Comprehensive Capabilities

  The foundation of AWP Life Brokerage is the belief that firms are strengthened by the ability to work in tandem as a unified consortium.  Our specializations include insurance concepts and...


Industry Leader

  AWP has proven continual leadership in delivery of benefits solutions for companies of any size as well as we continue to be a leading enterprise in life insurance planning and...


Institutional Relationships

Institutional accounts are integral to our overall distribution plan.  We define institutions as banks, wirehouses, regional broker dealers, and CPA networks. AWP has acquired recognition as a player in the institutional...


Pioneering Captive Insurance

Introduction Despite the fact that the concept of “captive” traces its origins to the beginnings of formalized trade, many people believe captive insurance companies to be a relatively new phenomenon.  Formed...


Premium Financing

Many affluent clients are aware of the benefits that life insurance can provide.  However, clients often harbor concerns that a substantial income tax liability will result from liquidating low basis...


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Asset Protection

In General


“Asset protection” makes reference to various legal arrangements that impose difficulties for creditors to reach certain assets without committing fraud of otherwise violating the law.  As a general rule, Nevada law does not permit one to transfer assets to hinder, defraud delay, or otherwise frustrate the collection of existing obligations, but Nevada law does permit one to shield assets from future potential creditors under appropriate circumstances.


Business Entities


Business entities, inclusive of corporations, limited partnerships, and limited-liability companies, can be used for the purpose of shielding personal assets from business liabilities and likewise business assets from personal liabilities.


Spendthrift Trusts


A "spendthrift trust" is an irrevocable trust in which assets are protected under state law from creditors of a beneficiary.  Most states do not allow a spendthrift trust to be established for the benefit of the trust's settlor (creator).  However, since October of 1991, Nevada law has permitted a settlor to establish a spendthrift trust for his/her own benefit if there is a Nevada trustee with specific authority required by law involved.  A person other than the settlor must approve all distributions to or for the settlor, and transfers to such a trust cannot be fraudulent transfers or in violation of a contract or court order.  This type of trust falls under the category in technical treatises on trusts as a "self-settled spendthrift trust" (SSST).  For greater protection, offshore trusts are often used, especially if protection is needed against claims governed by federal law, including claims by the IRS, SEC, FTC, and other federal agencies.

 

Review of the assets and sources of income listed on a personal financial statement provides potentially revelatory planning opportunities that can help you transfer wealth to your heirs with greater efficacy.


An AWP office can assist you with repositioning some of the identifiably inefficient financial statement items into more efficient assets and, in this way, potentially assist you in passing on more wealth (especially if you will be subject to estate and/or inheritance taxes).


One asset that can be attractive to reposition less efficient assets into is life insurance.  For the following reasons, it has several potential advantages compared to other types of assets:


- The death benefit generally passes income in a tax-free manner to designated beneficiaries.


- Annual premiums generally are considerably less than the death benefit, potentially providing substantial leverage.


- Life insurance can be simple to own as an asset outside the taxable estate without onerous gift tax consequences since the gift is equivalent to only the annual premiums, and these may fall within the client’s annual gift exclusions.

 

Inefficient assets that are not needed for retirement can be fully or partially liquidated and their proceeds can then be channeled to provide a potentially greater inheritance via the payment of premiums on a life insurance policy owned outside the taxable estate.  Additional leverage may be obtained alternatively by using the proceeds of liquidated assets to purchase a single premium immediate annuity (SPIA) and using the income stream to pay life insurance premiums.

 

Market fluctuations can impact the value of an investment portfolio.  This is important to be aware of given that the amount of wealth transferred to your beneficiaries is based on the value of your investment portfolio at an indeterminate point in the future.  Depending on the performance of the investment portfolio, your beneficiaries may receive more or less than expected.  By allocating a small portion of your portfolio to purchase a life insurance death benefit, you may hedge market losses.  In doing so, you may increase the amount of wealth transferred to your beneficiaries.

 

Life insurance is a unique asset in that the death benefit risk is borne of the life insurance carrier, which will pay the death benefit in full in the event of death regardless of the “timing.”  As a result, life insurance provides you with a death benefit that is uncorrelated to other sectors of the investment marketplace, such as equities or bonds.  In other words, the death benefit is based on the event of death alone – not on a market event that can cause a downturn in value.

 

Highlights


- Life insurance death benefit potentially affords significant leverage, especially in the early years, and may increase amount of wealth transferred to heirs


- Directing a portion of portfolio to life insurance premiums allows client to hedge against market losses


- Life insurance death benefit is not correlated to other sectors of investment marketplace, such as equities or bonds


- Potential to increase tax-adjusted internal rate of return of client’s portfolio


- In cases where properly owned, death benefit can be received free of estate and income tax