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Aug 6th, 2022
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How to Set type in the Split Dollar Agreement

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[Music] hello Im Jamie Hopkins and Im joined here with Steve Parrish thanks for joining my pleasure and I want to talk to you about a planning technique with life insurance we call split dollar life insurance and I know a lot of our students are familiar with this they use it the advisors out there it is not that you know an unheard-of thing but for some of our students they might not be that familiar with it if they didnt come from the insurance side or business planning side and and you just give us a little background what do we mean by split dollar life insurance well it comes from the the term split dollar meaning somebody has a need and somebody else has the ability to pay for words and thats where that term came from and really the healthy in days of split dollar before 2003 it was used a lot for retirement planning death benefit planning estate planning and what happened is the IRS said its being used a little too much and so they they said wait a minute and so some regul

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Disadvantages of split dollar life insurance plans Your business will generally receive no tax deduction for its share of premium payments under the split dollar plan. Depending on how the agreement is structured, employees may have to pay income taxes each year on the value of the economic benefits provided to them.
There are 2 types of split dollar plans. Collateral assignment / loan regime. Endorsement split dollar / economic benefit regime.
What is a split-dollar life insurance plan? A split-dollar life insurance plan is an agreement between an employer and an employee in which they hold joint ownership of a permanent cash-value life insurance policy, including its benefits and premiums.
In a split-dollar plan, an employer and employee execute a written agreement that outlines how they will share the premium cost, cash value, and death benefit of a life insurance policy.
Principal Loan Split Dollar is a plan that allows employers to reward key employees by helping them meet their financial security goals, while also providing survivor benefits for their families. It also offers options for recovering employer costs for this benefit.
There are 2 types of split dollar plans. Collateral assignment / loan regime. Endorsement split dollar / economic benefit regime.
Under the economic benefit arrangement, or economic benefit regime) the employer is the owner of the policy, pays the premium and endorses or assigns certain rights or benefits to the employee. The employee is allowed to designate beneficiaries who would receive a portion of the policy death benefit.
A split dollar arrangement is a plan in which a life insurance policys premium, cash values, and death benefit are split between two parties. A split dollar arrangement can be helpful in estate liquidity planning to minimize income, estate, and gift taxes.

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