Compliance Simplifier by Michael Malloy

PPLI Offers the Following Advantages

  •       Adds ease of reporting to tax authorities
  •       Adds straightforward administration of assets
  •       Adds commercial substance to structures

Compliance Simplifier

The beneficial owner of the assets in a properly structured PPLI policy is the insurance company.1 This greatly simplifies any reporting obligations to tax authorizes, because the assets inside the policy are held in segregated accounts, and frequently spread out over multiple jurisdictions worldwide.  The PPLI insurance company becomes the administrator of the assets and their beneficial owner. Because they are held in segregated accounts, they are not part of the insurance company’s balance sheet and are often placed in the hands of a custodian bank.2

Most PPLI companies will accept any qualified institution to act as custodian, and any qualified asset manager to direct the investments in the segregated accounts.  This relationship between the owner of the policy, the insurance company, and the segregated accounts is codified in the laws of the various jurisdictions where PPLI insurance companies are located, and therefore lends viable commercial substance to such a structure.3

 

Endnotes

  1. “Wikipedia Private placement life insurance,” https://en.wikipedia.org/wiki/Private_placement_life_insurance see also, “The New Age of Global Tax Transparency and Registers of Beneficial Owners. The Compliant Solution,” Taxlinked.net https://taxlinked.net/getattachment/m/FT-Alternative-Solutions/Publications/The-New-Age-of-Global-Tax-Transparency-and-Registe/The-New-Age-of-Global-Tax-Transparency-and-Registers-of-Beneficial-Owners-(3).pdf
  2. Bortnick, “Tax Management: Building Wealth, Reducing Taxes,” in The PPLI Solution, Delivering Wealth Accumulation, Tax Efficiency, and Asset Protection Through Private Placement Life Insurance (The PPLI Solution) at 33 (Bloomberg Press, 2005).
  3. “Wikipedia Private placement life insurance,” https://en.wikipedia.org/wiki/Private_placement_life_insurance

 

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

Michael Malloy Contact Info

 

 

Asset Protection

PPLI Offers the Following Advantages

 

  • Protects assets with segregated account legislation
  • Protects assets from claims of creditors
  • Protects assets using the benefits of life insurance

 

The assets inside a PPLI policy are protected from creditors of the insurance company because they are segregated into separate accounts.  These separate accounts are not part of the general assets of the insurance company.1 The assets are protected from their own creditors, because of the asset protection laws in the jurisdictions where the PPLI companies are located.2 For example, the Bermuda Life Insurance Act of 1978, § 26(1), provides an unlimited exemption to the insured of both cash value and death benefit.   Further protection can be offered with the policy being owned by a trust that has its own asset protection provisions.

A PPLI policy actually offers three layers of asset protection:  the fact that they are held in segregated accounts; laws that exempt life insurance from the claims of creditors; and the asset protection laws in the jurisdictions where the PPLI insurance companies are located.

In addition, the PPLI policy inherently offers considerable tax benefits as well as asset protection. This would counter any argument that the transaction was a mere so-called fraudulent transfer to thwart creditors.3

 

Endnotes

  1. Lawson, “An Introduction to PPLI,” in The PPLI Solution, Delivering Wealth Accumulation, Tax Efficiency, and Asset Protection Through Private Placement Life Insurance (The PPLI Solution) at 5 (Bloomberg Press, 2005).
  2. Williams, “Jurisdiction—Home or Away?” in The PPLI Solution, supra note 1 at 285.
  3. Rothschild and Rubin, “Asset Protection: Riches Out of Reach,” in The PPLI Solution, supra note 1 at 50.

 

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

Michael Malloy Contact Info