Private Placement Life Insurance (PPLI) and Private Placement Annuities (PPA) - A Major Tax Planning Opportunity for HNW Clients in 2021
Friday March 19
3:00PM ET - 4:30PM ET
The recent appropriations bill (H.R. 133) and COVID-19 relief provisions, signed into law on Dec. 27, 2020, included a significant change to the interest rate assumptions underlying Internal Revenue Code Section 7702. The change in the IRC Section 7702 interest rate assumptions is applicable to life insurance policies issued on or after Jan. 1, 2021. For Private Placement Life Insurance (PPLI) policies, which are generally structured to include only the minimum amount of mortality risk needed to achieve optimal income tax treatment, the change in the Section 7702 interest rate assumptions will drive two very favorable outcomes:
- Increase in premium deposit capacity: An increase in the total premium deposit capacity for each individual that can be insured through a portfolio of PPLI Investment Accounts, and
- Lower cost: A reduction in drag on return caused by mortality expense, and a corresponding increase in the investment account value that can be accumulated within a PPLI Investment Account for each premium deposit.
With potential income and estate tax increases looming, every wealth advisor whose clientele includes High-Net-Worth (HNW) families should have a working knowledge of Private Placement Life Insurance (PPLI) and Private Placement Annuity (PPA) policies. In their exclusive LISI Webinar, Michael and Bryan will provide an overview of PPLI and PPA policies and review the following topics:
- The structural attributes and income taxation of PPLI and PPA policies
- Fees and charges
- Economic results that can be anticipated, including the impact of the changes to IRC Section 7702
- Allocating premium deposits - what investment options are currently available, and can a new investment option be created?
- Case Studies: Key Applications of PPLI and PPA for estate and income tax planning
- Reasons why a client would NOT utilize PPA and PPLI Investment Accounts - Good Reasons, Bad Reasons, Secret Reasons
- Bottom Line: which clients are the best candidates to utilize PPLI and/or PPA Investment Accounts??
Michael Liebeskind is a founder and owner of four independent operating businesses, all of which have a deep infrastructure:
Golconda Partners / Mandorlo International: Founded in 2019. Focuses on the development, implementation, and administration of very large portfolios of Traditional Life Insurance and/or Private Placement Life Insurance (PPLI) and Private Placement Annuity (PPA) Investment Accounts. Golconda Partners is licensed in the United States. Mandorlo International is licensed in Bermuda. www.golconda.com
SALI Fund Services: Founded in 2002. A Registered Investment Advisor (RIA) and the leading multi-series platform for the creation of new Insurance-Dedicated Funds (IDFs), which is the form of investment vehicle that can be attached to private placement life insurance and annuity platforms. SALI currently administers approximately $13.0 Billion of IDF assets. A minority interest in SALI was acquired by Long Ridge Equity Partners in 2018. Michael is no longer an Active Member. www.sali.com
Covala Group: Founded in 1993. Developed the first large-scale multi-life offering of supplemental long-term disability insurance (for the senior executives of Salomon Brothers) in 1993 and is now the leading enrollment/administrative firm in the U.S. for such programs. Michael led the firm’s sales effort from inception and created the firm’s enrollment and administrative processes. A majority interest in Covala was acquired in 2008 by NFP, which was privatized by Madison Dearborn in 2013. Michael is no longer an Active Member. www.covalagroup.com
Winged Keel Group: Founded in 1989. A leader in the traditional life insurance brokerage industry and in the private placement life insurance and annuity brokerage industry. Throughout his tenure with the firm, Michael was the leading producer and the primary technical expert and developer of the analytical tools, presentation/communication templates, and administrative processes that the firm continues to leverage. Michael is no longer an Active Member. www.wingedkeel.com
Michael graduated from Princeton University in 1981. He began his professional career with the accounting firm of Coopers & Lybrand, where he became a Certified Public Accountant (CPA) in 1984. He earned his Master of Business Administration (MBA) degree from New York University in 1986 and is a member of the New York State Society of CPAs, the Estate Planning Council of New York City, The Society of Trust and Estate Practitioners (STEP), and the Yale Insurance Study Group.
Bryan Bloom is a tax authority and attorney who provides personalized and comprehensive estate planning for family offices and tax and transactional advice for investment funds and investors. He designs multigenerational plans, putting into place the right system to integrate next generations into the business, investment and charitable philosophy of the family. Bryan maintains a keen focus on designing tax-efficient strategies to advance clients’ personal goals and to protect family legacies. His background as a long-time general counsel of an investment management firm supports his work advising clients on tax aspects of major transactions and various forms of investments, both on entering and exiting the investments. Given his background, Bryan is uniquely situated to integrate all facets of income and estate taxes into transaction structures, addressing a wide range of issues related to their assets and business interests.
Bryan’s background in tax, private equity, trusts and estates, charitable planning, and asset management allows him to serve the needs of family offices. His individualized counsel addresses structural issues that can arise as new generations are incorporated into family businesses and family offices. He implements solutions as appropriate through family meetings and in conjunction with clients’ investment and charitable strategies. Bryan leverages his tax, accounting and business backgrounds to deliver informed and creative solutions to preserve company legacies and address business challenges.
Bryan’s client representation is national in scope, including clients with substantial assets in Texas, Nevada and South Dakota. As a member of the Florida, New York and New Jersey bars, a large portion of his client base resides in those three states. He has re-domiciled many clients to Florida while continuing to serve as the family advisor.
Clients value his ability to arrange — and rearrange — ownership structures to minimize both estate and income taxes, and to achieve their personal goals, being they philanthropic, impact investing, or just tax planning. Bryan incorporates domicile planning into his tax analysis, counseling clients on changing domicile as appropriate and practical. He has represented clients in residency audits and in litigating other tax controversies in Tax Court.
Transaction and Business Counsel
Bryan advises clients on the tax implications of mergers, asset purchases, partnership investments and joint venture arrangements. He also provides general corporate counseling. Bryan spent 20 years as the general counsel of a private investment management firm and is steeped in the nuance of tax-efficient structuring of investments. As an adviser to clients, Bryan incorporates deep experience structuring investments in the most strategic way. He also assists clients in operating and disposing of portfolio assets.
A noted tax corporate authority, Bryan is a coauthor on two continuing education books that have been used by the American Institute of Certified Public Accountants (AICPA), Corporate Taxation and C Corporations, Mergers and Acquisitions in its continuing education programs. He was also an adjunct professor at the Graduate Tax Program at Fairleigh Dickinson University, teaching classes on partnership and corporate taxation.
Bryan has served on the board of directors of various public and private companies, including CKx, Inc., the company responsible for the success of American Idol. He also served on a variety of creditors’ committees, including Adelphia Communications and Bruno’s Supermarkets. Bryan’s governance experience has sharpened his insight into the tax and commercial considerations of businesses of all sizes and the corresponding challenges facing fiduciaries.
This experience has led Bryan to represent a number of trustees and trusts in carrying out their duties to their beneficiaries and to provide practical solutions to complex problems.
- Fairleigh Dickinson University Graduate Tax Program — Adjunct Professor, 1991-99
- American Institute of Certified Public Accountants — Lecturer, 1992-2004
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