Sponsored By
Trusts & Estates logo

Side Fund Split Dollar Under The Loan RegimeSide Fund Split Dollar Under The Loan Regime

A beneficial and flexible strategy.

+1
Lawrence Brody, David Byersand 1 more

August 29, 2022

19 Min Read
Brody- GettyImages-963121676.jpg

Split-dollar life insurance transactions can be an efficient technique1 to fund large life insurance death benefit amounts outside the insured’s estate even after the Treasury Regulations Sections 1.61-22 and 1.7872-15 were enacted in 2003. If the current higher exemption isn’t extended beyond its scheduled sunset at the end of 2025, or is reduced earlier, many more estates would benefit from the infusion of insurance liquidity that split dollar can efficiently facilitate.2 

Two Regimes

The regulations provide for two regimes for split-dollar transactions: (1) economic benefit; and (2) loan.3 Under the economic benefit regime, the measure of a grantor’s annual gift is the economic benefit of the net death benefit coverage of the policy for...

Unlock All Access Premium Subscription

Get Trusts & Estates articles, digital editions, and an optional print subscription. Choose your subscription now and dive into expert insights today!

Already Subscribed?

About the Authors

Lawrence Brody

Senior Counsel, Harrison & Held, LLP

Lawrence Brody retired as an Adjunct Professor at Washington University School of Law, after fifty years of teaching Estate Planning and Drafting.  He is a visiting Adjunct Professor at the University of Miami Law School, teaching a course on Life Insurance.  Mr. Brody is the author or co-author of numerous articles and books on the use of life insurance in estate and employee benefit planning, including two BNA Tax Management Portfolios, two books for the National Underwriter Company, and a number of volumes in the ABA Insurance Counselor Series.

Mr. Brody is a frequent presenter for ALI-CLE estate planning programs, Society of Financial Professionals programs, major life insurance industry programs (including the MDRT, LIMRA, the Top of the Table, AALU and the International Forum), the Heckerling Institute, the Notre Dame Estate Planning Conference, the Southern Federal Tax Institute, the NYU Tax Institute, the NAEPC Annual Meeting, and regional and annual ACTEC conferences.

Mr. Brody is a member of The American College of Trust and Estate Counsel (ACTEC), an emeritus member of the Advisory Committee for the Philip E. Heckerling Institute on Estate Planning (University of Miami School of Law), and a member of the Editorial Board of the Society of Financial Service Professionals CLU Journal.   Mr. Brody received the designation of Accredited Estate Planner by the National Association of Estate Planners and Councils and was one of ten individuals awarded its Distinguished Accredited Estate Planner designation in the initial class (2004).  He has been named in the Private Wealth Law Section of Chambers High Net Worth Guide. Mr. Brody was named a Distinguished Law Alumni by Washington University School of Law in 2012.

David Byers

Managing Principal, Capital Strategies

David Byers is managing principal at Capital Strategies in Birmingham, Ala. 

 

 

Alexander Jones

Tax Counsel, Capital Strategies Group, Inc

Alexander Jones is tax counsel at Capital Strategies Group, Inc. in Birmingham, Ala.