Law Office of Thomas J. Swenson

Recent Private Letter Ruling From IRS Answers Old Question Regarding Asset Protection Trusts

admin — Sun, 04 Jul 2010 17:38:59 +0000

In a recent private letter ruling, the IRS ruled that assets in an asset protection trust were not includable in the grantor’s gross estate even though the grantor was a beneficiary of the trust. Accordingly, a U.S. taxpayer can use an offshore irrevocable life insurance trust to legally avoid all future U.S. taxes, protect trust property against creditors, and also enjoy trust assets.

New York, NY (PRWEB) June 1, 2010 — The IRS recently provided some clarity and reassurance to U.S. taxpayers who want to be beneficiaries of a self-settled, irrevocable, discretionary asset-protection trust. In Private Letter Ruling (PLR) 200944002, the IRS ruled that assets in an asset protection trust were not includable in the grantor’s gross estate even though the grantor was a beneficiary of the trust.

In these times of eroding property rights, punitive tax rates, and financial insecurity, a U.S. taxpayer can use an irrevocable life insurance trust to protect trust property against creditors, legally avoid all future U.S. taxes, and also enjoy trust assets. Generally, a carefully-designed irrevocable life-insurance dynasty trust (or GST trust) provides tax-free growth of policy assets, and proceeds of the life insurance policy are paid to the trust free of income and estate taxes. Previously, it was uncertain whether the person who settled and funded a trust could also be a trust beneficiary without loss of estate-tax advantages. Based on the new IRS ruling, the grantor (or settlor) of the trust may be a discretionary beneficiary (i.e., subject to the discretion of the trustee), but trust assets will not be taxed in his estate when he dies. In other words, a U.S. taxpayer can fund an irrevocable trust that buys a life insurance policy insuring his life, the policy assets can grow tax-free, he can benefit from trust property during his lifetime, and when he dies, the insurance policy proceeds are paid to the trust free of income and estate taxes.

In the past, some U.S. taxpayers used secret offshore companies and numbered Swiss bank accounts to avoid taxes. Now, similar benefits can be achieved in complete compliance with U.S. tax laws, and with the peace of mind that everything is completely legal.

An offshore trust holding a Swiss life insurance policy provides virtually unassailable asset protection, in addition to tax-free growth and tax-free wealth transfer in the family legacy trust – a very nice solution to the problem of high taxes and precarious property rights. A Swiss annuity can provide some of the same benefits. Advice on these and other wealth-building and asset-protection techniques is available to clients of the Law Office of Thomas J. Swenson, at 303-442-3100, and at www.swenlaw.com.

Read this press release at PRWeb

TAX-EFFICIENT WEALTH BUILDING AND ASSET PROTECTION

admin — Tue, 11 May 2010 21:18:17 +0000

The term “asset protection” broadly includes building and preserving wealth, as well as protecting it against creditors. Private placement life insurance (PPLI) provides a vehicle for tax-free growth and tax-free transfer of wealth in complete compliance with U.S. tax law in addition to providing a life insurance benefit in case of death. Life insurance investments grow tax free. When PPLI is owned by an irrevocable life insurance trust (ILIT), policy proceeds are paid free of income and estate taxes upon death of the insured. Thus, an ILIT eliminates all taxes legally.

INSURANCE POLICY PROTECTION

admin — Sun, 09 May 2010 22:16:39 +0000

Private placement life insurance (PPLI) allows tax-free growth in separate policy accounts holding hedge funds or other high-return investments. Because assets in PPLI are in separate accounts, they are protected against insolvency of the insurance company. When an irrevocable life insurance trust owns the policy, the policy and its proceeds are protected against unforeseen future creditors of the insured and beneficiaries. Foreign PPLI typically has a minimum premium commitment of $1 million.

ENHANCED GROWTH AND PROTECTION OFFSHORE

admin — Thu, 06 May 2010 02:13:53 +0000

Captive insurance companies, life insurance and deferred variable annuity (DVA) policies in Liechtenstein, the Cook Islands, Bahamas, and other offshore jurisdictions can be designed for full compliance with U.S. tax laws to maximize tax saving and wealth building advantages. These offshore vehicles generally allow greater flexibility and range of investments than US-based entities. Fees and minimum premium commitments are usually much less than in the U.S. Asset protection is stronger than possible in the United States, especially when an offshore trust owns the assets.

WEALTH ACCUMULATION AND TRANSFER

admin — Wed, 05 May 2010 21:24:51 +0000

Allocation of exemptions for gift and estate tax and generation-skipping transfer tax (GSTT) to an irrevocable life insurance dynasty trust make it possible to avoid income, capital gains, gift and estate taxes perpetually. With gift and GST tax exclusions currently set at $5 million, now is the time to fund a dynasty trust. Ownership of a captive insurance company (CIC) by a dynasty trust protects the CIC and provides efficient generational wealth transfer. Many techniques and strategies are available for integrating tax-efficient accumulation, preservation and transfer of wealth.