Takeaways on Investor ControlTakeaways on Investor Control

Many articles¹ have been written about the recent investor control case, Webber v. Commissioner.² In Webber, the Tax Court found the policyholder personally liable for taxes on income earned on assets held in separate accounts that supported offshore private placement life insurance (PPLI) policies, because he maintained excessive control over the policies’ assets and, therefore, was considered their owner for tax purposes. While the facts in the case were extreme, the case highlights the continued importance of the investor control doctrine and how courts will apply it to PPLI and annuities.

High-net-worth clients considering private placement variable products should expect that the Internal Revenue Service and Tax Court will look beyon...