Abstracts » Law

The WRAP Trust

Article Abstract:

The Wealth, Retirement and Asset Protection (WRAP) trust combines the use of life insurance and Crummey powers to remove the cash value of a life insurance policy from the insured's estate while still permitting access through loans. The transferred funds are free of gift tax using the annual exemption and Crummey powers. The cash value of the life insurance policy can be accessed by income tax-free loans that do not create an incident of ownership because they must be re-paid and interest is charged. Assets in the trust are excluded from the estate and the claims of creditors.

Innovations, Trusts and trustees, Trustees, Crummey trusts

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Estate planning implications of nonqualified deferred compensation benefits

Article Abstract:

Financial planners may use insurance products to help to reduce estate or income taxes which may result when employees die before retirement benefit contract periods. Nonqualified deferred compensation plans can be less costly if surviving spouses or marital trusts are named beneficiaries. Split-dollar life insurance may be useful as a funding mechanism which can provide beneficiaries with death benefits. Reference to detailed examples may be useful.

Employee benefits, Deferred compensation

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Leveraged wealth transfer with asset protection

Article Abstract:

A combination of spendthrift trusts, life insurance and generation-skipping exemptions and exclusions can provide a strategy for long-term asset protection with leveraging but strict rules must be followed. There are two ways to make a life insurance policy into a generation-skipping tax (GST)-exempt life insurance trust: through IRC 2642(c) GST annual exclusions and the IRC 2632 GST allocation. Examples of these dynasty trusts are provided.

Trusts, Funds, Trusts, and Other Financial Vehicles, Generation-skipping trusts

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