Superfunding ILITs

 

Launch the Superfunding Calculator

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The Superfunding technique is used with the Loan-Based Private Split Dollar illustration module which is part of the InsMark Loan-Based Split Dollar System (which also includes the Loan-Based Split Dollar illustration module for plans cast between employers and executives). Superfunding involves making a single loan to the policyowner (an irrevocable trust) which is deposited into a Premium Reserve Account from which the trustee each year withdraws the annual premium for the policy. The advantage of this strategy is to lock down the current low, long-term Applicable Federal Rate for the life of the insureds without resorting to use of a single premium which would have the negative result of producing a modified endowment contract (MEC) thereby eliminating the option for the trustee to access policy cash values on a tax favored basis for loan repayment or for distribution to heirs.

Superfunding Example Using Indexed Survivor Universal Life

(Survivor universal life and whole life also illustrate well with this concept.)

  • Insureds: Jerry and Janet Grant
  • Ages: 65/60
  • Policyowner: Grant Family Trust
  • Policy Face Amount: $12 million
  • Illustrated Premium: $706,649 (paid for 5 Years)
  • Number of Annual Gift Exemptions: 6 (3 children)
  • Premium Reserve Account Tax Exempt Interest Rate Assumption: 3%
  • Long-Term Applicable Federal Rate: 2.52% (February 2013)
  • Years to Illustrate: 35

 

Review the case below:

Here is how the plan design was established using the Superfunding Calculator:
the Superfunding Calculator:

 

Launch the Superfunding Calculator

Trouble accessing the Superfunding Calculator?  Try using Microsoft's Internet Explorer.

Use the Superfunding Calculator™ to see how to fund a trust-owned policy far beyond your wildest imagination --while incurring no gift taxes.

Click here for an Overview of Loan-Based Private Split Dollar.

Click here for a summary of the features of Loan-Based Private Split Dollar.

Click here for a summary of the features of the Loan-Based Split Dollar which is cast between employers and important executives of privately-owned companies.

Click here to license the InsMark Loan-Based Split Dollar System.

 

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