PPLI Produces Longevity Through Time
The stability of Private Placement Life Insurance (PPLI) in structuring assets for wealthy international families is a creation of how we look at the element of time. PPLI relies on the laws and regulations of insurance. These laws and regulations in most countries have been in effect for a longer period of time and are less subject to change than the tax codes in these countries.
When a new trend emerges frequently people line up on either side of the topic: some being in favor and others opposing this new trend. One such new trend for wealthy international families are the various citizenship by investment programs that are being offered by many countries. We will explore this trend, but first more on the workings of how PPLI can assist in the structuring of assets.
How does the element of time enter the picture? How does it add the stability that is currently being sought in the whirlwind of change brought about by FATCA, CRS, and the Registers of Beneficial Ownership?
This topic came into the light when I was reading a book that used first person interviews with various subjects to make certain points. I found the interviews lacked depth. Not particularly because they were poorly conducted, but just the fact that when you meet someone for the first time it is not the same experience as knowing a person for a long time.
In other words, one cannot form a deep, lasting friendship with someone unless one has known this person over some longer period of time. We can call this aspect of time duration or longevity. This aspect of time produces in us a certain feeling of comfort, much like returning to a habitual routine after a period of absence from it.
When we structure the assets of a family, we wish to bring them the comfort of having–Time On Your Side: knowing that the next generation will inherit assets through a tax-free PPLI death benefit. This is accomplished by using the time-tested body of insurance laws and regulations throughout the world.
The Economist article, “Selling citizenship is big business–and controversial,” is in part disparaging of citizenship by investment programs because they are relatively new phenomenon, and somewhat outside the regulation of individual governments. Here are a few excerpts:
“To meet the demand for long-term visas and passports, more and more countries are flaunting their attractions. About 100 offer a “residence by investment” programme. Over a dozen offer citizenship—including five Caribbean island-states, Vanuatu, Jordan and, within the EU, Austria, Cyprus and Malta.”
“The industry, however, is under a cloud. It is suspected of commercialising and trifling with rights and privileges that patriots regard as sacred; and of making life easier for crooks and terrorists.”
“For the European Union in particular, the issue is delicate. It touches on one of the most “national” of competences—who lives in a country and bears its passport—yet has Union-wide consequences. An EU-member-country’s passport is also an EU passport; a “Schengen” visa grants access to 22 EU members and four other countries.”
“Both the EU and the OECD, a club of rich countries, are looking leerily at CRBI schemes. Later this year, the European Commission, the EU’s executive, is to publish a report on those offered by EU members. The industry fears the worst.”
At Advanced Financial Solutions, Inc. we are eager to put Time On Your Side, and hope you will take advantage of our many PPLI structuring programs that operate worldwide. Please let us know how we can help you achieve your aims in the area of privacy and tax minimization.
by Michael Malloy, CLU, TEP, @ Advanced Financial Solutions, Inc
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