The number one issue wealthy families face on a worldwide scale today is debt. The past decades of “cheap money” have resulted in fiscal and monetary imbalances that make for a formidable enemy of freedom, wealth and prosperity. There are a variety of predators of wealth out there to consider. Thus, your wealth plan should entail a structure that affords proper tax planning and solid risk management.
Equally, at BFI, our comprehensive approach to international wealth management starts with structure and risk management considerations. We believe that the first step towards prudent jurisdictional diversification should focus on a plan that incorporates the cornerstones of wealth planning, such as jurisdictional and institutional safety, legal asset protection, long-term flexibility or tax efficiency.
Private Placement Life Insurance (PPLI) efficiently addresses these needs in a relatively simple, truly integrated and tested model.
What is PPLI?
In brief, PPLI is a multi-jurisdictional wealth planning tool available on a private placement basis to wealthy families and high net worth individuals. It is based on life insurance and annuity policies that allow for personally tailored and internationally diversified investment strategies. The concept is at times referred to as “private banking insurance” or “insurance wrappers”. In other words, PPLI presents a planning structure, similar to trusts, LLCs or foundations, that allows your internationally diversified portfolio to be enveloped within the legal structure of a life insurance or annuity policy resulting in a number of desirable wealth planning benefits.
The investment gains achieved within a PPLI policy accrue tax-free within the policy, thus accelerating the performance of the assets via tax-free compounding. Further tax benefits, such as tax-free loans, tax-free withdrawals and tax-free inheritance of the policy’s face value, may be achieved depending upon the choice of policy employed.
Because of its structure, assets in the PLLI investment portfolio can be allocated into investment opportunities and strategies otherwise not available to US investors directly. All investments are made in the name of the insurance carrier, a non-US person. Thus, the ordinary restrictions of international funds that may restrict investments by US persons will not apply.
A high degree of investment flexibility and choice applies. The policyholder can choose the custodian bank, the asset manager and the investment strategy. Furthermore, these choices can be adjusted over time as desired.
A PPLI policy can be owned individually or by a legal structure such as a trust, a foundation, a pension plan or an LLC.
Furthermore, ownership and the designated beneficiaries can be changed during the life of the policy.
Funds may be partially withdrawn or entirely liquidated at any time. The PPLI portfolio may be pledged in exchange of a loan.
Flexible transfer of wealth
To the beneficiaries of choice. This can be done without the requirement of a will or trust. Upon death of the insured person(s), the value of the PPLI policy plus any death benefit (if applicable) is paid directly to the beneficiaries listed in the policy, and separate from probate.
If there is insurance cover required, it is valid from the first day of the contract term.
Solid asset protection
Asset protection based on the life insurance laws of the carrier’s jurisdiction. These laws protect the assets in the portfolio from the risks of frivolous lawsuits, confiscation and bankruptcy.
Based on the carrier’s jurisdiction and that country’s applicable segregated account laws, the invested assets within the structure are protected from the carrier’s institutional insolvency and default.
The unique PPLI structure contains a system of multi-layer checks and balances, thus providing for secure global investment capacity.
Transparent cost structure
At least annual reporting on the PPLI portfolio. Further personalized reporting frequency and options can be achieved through BFI’s services.
At BFI we always look for solutions that afford our clients solid wealth management benefits. PPLI is a tool we have used for over 20 years. Over this period, BFI has become a recognized expert and service provider in the context of the planning and implementation of international PPLI solutions, and with a specialty in servicing investors with US connections.
How do I minimize future tax burdens? How do I retain and grow my wealth in a safe and sustainable way? How do I ensure that my heirs benefit from it? How can I achieve all that privately and in compliance with US laws and regulation?
These questions need to be answered. These are the questions we deal with on a daily basis.
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