What Is A Captive Insurance Company?

resourceful and innovative

Captive insurance companies are known for their ability to improve long-term and general overall profitability for businesses. In estate planning tax issues, a captive is frequently an excellent choice for those who own a substantial business. Wealth transfer can in many cases be best managed through the resourceful and innovative use of captives. So what are captives or captive insurance companies?

Risk management

A captive designated insurance company is simply a C-Corporation that is intended for the express purpose of writing insurance for a specific group or entity that is to be insured. The primary advantage of utilizing a captive is that it is effective in managing risk in a more defined way. Something known as a single parent captive is perhaps the most common in use today.

Why would a business create a captive insurance company?

The main goal of a captive is to insure risks for the parent company in question. It can also be instrumental in insuring the risks of employees and even subsidiaries. It may be implemented and managed in such a way that it becomes a subsidiary type of company. When a company finds that it requires more effective risk management as related to “property and casualty” types of risks, a captive is arguably an excellent choice. Below are listed eight key reasons why a business would move forward with creating a strategic type captive.

1.    Tax Efficiency

Tax efficiency is always a major concern today. A captive has the unique ability to compound tax-deductible reserves over time. This is the case for known or even estimated unpaid claims.

2.    Better Management Of Cash Flow As Related To Self-Insured Expenses

In many instances, a single parent type captive can be used by a parent company to transfer specific types of P&C risks over to the captive. This is especially true with regard to certain types of risks that would otherwise be self-insured by the parent company. In many cases this allows the parent company to enjoy improved cash flow management. While it is true that a sinking fund can be used to cover risks associated with self-insurance related risks, the parent company can pay premiums to a captive as a way to better manage risks while allowing for those payments to be deductible.

3.    Accessing The Reinsurance Market

One excellent use of captives is to gain access to something known as the reinsurance markets. This helps to provide for increased limits as well as protecting surpluses. In addition, a captive may collaborate with other carriers that are of a traditional or legacy nature in order to issue various types of policies requiring “A” rated type paper.

4.    Gaining Access To Coverage That Would Otherwise Not Be Available

There are various types of risks associated with the retail market that are not transferable. Captives can make available coverage for these types of risks in a way that would otherwise not be possible.

5.    Balance Sheet And Cash Flow Protection

Legal action and legal claims can jeopardize cash reserves held by a parent company. By having assets and reserves dedicated to a licensed and regulated type entity, a company can maintain better control of its finances and its overall risk management. A carefully implemented captive program can be exceedingly effective at protecting a company's balance sheet, assets and general cash flow.

6.    Securing Higher Quality Property And Casualty Type Coverage

One of the most striking examples of the benefits to a parent company with regard to a captive is that the parent company is able to custom craft policies as necessary. Further, a captive is able to make available certain types of coverage that would simply not be possible in a traditional market. In short, this unique and innovative product can make available coverage to a corporation or company that would otherwise not be offered or affordable.

7.    The Advantage Of A Favorable Claims Type Experience

A company can benefit from the profits realized through utilizing a captive rather than a third party benefiting in this way. It should be noted that the entity that actually owns a captive is the entity entitled to the profits. For example, in the case of a subsidiary captive, the parent company would receive all profits. Alternately, any other party owning a captive would be entitled to profits.

8.    Investment Related Income And Profits To Underwriters

As it relates to businesses with substantial loss experience, insurance type expenses can often be viewed as “sunk” costs. These types of costs are typically non-recoverable. As such, a captive can be used to reduce this type of burden on a business. Investment related income as well as profits that would go to an underwriter can be reclaimed by utilizing a captive.


Businesses, companies and corporations today are seizing the many opportunities made available by captives. In short, a captive enables an entity to maintain increased control over various levels of risk exposure. As such, utilizing captives in this way results in far greater control for business owners when it comes to estate plan risk management.

Send comments or amplifications regarding this blog article to Seamus O’Brien via the main contact form found here. Seamus is an expert advisor with Team Silver Rock and has nearly two decades of experience in working with ultra-high net worth clients and business owners. Seamus specializes in captives or closely held insurance companies for the affluent. Especially those who are wishing to achieve higher levels of tax efficiency.

What Will The Proposed New IRS Estate-Planning Rules Mean To You?

Transferring a family business

Team Silver Rock uncovered a reveling article that just posted in the Wall Street Journal a few days ago. The article brings to light several intriguing topics as related to estate planning and succession planning and how these concepts are being targeted by the IRS for future codified actions. More specifically the article looks at the use of corporate identity and even partnerships to transfer the assets of the wealthy. Transferring a family business or even securities to heirs, a spouse or children in a more tax efficient way is typically the objective here.

Know And Proven Strategy

The article does a good job of pointing out that the IRS is increasingly placing wealthy families under the “tax microscope” simply because they are choosing to value certain assets in a specific manner. This should catch the attention of affluent and high-net-worth members of society as it may profoundly change the way estate planning is implemented going forward. As a known and proven strategy in NY estate plan structuring the idea is to effectively manage estate taxes and gift taxes by creating a corporation to encompass a family business. In short, it is a concept that has a proven track record in years past.

Increase In Value

According to the WSJ piece, the IRS is intent on ending this accepted practice. The technique is also a key strategy commonly used for transferring portfolios at a discount in relation to publicly traded securities. In most instances, a family LLC or limited partnership is established by a husband and a wife as a way to more efficiently own a business. Especially if the business is forecast to increase in value over a given period of time.

Course Of Action

The idea is that a couple will operate as partners whereby they can then “gift” assets to children while enjoying tax breaks and improved tax efficiency. An estate attorney or estate plan adviser is best able to assist those wishing to take this course of action. Other planning strategies such as the use of a life insurance policy to create tax efficiency offer added advantages as well. Life insurance for foreign nationals is also often used in the same way with a very similar outcome.

Federal Tax Efficiency

The essence of the partnership planning discussed earlier here is to allow for a gift to children in order to displace assets from the couple’s primary estate while still maintaining control of those assets. This is a crucial federal tax efficiency move in that it can protect assets in a proven way. The net result is a lower estate tax bill or greater estate tax credit depending on how it is viewed. This is due largely in part to the fact that combined assets in a partnership are less marketable and perceived as lower in value than would otherwise be the case.

Legitimate Business Interest

The WSJ article quotes one Northeastern US management-planning expert as saying that by the IRS removing this discount it will have a big impact on “balance sheets that are dominated mostly by highly liquid assets.” Current IRS code states that a partnership must serve a legitimate business interest. As it stands this definition is broad enough to include families routinely involved in making investment decisions related to a family business or a securities portfolio. The WSJ write-up goes on to say that it is likely that the IRS will soon limit these types of discount strategies. Affluent and high-net-worth individuals should take notice in this regard.

More Innovative Strategies

These types of rule changes could have a definite “freezing” effect or existing “income tax efficiency” as it is related to estate type planning. This is especially true with reference to wealthy families and individuals who have already taken full advantage of exemptions available to them for giving financial gifts during their lifetime. Currently that amount is slightly in excess of $5 million for an individual and close to $11 million for a couple. Those with assets and wealth that go above and beyond these amounts may require more innovative strategies to better address any impending IRS rule changes.

Comments And Questions

Write to Mike@silverrockpartners.com for amplification and to make comments about this informative post. Silver Rock Partners is comprised of a dedicated team of estate planning experts specializing in assisting high-net-worth and affluent families. Contact Team Silver Rock today for foreign national estate plans and life insurance for those who have already been deemed uninsurable. Team Silver Rock advisers implement succession planning best practices as well as addressing estate planning tax issues. The company serves wealthy clients in New York, California and Florida.

Tips On Buying Real Estate In New York As An International Investor

Exceptional Investment Opportunities

A recent trend has become increasingly well established as a record number of international investors or foreign national buyers acquire U.S. real estate. Dwarfing the some $68 Billion spent in 2013, the total real property sales to international clients ballooned to over $92 billion in 2014. This trend is expected to continue well into 2015 and beyond as international buyers of real estate scoop up what is perceived to be exceptional investment opportunities. Many of these purchases involve high-end luxury properties and lavish estates.

The more popular states where buyer activity is centralized are places like New York, Texas and Florida as well as major portions of California. Desert southwest Arizona has also experienced its share of international investment activity. Here are three primary benefits that foreign national investors enjoy when choosing to buy a home in the United States.

1-    Foreigners or non-U.S. citizens are able to own real estate that they purchase outright. They can legally hold title to the property - this is in stark contrast to what would be the case in most other countries.

2-    One key advantage of owning property in America (as an international investor) is that the U.S. has an established economic and political landscape that is admired around the world.

3-    Because the U.S. dollar is the world’s reserve currency buyers can expect a higher level of investment stability. In short, property values are better maintained and investments can be expected to hold their worth in a more predictable way.

While these advantages are well documented, there are a variety of estate taxation liabilities that must also be addressed by foreign nationals. International real estate investors are strongly encouraged to consult with an experienced estate-planning advisor or expert as a way to maximize tax credits and taxation efficiency issues. Successfully navigating the financial pitfalls of being an international investor in U.S. real estate can make the prospect of buying real estate in the United States much more appealing.

As such, it may be well worth considering a few clear and proven strategies available to non-resident buyers who may be wishing to more effectively manage tax exposure in the United States.

1-    Perhaps one of the best ways of gaining much-needed tax credits is to purchase a life insurance policy. As discussed in other Silver Rock posts, a New York life insurance policy owned by a foreigner is not interpreted as being a part of a foreign national’s overall U.S. asset pool. A life insurance policy supports the intention of transferring an estate to heirs without tax penalties. It also provides for much needed cash flow in the case of a principle’s death.

2-    Estate tax efficiency is improved for foreigners in light of the fact that the estate tax exemption is more than $5 million dollars for United States residents. While international investors are only entitled to a paltry $60,000 dollars in estate tax related exemptions. This is where a life insurance policy could have a big impact and level the playing field.

3-    Strategic estate tax planning can help to protect the spouse of a non-U.S. citizen financially. This is simply due to the fact that a surviving spouse will typically be liable for estate taxes when the other spouse passes. Under this first-to-die circumstance the tax rate can exceed 40 percent. This can have a profound impact on a surviving spouse’s ability to enjoy maximum financial security. Tax efficiency planning is therefor a must today.

Better Managing The US Estate Taxes Foreigners Often Experience


$60 billion in real estate

When it comes to exposure to excessive estate taxes, perhaps no investment group is more familiar with this issue than foreign nationals. This is a topic worth discussing simply due to the fact that in 2013 alone, foreign nationals' investments totaled well over $60 billion in real estate throughout the US. That said these metrics are likely to only increase in the coming years as more people from around the world discover the value of investing in property in cities across the United States.

Appealing To Buyers

However, there has been a growing concern among many people making these types of investments with regard to exposure to substantial estate taxes. While the real estate market in the United States has been sporadic at best over the last few years, the opportunity to purchase property in the US is still very appealing to buyers from around the world. The US is known worldwide for governmental stability, favorable property rights and a stable and established national currency. These advantages continue to attract investors from all parts of the globe.

Most Sought After Regions

Perhaps no other state in the country makes it more obvious how appealing US real estate is to foreigners than Florida. South Florida in particular and Miami specifically are considered by experts to be the most sought after regions by international property buyers. California is also very high on the list because of its general overall appeal and desirable lifestyle. That being said, it is essential for foreigners buying property in the United States to have access to experienced and focused estate planning services.

Substantial And Overwhelming

Whether it is California estate taxes or Florida estate taxes that come with buying property as a foreigner, one thing is sure and that is that estate tax exposure can be substantial and overwhelming. In fact, the tax implications for foreign-nationals can turn what would otherwise be a favorable purchase into a confusing tax quagmire. Ubiquitously, US citizens enjoy over $5 million in estate tax exemptions while foreign nationals are limited to just $60,000 in total estate tax exemption. These numbers in themselves do speak volumes.

Vacation Home

Because affluent foreign nationals and those from other countries with high net worth typically purchase real estate that is substantial in value it is important to always consider tax efficiency as a foreign investor. Even more alarming is the fact that tax rates can also have a big impact on a legacy or an estate of those choosing to own property in the US. Beneficiaries, heirs and others named in a will or other estate documents could be burdened with tax rates up to 40% of the actual value of a vacation home, for example, at the time of a principal's death.

Succession Of Wealth

All said, one established, proven and accepted practice for protecting an estate or legacy is to consider the strategic use of a carefully chosen life insurance policy. This is simply due to the fact that current US tax laws view life insurance purchased by a non-resident foreign national as not being a part of an individual's gross total estate holdings. This is of prime concern because at the time of the death of the principle, any succession of wealth is not taxed and remains intact for heirs. Further, using this accepted strategy can also help to ensure that beneficiaries and heirs will have the financial wherewithal needed to address US estate taxes.

Value Added Services

Finally, another key reason to choose purchasing life insurance in the United States is that it is considered more reasonably priced as compared to similar products available in other countries. This is one more reason why a life insurance policy for foreigners is a win-win. In addition, US life insurance policies often make available value added services that a foreigner may not find in similar products offered in their home country. Silver Rock Partners assists non-resident foreign nationals in making more informed and more tax efficient estate planning decisions. For foreigners buying real estate in Los Angeles or foreign nationals purchasing property in Miami, Silver Rock Partners is a trusted and respected name in innovative high-net-worth estate planning.

What Can We Learn From The Recent News About Joan Rivers’ Estate?

resident of New York?

We recently uncovered a very intriguing article at Investmentnews.com that talks about Joan Rivers, a superstar in her own right, who recently passed. It takes a look at her creative estate planning strategies. The opinion piece reflects on Joan’s decision to claim residency in one state while choosing to be based in another location. Ms. Rivers, who passed away because of medical procedure complications was 81 and according to the article had a will on file in NY dating back to 2011. The will indicates that Joan was a resident of New York, but that she declared California as an indefinite or permanent base. So there is some ambiguity in the legalese contained within the document, it seems.

Bi-Costal Strategy

Estate planning experts and attorneys would likely agree that celebrities often choose this bi-costal type course of action as a way to maximize tax efficiency. In Joan’s case there could be an issue of interpretation. Understanding state related estate tax laws is essential to safely implementing a bi-costal type of estate plan strategy. Rarely used by those who are not celebrities or famous public figures of note, the bi-costal angle to estate taxes has inherent complexities that are best addressed by a planning expert. With New York’s 16% estate tax, it is not surprising that those with homes in both California and New York would consider this creative option.

Claimed Domicile

The estate tax benefits offered by the state of California can provide for an important tax break if the planning is done in a concise and legally safe and transparent manner. Albeit, each estate case is unique and different; meaning nothing is cast in stone. As a reminder the New York estate tax exemption is set to increase each year until 2019. The main objective of the recent changes to estate taxes in New York is to achieve parity with the federal estate tax exemption as adjusted for inflation. In California where Joan Rivers claimed domicile there has been no estate tax since as far back as 2005. In terms of estate planning established rules and accepted practices, only one state can be listed as a primary domicile.  This is a key consideration for those who choose to reside in multiple locations.

Determining A Domicile

Also worth noting is that the probate process is less encumbering and less stringent in New York as compared to California. So there is clearly a give and take when determining a domicile for estate taxation purposes. In short, a domicile can only be one state - so choose wisely. Always avoid the temptation to list two states as a domicile. This is especially true in light of the fact that state taxing authorities tend to take notice of out-of-the-ordinary domiciling. Ms. Rivers’ case is unique and one that raises important questions. Estate planning in New York state requires careful and detailed analysis by an expert in the field. Estate planning in California requires the same level of professional focus.

Tips On Life Insurance For Foreign Nationals In America

risk assessment

Foreign nationals residing in the United States who have significant assets and wealth will in many instances choose to acquire a life insurance policy. As with US residents, foreign nationals are looking for better tax efficiency and ways to protect assets and an estate as a whole over the long term. As a risk based product, a life insurance policy is typically issued only after a complete and thorough risk assessment. A number of factors go into assessing the risk of an individual who is wishing to purchase term life or whole life insurance. This includes everything from satisfying underwriting guidelines such as driving history, health, age, and whether an individual is a foreign national or US citizen. Those with foreign national status should know that the requirements are typically more stringent as compared to what a US citizen might expect.

Tax Efficiency Related Challenges

Another distinction with regard to a foreign national life insurance policy being granted in the United States is that of insurability. One major concern of those who are not American citizens and who are living in the United States is that of tax exposure. Life insurance is an excellent asset protection tool for those with considerable wealth or a substantial estate. A non-US citizen is in most cases faced with unique US tax efficiency related challenges. This is especially true with regard to high-net-worth individuals and affluent families. Working with an experienced and knowledgeable life insurance advisor or estate planning expert can greatly improve tax efficiency for those who are not US citizens. For example, foreign nationals residing permanently in America will typically not have access to unlimited marital deductions.

Investors From Other Countries

This simply means that if a foreign national were to pass an estate to a non-citizen spouse that certain US estate taxes would be levied. In addition, when foreign nationals own various types of assets in America they can be subject to American estate tax liability. Equally of concern in this regard is the fact that only a small percentage of an estate (typically around $70,000) is exempt from estate taxes in the United States. This same set of circumstances is in effect for investors from other countries buying assets or real estate in the US.

How Can A Life Insurance Policy Help A Foreign National?

A quality life insurance policy that is carefully chosen can provide the necessary liquidity needed to better manage American estate taxes. It is a vital resource that can work in an integrated way within an established estate plan. Equally encouraging is the fact that a life insurance policy held by a foreign national in the United States will ultimately protect an individual from a forced sale because of over-burdensome tax liabilities. Basically, a non-US citizen can retain the value of an estate without the concern for having to liquidate assets as a way to satisfy a tax bill. Those wishing to protect their families, their heirs and future generations (while maintaining a non-US citizen status) will be better prepared to protect the standard of living of their surviving spouse with life insurance.

Protect Family Members

Finally, life insurance in Miami offers incredible flexibility when it comes to innovative and strategic estate planning for those with foreign national status. Life insurance is a cost-effective and easy way for nonresident aliens to protect assets, wealth, a legacy or an estate without the need for a trust or other type of commonly used legal entity. Non-US citizens wishing to avoid unnecessary estate erosion should consider the specifics outlined here as a way to secure wealth, protect family members and ensure that future generations will enjoy an estate. One that may have took decades or centuries to accumulate. Silver Rock Partners is comprised of a dedicated team of underwriting professionals who offer advisory services for those with foreign national status. Visit Silverrockpartners.com online today or speak in person or by phone with a qualified, licensed and experienced Miami insurance advisor for the affluent.

Why Do I Need Estate Planning?

Charitable Organizations

This is a common question that comes up frequently among those who are unfamiliar with the benefits of good estate and retirement planning. Formulating how estate assets will be distributed requires forethought and careful consideration. It is a strategic plan of sorts that is intended to protect the assets and wealth and most importantly the family members and heirs of a person with an estate and assets. It even looks at certain charitable organizations that are chosen by those wishing to donate as part of an estate distribution. A comprehensive estate plan will consider a principles future wishes and needs if incapacitation, debilitating illness or injury ever becomes an issue. Listed below are several excellent reasons to establish a robust yet flexible plan going forward and to keep that plan updated and refreshed often.

·      Determines asset distribution specifics upon the death of the principle

·      Determines the circumstances under which assets will be distributed

·      Determines personal care details and health care particulars

·      Determines how assets will be managed and by whom if the principle were no longer able to do so in a meaningful way

It should also be noted that estate type plans involve far more than simply a will. While the will is an essential and key component there are several other documents that must be considered to ensure a total and compete package, as it were. Here are a few examples of other information, data and documents that often typically make up a greater estate related plan.

·      Tax documents and tax considerations

·      Financials including stock holdings and financial planning forms

·      Business information such as corporate documents and accounting data

·      Medical records and health care coverage

·      Life insurance information and records

·      Power of attorney documents

·      Law firm and legal document details

Any estate related planning requires a fluid and dynamic approach to keeping all details and information recent and up-to-date. This is always a good idea as the unexpected can occur at virtually any time. Being prepared is always the best policy in this regard. Protecting a legacy and the well-being of future generations is at stake when putting a solid plan into place. Regardless of the size of an estate, large or small, it is recommended by experts in the field to have a plan implemented early on. Designating someone to manage assets if you become incapacitated is simply smart business. Preserving assets and wealth for beneficiaries and limiting the overall burden that estate taxes impose can provide for true piece of mind for families.

greater leverage and control

Another critical reason to have an estate plan established early is that absent a plan, it can be expected that a judge will likely appoint a third-party to manage an individual's personal health issues and asset management. This can create a situation where something known as intestate succession allows the state to distribute wealth according to certain established rules. In essence this results in an estate being distributed in a way that a principle may have not chosen. Detailed estate planning gives an individual far greater leverage and control in terms of who will inherit wealth, assets and personal belongings. If you are asking the question “why do I need estate planning,” then you likely do require some level of professional assistance in this regard. Silver Rock Partners is comprised of a dedicated team of estate planners and NY insurance advisors with years of experience in the industry. Call today to learn more.

Discover A Powerful Retirement Wealth-Building Tool

Virtually every business owner today is looking for new ways of becoming more tax efficient. That said a retirement plan is not usually the first place a business owner looks in terms of tax solutions. However, cutting-edge, emerging strategies are quickly turning the employer-sponsored retirement plan into a powerful wealth-building tool. One of these strategies is known as the “cash balance plan,” which allows employers to make tax-deductible six-figure contributions each year. It is also worth noting that these contributions grow on a very beneficial tax-deferred basis.

Let’s say that Rachel owns a small business and has an adjusted gross income of $400,000.  With no cash balance retirement contribution she would pay $103,000 in federal taxes. If she had a cash balance plan, she would pay $51,000 in federal taxes, and have a tax savings of $52,000. That is certainly worth getting excited about.

A cash balance plan can be attached to an existing 401k plan, or set up on its own. Either way, like all retirement plans, a cash balance plan allows the employer to retain key employees by offering greater benefits. No other plans, however, offer the laser-focused tax-efficiency that this type of plan makes possible. Using this unique and advantageous strategy ensures a long-lasting legacy for almost any business owner today.

This informative article has been brought to you by a partnership and collaboration between Silver Rock Partners and Economic Group Pension Services. Economic Group Pension Services (EGPS) is comprised of a team of dedicated, experienced, and responsive professionals who work with brokers, advisors, and a variety of other financial intermediaries to deliver outstanding retirement solutions for plan sponsors. Our partners include retirement specialists, accountants, financial consultants, registered investment advisers, and financial intermediaries who value our depth, range of experience, and independence.

Tips For More Effective Estate Planning

Piece of Mind

It may be surprising to find that well over 100 million Americans do not have any kind of definitive estate plan or if they do it is likely severely deficient in terms of completeness. As most already know, an estate plan is a critical and necessary tool for protecting a principle and his or her family at times of illness, injury or when a death is experienced. A well-organized and carefully designed plan can provide for an overall level of piece of mind that would otherwise not be possible. Here are just a few excellent tips for improved planning for times when the unexpected strikes.

Plan And Write A Will

While it may seem overly obvious, a will is one of the most essential components of a larger planning strategy that must always be considered. This single document alone can ensure that assets are distributed according to the wishes of the person's will. When there is the absence of a will the state will typically determine what will happen to assets and property. A will is also instrumental in naming a guardian for minors if both parents were to die or become incapacitated. This key document allows a principle to place assets in a trust or put specific restrictions or limitations on assets.

Beneficiary Designation Updates

Changes take place all the time in life and that is why updating information on various estate distribution documents is so important. When a marriage takes place or a divorce occurs or any other substantial life event transpires, consider making the necessary changes to retirement plans, life insurance polices and other key documents.

Choose Carefully With Regard To An Estate Executor

Making smart decisions in an attempt to best protect an estate or legacy can be as simple as choosing the right executor. This person will be tasked with distributing assets as per a will and will pay bills and debts as required. Typically, the oldest living child is chosen, but this can vary based on the complexity of an estate. Conversely, a CPA can fulfill the duties of a professional executor. These professionals are experienced in performing the various duties of an executor. They also provide a degree of impartiality when distributing estate assets.

Keep All Vital Documents In A Safe Place

Those wishing to estate plan wisely should always have an established list of documents. A list that is intended to inform others where vital documents and key assets are located can benefit all involved. The list of documents should be complete and include everything from marriage certificates to passports as well as birth certificates and other similar documents. In addition, various financial documents and records should be in a safe yet easy to access location. Excellent organization is probably the best way to keep an estate in order in the event of the unexpected.

Power Of Attorney And Living Will

Finally, when a principle becomes incapacitated it is vital to have a power of attorney ready and in waiting. In short, something known as a durable power of attorney will allow a trusted individual to pay bills and manage other affairs during a period of incapacitation. Equally important is a heath care directive or living will. This document conveys a principle’s wishes with regard to medical procedures that are or are not to be performed when incapacitation happens. It is always best to discuss these issues with family members long before it becomes an issue. This is just one more case where organization and planning can prevent confusion and provide real piece of mind for all involved.

Silver Rock Partners is a trusted and respected name in high-net-worth estate planning and foreign national insurance products. The company also provides viable solutions for the uninsurable. Silver Rock Partners is dedicated to exemplary client services and exclusive estate plans for the affluent and those with ultra-high-net-worth. Protecting a legacy requires the expertise of focused insurance advisers. Call Silver Rock today.

Exploring Estate Tax Changes In New York State

An article that appeared in Forbes last year discusses the estate tax exemption in New York State and what it means to those residing in New York. It did note that the tax exemption had doubled as of last year and is slated to eventually match the larger and more robust federal tax exemption by 2019. As a note, the federal exemption is projected to reach a level of $5.9 million in the next few years. Digging a little deeper into the 2014 state level changes there may be reason for concern.

As mentioned, one interesting change that happened in 2014 regarding the NY estate tax laws was that after April 2014 the state exemption increased to just over $2.0 million dollars. One caveat is that there is a “cliff” of sorts in place wherein if an individual passes away with an amount (5%) even slightly over the exemption that they are surprisingly taxed on the full worth of the estate.

This is a real concern with regard to the rules legislated into law in NY in 2014. Another key issue is that of a lack of portability as is the case at the federal level. From a federal perspective a surviving spousal member may shelter twice as much net-worth estate value without the need for complex trusts. There are several other concerns with the changes put into place in NY in 2014. For example, specific tax treatments regarding estate planning and general depreciation all deserve a closer look, preferably at the state legislative level.

In short, the rules that were established during 2014 are being viewed by many experts within the industry as exceedingly complex and restrictive to residents of the state. Estate attorneys, accountants and insurance professionals will likely find the new rules and laws to be overbearing and burdensome to those wishing to protect a family estate or legacy.

Even taxable gifts as of the 2014 changes require a three-year retrospective look-back. In essence, these types of gifts are pulled back into the estate. These concerns and others require being addressed at a legislative session so that the residents of New York can feel more confident in passing on a legacy or estate to a spouse or to heirs.

Silver Rock Partners understands the concerns of high-net-worth individuals and affluent families with regard to estate tax efficiency. We follow existing and proposed legislation at the state and federal levels so as to provide clients with exceptional service and outstanding high-end estate planning. Our firm is dedicated to helping clients protect wealth and maintain the highest levels of tax efficiency. When expert estate planning is required it is best to work with a team that genuinely understands the complexities of estate tax code, rules and laws. Contact one of our dedicated advisers today.

What Are The Best States For Estate Tax Advantages?

We came across a recent article in Forbes that discusses the advantages and disadvantages of living in different states when it comes to estate tax planning. While legislative changes are happening all the time as related to this subject, there are some basics worth considering as a way to protect an estate or legacy. Most would agree that federal estate tax laws are relatively manageable and for the most part beneficial to US citizens. While this is not always the case for foreign nationals, those wishing to pass on an estate at time of death that are US citizens have a reasonable tax exemption to work with at present. However, on a state-by-state basis, exemptions and state taxes vary considerably and in some instances can cause detrimental harm to a family’s generational wealth.

Targeted Wealth

A number of states in the country including New York levy separate estate taxes aside from federally imposed taxes. The problem arises in the fact that state exemptions are typically quite a bit less than at the federal level. Those living in New York or who are planning to move to New York State would be well advised to consider recent legislation and existing tax laws. There are nearly two-dozen states that target estate wealth as a way to generate additional revenue at the state level. Careful planning can help to ensure that affluent individuals protect their family’s financial best interests. The Forbes article referenced above talks about a newly coined term known as “domicile planning.” This idea refers to the careful consideration that is necessary in respect to where a person chooses to live (and die) in order to maximize estate wealth protection.

Various Challenges

In essence, domicile planning really comes down to choosing which state is most beneficial in terms of being able to pass on a family estate upon a principal's death. For example, a state like Florida is viewed as an ideal location for those wishing to avoid state income tax and so-called death taxes. While the federal estate tax exemption is slightly over $5 million per person and is permanent as it stands, estate taxes in different states present various challenges. States imposing these kinds of taxes, for the most part, have exemptions that are much more restrictive than their federal counterpart. The top tax rate in some states is upwards of 16%. As a note, both federal and state systems allow bequests to spousal partners that are always tax-free.

The Legislative Perspective

The state of New York, as a prime example, sets its exemption at approximately $1 million. Legislation ensures that this number is almost always a moving target. This means that if an individual dies in New York State with slightly over $5 million in wealth that they will incur virtually no federal tax but will be subject to nearly $1/2 million in state taxes. This is certainly worth taking note of when estate planning. Many states are in the process of repealing or substantially reducing estate taxes at the state level. The overall general trend is moving in this direction as more and more advocates of better estate tax laws make headway from a legislative perspective. Planning strategically from a “death tax” angle can have a profound effect on one's estate or legacy. Take the time to research this important topic as a way to protect generational financial interests. Silver Rock Partners is an experienced firm providing detailed New York estate planning for affluent and high-net-worth individuals.