JHAM Radio - Beneficiary Defective Inheritor's Trusts

Interview of Steve Oshins, a principal architect of this innovation in asset protection / wealth transfer planning. Presented by John Hancock Advanced Markets Radio.

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Beneficiary defective inheritor's trust

Robert Moshman (writer and attorney) has written an article entitled The Estate Analyst: "Freeze, Squeeze & Burn Trusts", Feb. 15, 2009.

Here is a summary of the article:

Richard Oshins has come up with a completely new approach for estate planning, a beneficiary defective inheritor's trust. This arrangement works by "freezing" estate asset values, "squeezing" value by exchanging minority interests in businesses that are subject to valuation discounts, and "burning" off the trust's income tax strategically. Will this new trust withstand IRS scrutiny? Will it be too expensive to administer? The article lays out a nice overview of this new type of estate planning technique.

Opportunity Shifting: A Life Insurance and Estate Planning Technique

by

STEVEN J. OSHINS

Abstract: Opportunity shifting is a technique used to move anticipated future wealth into irrevocable trusts so that the wealth can be protected from estate, gift, and generation-skipping transfer taxes, and creditors, including spouses and ex-spouses. Whenever the owner of a large estate has a "hot" business or investment opportunity, the estate owner should consider "referring" the opportunity to a trust that is protected from transfer taxes and creditors. This strategy can create a large cash flow inside the trust to pay the premiums for large life insurance policies. full article

Terminal Funding Group Annuity Contracts

Under a Terminal Funding contract, annuity purchases can be made for participants retiring under the contract on an as needed or on going basis as they retire. In effect, it can be a series of single premium purchases under one Group Annuity Contract. The Terminal Funding Contract is suitable for an active plan.

The need for these group annuity contracts can result from a plan sponsor’s desire to alleviate administrative costs or as an added benefit option for departing employees who desire a reliable immediate fixed annuity option upon retirement.

Applications

PENSION PLAN TERMINATION

• Replacement with 401(k) program
• Mergers and acquisitions
• Bankruptcy and financial hardship
• Frozen plans

SETTLEMENTS

• Accounting gains (FAS 87 / 88)
• Expense savings for terminated vested or retired participants
• Risk transfer

New York Life

NYLIM Guaranteed Products offers a broad range of traditional and customized products to institutional investors with low risk characteristics that seek to provide stable returns.

New York Life’s Terminal Funding Group Annuity Contract is a non-participating group annuity contract designed to provide guaranteed fixed annuity benefits payable under either Qualified Defined Benefit or Defined Contribution plans.

David D'Auria,
Second Vice President
Phone: 973-394-3264
david_d’auria@nylim.com

John Hancock

Kevin Farquhar - 617-663-4740

AIG

A Terminal Funding or Annuity Buyout contract is a Single Premium Group Annuity (SPGA) product that can guarantee benefits of a pension plan's retired, active or deferred vested participants. The insurer determines the present value, or premium, needed to purchase a group contract through which the employer or plan sponsor can transfer selected plan liabilities in the form of fixed or variable annuities for each plan member. Buyouts are typically used in cases of plan termination or settlements, often in conjunction with corporate restructuring.

For more details about Annuity Buyouts, please contact us at 212-770-2334 or email us at pensionannuitybuyouts@aig.com.

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