Tax Aspects of Life Settlement Arrangements

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The authors explain that as clients advance in age, their need for life insurance also changes. Clients with life insurance policies that no longer serve a purpose have many choices, including surrendering the policy to the carrier, selling the policy (called a life settlement), borrowing from the policy, or entering into a 1035 exchange. Case examples are presented in terms of the use of life settlement transactions as an estate planning solution, and the tax implications involved.

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