Pam is a business owner who acquired multiple life insurance policies over many years. Now as she updates her estate planning, her attorney recommends that she have her policies reviewed. Pam needs more life insurance but does not want to spend more than what she is currently paying. Furthermore her old irrevocable life insurance trust, which owns the policies, has outdated provisions that Pam wants to change. CFG is referred to P am by her attorney. Our review of her policies indicated that two of the policies are underperforming and will require premiums much longer than originally planned. Pam’s health is still good; current insurance pricing for Pam is less expensive than when Pam purchased her policies. Pam can replace her policies and spend the same amount as she was previously but acquire an additional $10 million of coverage---with no additional costs and no gift tax. Furthermore, CFG worked with Pam’s attorney to transfer the old policies, tax-free out of the old life insurance trust. The attorney drafted a new trust for Pam which meets her current goals.
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Case Study 7