Estate Planning for Closely Held Businesses: Transfers to Trusts, Private Placement Life Insurance, Risk Mitigation

Description

Low-interest rates and asset values are a direct result of the current pandemic. The depressed economy can make this an ideal time to transfer a business interest. Establishing the transfer using a trust can avoid future conflicts and ensure a business is transferred according to the owner's wishes. Still, the questions owners and advisers must address concerning the transfer can be daunting.

Preserving the wealth created by an individual through his/her business creates income tax, estate tax and asset protection planning opportunities, whether the business owner desires to continue in the business or have the next generation succeed.

Often buy-sell agreements are structured using life insurance to transfer business interests to family members or others at a predetermined sales price. One of the most overlooked vehicles is private placement life insurance (PPLI). PPLI can allow investments to grow tax-free, provide loans to policyholders, and of course tax-free transfers at death. Understanding the many choices available for transferring ownership and the caveats of these transfers is critical for advisers of small businesses.

Listen as our panel of trust and estate experts discusses ownership transfers and risk mitigation in the current economy, including the differences in types of trusts, trust-owned life insurance, and supplemental insurance coverage available through captives.