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Private Placement Insurance Products - Pat Soldano

Thank you to The Madison Group for this M Financial Whitepaper

Many family businesses and multigenerational businesses use private placement insurance. This article may help those businesses to understand private placement insurance better.

This White Paper is to provide you with insight into why Private Placement Life Insurance (PPLI) is one of the fastest-growing tax/investment strategies today. PPLI and its cousin Private Placement Variable Annuities (PPVA) have been around for 20 years but are now an overnight success.

Factors contributing to recent popularity are:

  1. Higher income taxation due to loss of the state income tax deduction and the specter of increased income taxation on the horizon.
  2. A 25-year effort to build a robust menu of traditional and alternative investments available through the PPLI and PPVA platforms. Now with over 400 choices and the ability to add Separate Managed Accounts (SMA’S) the investment options are now sufficient for the most sophisticated investors.
  3. The massive transfer of wealth due to the historically high estate tax exemption and low interest rates has resulted in multi-generational grantor trust with significant income either taxed to the grantor or if a non-grantor trust taxed at the highest income tax rate (currently 37%) over $12,500 and a flat tax of $3,011.50. All grantor trusts become non-grantor trusts upon the death of the grantor. These factors are driving many trustees to seek strategies to increase income tax efficient investing.
  4. In the search for income generating investments, credit managed funds (e.g., Golub, Oak Tree) have become popular. These funds have relatively high predictable yield but are subject to ordinary income tax rates. Clones of these funds are on the PPLI/PPVA platform, allowing investors to effectively increase the after-tax yield without altering the investment return or risk profile.
  5. The 2020 Tax Act significantly enhanced the economics of PPLI by reducing the amount of life insurance required.

About The Madison Group
The Madison Group is one of the largest independent financial firms in the U.S. dedicated to comprehensive wealth preservation since 1968. We specialize in providing affluent families, business owners and executives with unique, tax-efficient wealth transfer and business continuity strategies. We value solutions that have simplicity at their heart and are manageable across generations.

Family Enterprise USA advocates for American Family business. We help family businesses communicate their challenges and contributions to American economic freedom to Legislators. We represent all American family businesses; not just specific industries and provide research to enhance the opportunity for success. We help family businesses continue to establish their unique business legacy. Family Enterprise USA is a 501(c)(3) non-profit organization.. Family foundations can donate.

We hope you’ve enjoyed this article. While you’re here, we have a small favor to ask…

As we prepare for what promises to be a pivotal year for America, we’re asking you to consider becoming a member.

The need for fact-based reporting of issues important to multi generational businesses and protecting a lifetime of savings has never been greater. Now more than ever, multi generational businesses and family businesses are under fire. That’s why FEUSA is passionately working to increase the awareness of issues important to generationally-owned family businesses built on hard work, while continuing to strengthen our presence on Capitol Hill.

@FamilyEnterpriseUSA @PolicyAndTaxationGroup @DitchTheEstateTax #FamilyBusiness #Business #SmallBiz #EstateTax #Deathtax #CapitalGainsTax #StepUpInBasis #Taxes #gifttax #Generationskippingtax #InheritanceTax #repealestatetax #promotefamilybusinesses #taxLegislation #AdvocatingForFamilyBusinesses #incometax #Generationallyowned #Multigenerationalbusiness

Family Enterprise USA is the organization that represents all family businesses on a national level in DC; it is not unique to any industry. Family Enterprise USA is different from other organizations because it represents and advocates for the families of family businesses and the issues, they face running their businesses every day. Our sole mission and purpose is to promote family businesses and their job growth in America. We also support the work of Family Business Centers across the country. We hope your family will choose to be a member of Family Enterprise USA.