Wisconsin Split-Dollar Life Insurance

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Multi-State
Control #:
US-CC-24-263D
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Word; 
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This sample form, a detailed Split-dollar life insurance document, is a model for use in corporate matters. The language is easily adapted to fit your specific circumstances. Available in several standard formats.

Wisconsin Split-Dollar Life Insurance is a specialized life insurance arrangement that offers unique benefits and tax advantages for both employers and employees. Split-dollar life insurance is a type of policy in which two parties, such as an employer and employee, agree to share the premium costs, policy ownership, and death benefits of a life insurance policy. In Wisconsin, there are primarily two types of Split-Dollar Life Insurance arrangements commonly used: 1. Irrevocable Split-Dollar Life Insurance: This type of split-dollar arrangement involves an employer providing a permanent life insurance policy for the employee. The employer pays the policy premiums, while the employee has the right to designate the beneficiaries. It is often used as an effective way to provide key employee benefits, estate planning, and executive compensation. 2. Collateral Assignment Split-Dollar Life Insurance: In this type of split-dollar plan, the policy is owned by the employee, and the employer loans the amount equal to its premium payments. The employee designates the beneficiary and owns the policy's cash value. However, upon the employee's death, the employer's loan amount is repaid from the policy proceeds, and the remaining amount is provided to the designated beneficiary. Both types of Wisconsin Split-Dollar Life Insurance arrangements have various advantages. For employers, they can use this strategy to provide a valuable employee benefit and attract top talent. It also allows the company to recover its premium payments upon the employee's death, as the death benefit repays the employer's loan amount. Additionally, it can help with executive compensation and serve as an effective succession planning tool. Employees benefit from Split-Dollar Life Insurance as well. They receive life insurance coverage at a lower cost or no cost, depending on the agreement. The cash value of the policy can grow over time, providing potential tax-deferred growth. They also gain control over the policy, such as designation of beneficiaries, access to policy loans, and potential supplemental retirement income. Wisconsin Split-Dollar Life Insurance arrangements require careful planning and consideration of the tax implications. Employers and employees should consult with experienced financial advisors or insurance professionals to develop a customized plan that meets their specific needs and goals. In summary, Wisconsin Split-Dollar Life Insurance is an effective and flexible life insurance arrangement commonly used to provide valuable benefits to both employers and employees. The two main types, Irrevocable and Collateral Assignment Split-Dollar Life Insurance, offer different ownership and repayment structures. By utilizing this strategy, businesses can enhance their employee benefits packages, provide executive compensation, and plan for succession, while employees enjoy valuable life insurance coverage and potential financial benefits.

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FAQ

dollar life insurance agreement (or ?splitdollar plan?) is a strategy generally used as an employer benefit or for estate planning involving life insurance. It's an agreement between two or more parties to share the ownership, costs, and benefits of a permanent life insurance policy, like whole life.

Split Dollar Loan Regime Agreement & Contract Generally, at the employee's death, the employer receives a portion of the death benefit (usually equal to the total premiums plus interest from the loan) and the employee's beneficiary receives the balance.

While split-dollar life insurance arrangements offer numerous advantages, they also come with potential drawbacks, such as complexity, tax considerations, and limited availability. Both employers and employees must carefully weigh the benefits and disadvantages of this type of arrangement before deciding to pursue it.

?Economic benefit? refers to how the IRS treats this type of split-dollar insurance agreement. It means your employer is giving you some benefit but not a loan. That means you'll be taxed on the value of the life insurance provided, and that value is determined by the IRS or the insurance company.

Employers are responsible for making split-dollar life insurance premiums, regardless of the plan's type. However, it is important to note that under loan arrangements, employees must repay the premiums via collateral assignments made to their employer.

Common fringe benefits are basic items often included in hiring packages. These include health insurance, life insurance, tuition assistance, childcare reimbursement, cafeteria subsidies, below-market loans, employee discounts, employee stock options, and personal use of a company-owned vehicle.

There is no cost to the employee-participant unless the policy is transferred to them. This endorsement split-dollar plan is most often used to provide a low-cost death benefit to the employee-participant as a fringe benefit or where the employer wishes to own the policy and/or obtain key person protection.

The best way is to contact the policy's issuer (the life insurance company). Their records are key: even if you see your name listed on an old policy document, the deceased may have changed their beneficiaries (or the allocation of benefits among those beneficiaries) after that document was printed.

dollar life insurance agreement (or ?splitdollar plan?) is a strategy generally used as an employer benefit or for estate planning involving life insurance. It's an agreement between two or more parties to share the ownership, costs, and benefits of a permanent life insurance policy, like whole life.

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Creating a split dollar policy does not require any IRS approval and the administration necessary to complete the process is quite minimal. Cost-effective ... Oct 24, 2023 — Uncover the benefits, drawbacks and mechanisms of split-dollar life insurance in our insightful and detailed guide.Feb 21, 2020 — Split-dollar life insurance agreements can be a valuable tool to attract and retain executives. Though there are two types of agreements, ... Nov 18, 2020 — The agreement usually describes how the premium will be split, how the death benefit will be split, what the employer's rights are in regard to ... In a split-dollar plan, an employer and employee execute a written agreement that outlines how they will share the premium cost, cash value, and death benefit ... A split-dollar program can be designed to provide non-taxable supplemental income timed to meet the participant's needs (if the contract is properly structured ... The purchase price of the Policy shall be the sum of the interpolated terminal reserve and any unearned premiums, plus a pro-rata portion of dividends expected ... Feb 7, 2017 — Key Decisions for Designing Split Dollar Plans · Who will pay the premiums · Who will have access to the cash values · Who will be the beneficiary ... Aug 4, 2022 — With a split-dollar life insurance policy, the premiums are paid by the policyholder and the beneficiary. The death benefit is then divided ... A split-dollar life insurance plan is an agreement between an employee and employer on how they will share the death benefit and premium costs of a permanent or ...

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Wisconsin Split-Dollar Life Insurance