Asset Backed Insurance Lending

1. Individual Estate Planning
2. Multi-Generational Wealth Transfer
3. Family Trust Revitalization
4. Business Use
5. Charitable Planned Giving

Individual Estate Planning

For many ultra-high net worth Americans and for foreign nationals with significant assets in the U.S., the cumulative annual cost of life insurance plus the additional associated cost of federal gift taxes is often economically prohibitive. Since 2000, The CFS Group has specialized in an asset backed insurance lending program specifically designed to secure large amounts of needed life insurance coverage at a fraction of the normal cost. To qualify, the insured family member must have a net worth in excess of $10-15 million, be willing to assign collateral to the lending bank for a number of years, be in fairly good health and must not be much older than age 70. If these conditions are met, there is a high probability of significant annual cost savings of 75% or more. The program is especially valuable to the Family Office.

Multi-Generational Wealth Transfer

A program for families worth at least $40 million where there is a need for life insurance on older generation patriarchs or matriarchs, but there are health and/or age issues preventing the placement of insurance on these individuals. By utilizing the same principals behind our individual asset backed insurance lending strategy, these family situations may benefit from substantial estate tax discounts through insuring children or grandchildren under the program. Estate tax discounts will result in more wealth transfer to generations two and three, with insurance intact on these younger generations to maximize future wealth transfer. CFS will also provide experienced legal expertise to work directly with the family’s estate planning team, providing legal structure and guidance for a reasonably low fee. The same qualifications apply in terms of collateral and insurability. If similar qualifications are satisfied, the same high probability of annual cost savings of 75% or more exists.

Family Trust Revitalization

With large family trusts accruing over generations, there is the risk that too many beneficiaries drawing income will substantially dilute a family trust over time. Through our asset backed insurance lending program, the ultimate solution to this problem is available. By financing life insurance policies on a group of beneficiaries and using dormant trust assets as loan collateral, large amounts of insurance policy proceeds will “revitalize” the trust corpus. By insuring trust beneficiaries between the ages of 30 and 60, there is a high probability of no cost to the trust with total loan exit within 20 years.

Business Use

Asset backed insurance lending works effectively to provide businesses with needed life insurance coverage for important planning events such as: Buy-Sell Agreements for two or more owners; Key Employee coverage for individuals and groups of key employees up to 200; Senior Partner Buy-Out Planning for Law Firms and Professional Partnerships; Informal Supplemental Income planning for employee groups of 5-200; and Under Funded ESOP plans. To qualify for “Business Use” asset backed insurance lending, a company must have a strong balance sheet, consistently strong sales, assets or cash which can be used for collateral, possibly have maximized contributions to their qualified plan, and a strong desire to save cash flow over many years.

Charitable Planned Giving

This strategy can create endowments and cash flow to charities for decades, either through strategic planning with the individual philanthropist or through specifically structured donor groups such as college alumni affiliations. This program can be especially effective for the Family Foundation as well as Family Offices in need of new and innovative charitable and estate planning strategies.