challenge of being:  A Secure Island in a Tax-Hungry World.

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We will appreciate any comments you may have, (bottom of the page).

Thank you.

~ Michael Malloy

Michael Malloy