An Old Insurance Policy Yields Hidden Treasure
Our client’s successful business had accumulated considerable retained earnings. The issue for him lay in the high income tax he would have to pay in order to take the money out for his personal use.
A little detective work on our part uncovered his twenty-year-old whole life insurance policy, which was fully paid up. With our knowledge of an upcoming potential change in the tax laws, we were able to time things appropriately to transfer the policy to the company in return for a significant promissory note to our client.
The policy will, of course, still provide a tax-free payout on the client’s death, but in the meantime allows him to take significant amounts ofmoney out of the business without incurring any tax liability.
This very happy client was able to not only provide for his family when he dies, but also enjoy the fruits of his labour while he lives.