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Premium Financing Quarterly

How Estate Planning Leads To Financing Insurance

An estate planning attorney urges his real estate client to seek out premium financing With an estate worth $70 million, Steve Oshins’ real estate investor client has a large life insurance need. His client is divorced, so his federal estate tax exemption is $11.58 million, thanks to recent reform, said Oshins, an attorney in Las Vegas. At a 40% rate, that leaves an estate tax bill of more than $23 million. Sure, the client’s heirs could sell off the properties, one of which alone is worth $40 million. But real estate is notoriously illiquid, and estate taxes are due within nine months of death. Further complicating the situation is that the client also lacks liquidity to pay the premium on a $20+ million policy. In addition to having the bulk of his money tied up in the properties, the client’s income consists of periodic refinancing of the properties. Those circumstances make him a prime candidate for premium financing. “In this case,” Oshins said, “I referred him to an insurance agent because I saw what his estate tax exposure was.”

client, but he is not going to that meeting with all the details. “For the meeting with the advisors, I bring my business card,” Whitmore said. “I don’t bring illustrations. I don’t bring any numbers. It’s a conceptual sale and about getting the advisors on board.” Whitmore learns what the advisors know about insurance and premium financing and if they have any bias. He also learns about the larger context of the estate plan. “If I come in with a plan and then the attorney has a different idea of what they want to do, it’s never going to happen,” Whitmore said. “With the collaborative process, it’s a holistic planning process with their attorney. Because this is an estate tax issue, he’s going to be the architect

of the plan. The premium financing is just a strategy within that plan.” Then if the attorney or the CPA is on board, they not only support the sale but also make it an integral part of the overall plan for the client. In essence, they sell the insurance and financing when they meet with the client. “At that meeting, it’s going to be the client’s advisors,” Whitmore said. “I go in. The CPA is there, the attorney’s there, the insurance advisor and the client. We then walk the client through the strategy. At that point, it’s a strategy where everyone is on the same page, and it’s going to be recommended by the attorney, CPA and all their advisors. The likelihood of a client moving forward is greatly increased.”

February 2020 9

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Premium Financing Quarterly - February 2020  

Brought to you by Life & Annuity Masters.

Premium Financing Quarterly - February 2020  

Brought to you by Life & Annuity Masters.

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