During an ITM TwentyFirst University webinar on trustee liability, I described a replacement case that came into our remediation department. A grantor with a whole life contract in his trust had decided to stop gifting. His agent advised him to complete a 1035 exchange of the cash value from the existing policy into a new current assumption policy. The exchange, with no other premium, would [...]
The cost of insurance (COI) increases of the last 18 months have wrecked estate plans and created financial hardship among policy owners. The negative effect is clear – some policy carrying costs have more than doubled (see:Transamerica Cost Increase Causes Premium to Maturity to More Than Double: A Case Study for Trustees). What is not so clear – who is to blame? No less than five [...]
A recent US Tax Court Memo identifies the financial risk in unwittingly or intentionally mismanaging a life insurance policy. In 1987, a policy owner purchased a single premium variable life policy (since this was pre Code Section 7702A, it was not considered a modified endowment contract) with a payment of $87,500. The policy contract permitted the owner to take loans from the policy, allowing any [...]
In the past few years, we have seen a rash of lawsuits against 401(k) plan sponsors. Most of these suits allege that plan sponsors shirked their fiduciary duties, usually for allowing excessive fees or self-dealing. Well-known firms like Lockheed Martin and Boeing have signed multimillion-dollar settlements with their employees. Even financial firms that provide 401(k) plans to the public have recently been sued by their [...]
The TOLI world has been altered with the estate tax law changes of the last few years. Today’s wealthy couple can pass on more than ten million dollars in assets to their heirs before incurring any estate tax liability. In the last decade this has decreased the number of individuals subject to the estate tax by more than 80% (1). Because of this, the number [...]
Michael Brohawn, CFP, CLU
Randy Pople, CFP®, AEP®
