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Apr 1, 2011 12:00 PM
Transferring Life Insurance by Gift or Sale
How do you know what your policy is worth?
A client who has a personally owned life insurance policy comes to you. You convince her to either sell or gift the policy to an irrevocable life insurance trust (ILIT). You need to get the value of the policy, so you call the insurance company. It quotes a value so high that you and your client get sticker shock! The gifting or sales strategy suddenly becomes unattractive, if not totally impossible.
The above scenario isn't that unusual. Life insurance policies are often gifted or sold to accomplish a variety of estate-planning objectives, and the valuation can be critical to the transaction and its ultimate success. But the problem is that there's no recent guidance for valuing life insurance policies for gift and estate tax purposes. The regulations that do exist are 37 years old and don't relate to the majority of policies available today. And the valuation numbers obtained using those outdated methods can be in conflict with what a willing buyer and willing seller would actually negotiate.
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
E-Newsletter Signup
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