Private Split Dollar is currently one of the hottest estate planning topics. It’s is a concept that has been highly publicized, but only described in detail in two Private Letter Rulings issued by the IRS.
Generally, a private (or family) split dollar plan is an arrangement between two family members, such as a parent and a child, or between a family member and a family trust.
It may be appropriate for clients who have estate tax problems, but who do not want to give up total control over cash values.
There are two variations of the Private Split Dollar module, designed to assist the producer in depicting the use of either a single life or survivorship policy.
The insured buys a single life policy through an irrevocable trust, so the insurance proceeds will not be subject to estate tax, and the trustee enters into a Split Dollar arrangement with full access to the policy’s cash values.
