Bfi long term estate planning options for international investors and families


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  • Talking of an envelope: Washington Taxes A little boy wanted $100 badly and prayed for two weeks but nothing happened. Then he decided to write a letter to the Lord requesting the $100. When the postal authorities received the letter addressed to the Lord, USA, they decided to send it to President Bush. The President was so impressed, touched, and amused that he instructed his secretary to send the little boy a $5.00 bill, as this would appear to be a lot of money to a little boy. The little boy was delighted with the $5.00, and sat down to write a thank-you note to the Lord. It said: Dear Lord, Thank you very much for sending me the money. However, I noticed that for some reason you had to send it through Washington, DC and as usual, those jerks deducted $95.
  • MARTIN FISCHER : Knowledge is a process of piling up facts; wisdom lies in their simplification.
  • Bfi long term estate planning options for international investors and families

    1. 1. Thinking long-term: Estate planning options for international investors and families The nuts and bolts of multi-jurisdictional private placement life insurance planning Presented by Frank R. Suess QWealth Symposium, September 2010, Cork, Ireland © BFI Consulting Inc. All rights reserved.
    2. 2. What we do – structure first, then invest Long-term planning does NOT start with asset allocation! © BFI Capital Group Inc. All rights reserved. Personalized Wealth Management Solutions Wealth Planning Services <ul><li>Structure Solutions </li></ul><ul><li>Tax & Estate Planning </li></ul><ul><li>Asset Protection </li></ul><ul><li>Trust and Corporate </li></ul><ul><li>Insurance brokerage </li></ul>Asset Allocation, Portfolio Management and Global Custody Services <ul><li>Private Banking </li></ul><ul><li>Access to First-Class Banks at Institutional Terms </li></ul><ul><li>Performance Tools </li></ul><ul><li>Consolidated Reporting </li></ul><ul><li>Portfolio Management </li></ul><ul><li>Asset allocation and discretionary management </li></ul><ul><li>Tailored Portfolio Strategies </li></ul><ul><li>The BFI MAP™ </li></ul>
    3. 3. Life insurance becoming a key instrument in today’s global wealth planning toolkit Foundations Trusts Wealth planning tools Strong demand for needs-based solutions based on life insurance (PPLI) <ul><li>Integrated wealth management with ‘high-end life insurance’ </li></ul><ul><li>Worldwide recognised legal format </li></ul><ul><li>Effective and compliant structure: demand for transparency and on-shore solutions </li></ul><ul><li>Substitute or complement to traditional wealth planning instruments </li></ul><ul><li>Still underpenetrated market </li></ul>Life Insurance (PPLI)
    4. 4. Structuring a wealth management plan within a life insurance policy...?! © BFI Capital Group Inc. All rights reserved. „ Insurance Envelope“ Your personalized investment portfolio
    5. 5. The basic structure of „new life insurance“ Segregated account(s) for the benefit of policy xyz Variable returns <ul><li>Key Points: </li></ul><ul><li>Beneficial owner of the assets in the policy account is the carrier. </li></ul><ul><li>Insurer insolvency does not expose policy assets. </li></ul>Policy Assets Insurer General Account Policyholder Insurer Policy xyz with fixed returns / benefits Asset Manager / Advisor Limited Power of attorney
    6. 6. Personalized wealth management in your insurance structure Asset management tailored to meet your personal investment objectives „ Insurance Envelope“ tailored to meet the legal requirements of your tax domicile Policyholder Insurer Policy Assets Segregated account(s) for the benefit of policy xyz Asset Manager / Advisor Limited Power of attorney Policy xyz with “ variable” returns / benefits
    7. 7. Multiple Jurisdictions - Who is the investor? Policyholder Insurance Company Bank / Policy Account Independent Asset Mgr. US Liechtenstein Cayman CH <ul><li>Key Point: </li></ul><ul><li>Investor is the insurance carrier, NOT a US person! </li></ul>
    8. 8. Getting it right, from the start, for the long-term Key elements of solid wealth management solutions <ul><li>Safety – jurisdictional and institutional… </li></ul><ul><li>Asset Protection – from plaintiffs and creditors... </li></ul><ul><li>Privacy – keeping your affairs confidential... </li></ul><ul><li>Global investment flexibility – no restrictions or limitations... </li></ul><ul><li>Tax benefits – during lifetime and after... </li></ul><ul><li>Full compliance – peace of mind!... </li></ul>© BFI Capital Group Inc. All rights reserved.
    9. 9. <ul><li>Tax Benefits </li></ul><ul><ul><li>Earnings accrue tax-free… / tax-free compounding </li></ul></ul><ul><ul><li>Depending on policy-type and jurisdiction, tax-free surrenders / death benefits </li></ul></ul><ul><ul><li>Tax-free loans possible </li></ul></ul><ul><ul><li>Ideally suited for cross-border planning needs </li></ul></ul><ul><li>Security </li></ul><ul><ul><li>Suitable for long-term planning due to contractual structure </li></ul></ul><ul><ul><li>Local and international laws on asset protection and privacy </li></ul></ul><ul><ul><li>protection from default of carrier </li></ul></ul><ul><li>Planning flexibility </li></ul><ul><ul><li>one or more policyholders, one or more insured, individual or legal entities </li></ul></ul><ul><ul><li>flexibility to change beneficiaries at any time </li></ul></ul><ul><ul><li>flexible and direct transfer of wealth, separate of probate </li></ul></ul>Various Planning Considerations
    10. 10. <ul><li>Confidentiality </li></ul><ul><ul><li>Non-reportable in most jurisdictions </li></ul></ul><ul><ul><li>Transactions / Investments done in the name of the insurance carrier </li></ul></ul><ul><li>Liquidity </li></ul><ul><ul><li>withdrawal or liquidation possible at any time, no surrender penalties </li></ul></ul><ul><ul><li>lump-sum or regular payments </li></ul></ul><ul><ul><li>efficient loans via Portfolio pledge </li></ul></ul><ul><li>Investment Flexibility </li></ul><ul><ul><li>Choice of asset manager / investment strategies </li></ul></ul><ul><ul><li>Investment allocation / strategy can be changed at any time </li></ul></ul><ul><ul><li>Inclusion of non-bankable assets possible </li></ul></ul>Various Planning Considerations (cont’d) © BFI Consulting Inc. All rights reserved.
    11. 11. Structuring your insurance portfolio Individual, Partnership, Trust, Company, etc. Life Insurance Policy Segregated Account Investments (incl. legal entities…) Policy Contract (policyholder, insured, beneficiaries) “ Above” the Policy “ Below” the Policy
    12. 12. Caveats <ul><li>Inheritance / Estate tax not avoided by life insurance solutions per se </li></ul><ul><li>Beware of advisors who don‘t do their homework </li></ul><ul><ul><li>Generally, the policy should come with a legal opinion </li></ul></ul><ul><ul><li>The choice of carrier and its jurisdiction are critical </li></ul></ul><ul><li>Transfer of existing portfolio (“In kind premium”) subject to CGT </li></ul><ul><li>What are your primary objectives? You may not be able to „have it all“…, for example: </li></ul><ul><ul><li>Flexibility / Investments „underneath“ vs. tax benefits </li></ul></ul><ul><ul><li>Retirement planning versus inheritance planning </li></ul></ul><ul><li>Cost of insurance </li></ul>
    13. 13. Some of the jurisdictions with the most favorable tax laws <ul><li>Austria </li></ul><ul><li>Germany </li></ul><ul><li>Italy </li></ul><ul><li>Mexico </li></ul><ul><li>South Africa </li></ul><ul><li>Spain </li></ul><ul><li>Sweden </li></ul><ul><li>United Kingdom </li></ul><ul><li>United States of America </li></ul>
    14. 14. Emerging Role of Life Insurance “ New” Life Insurance Income Tax Planning Capital Gains Tax Planning Death / Estate Tax Planning Hedge against Death Dynasty Planning Immigration / Emigration Multiple Jurisdictions Investment Flexibility Securities Laws Asset Protection Financial Privacy
    15. 15. A glimpse of a few specialties <ul><li>Inclusion of non-bankables, e.g. </li></ul><ul><ul><li>International real estate </li></ul></ul><ul><ul><li>Physical precious metals </li></ul></ul><ul><ul><li>Pre-IPO / Pre sale </li></ul></ul><ul><li>Combined strategies, e.g. </li></ul><ul><ul><li>Nongrantor trust structures </li></ul></ul><ul><ul><li>ILITs </li></ul></ul><ul><li>Limited cash value policies, e.g. </li></ul><ul><ul><li>Frozen Cash value </li></ul></ul><ul><ul><li>Zero Cash Value </li></ul></ul><ul><ul><li>Limited with Risk Shift </li></ul></ul><ul><ul><li>Etc. </li></ul></ul>
    16. 16. Any Questions? <ul><li>Thank you for your attention! </li></ul>© BFI Consulting Ltd. All rights reserved. © BFI Consulting Inc. All rights reserved.