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Thursday, January 12, 2017

Generational Split Dollar

By: Bill Jackson J.D., CLU®

Generational split dollar consists of a trust structured for the benefit of Generation C (age 27). This trust would own life insurance on Generation B’s (age 58) life. Generation A (age 88) would enter into a non-equity collateral assignment split dollar agreement with the trust. In searching for methods of discounting the value of a wealthy client’s estate, the concept of generational split dollar should not be overlooked. This is especially the case if the client is very old or perhaps uninsurable and wants to do some later life estate planning. For example, a Generation A client (age 88) makes a personal loan of $3 million to a grantor irrevocable life insurance trust established for the benefit of Generation C (age 27). The trust purchases a life insurance policy on the life of an individual in Generation B (age 58). The client receives a note which becomes an account receivable. This account receivable is worth less than $3 million due to the restrictive right to be paid back only at a future date out of cash values or at the death of Generation B. Because of Generation B’s expected longevity, and other factors, the appraiser values the note at $750,000. The result is dramatic estate tax savings relative to an outright gift of $3 million.

A recent court case, Estate of Clara M. Morrissette - United States Tax Court, the court ruled in favor of the estate. It is important to note that all current split dollar rules were followed meticulously. The trusts involved were likewise established for valid separate purposes. Therefore, if this design is executed correctly it can transfer significant wealth and provide a dramatic estate tax reduction. Care should be taken not to sell or cancel the policy, merge the trust with another trust with the same beneficiaries, or for the donor to have access to the cash values, as this could cause the transaction to be viewed as a step transaction to avoid taxation and therefore fail.

Read the full article: "Serving Clients With Estate Planning Needs" first published in the December 2016 Broker World magazine here.
Fill out my online form.





For financial professional use only. Not for use with consumers.

Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of un-recovered cost basis will be subject to ordinary income tax. Tax laws are subject to change. 

Partners Advantage Insurance Services and their representatives do not give tax or legal advice.  Accordingly, any tax information provided is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Encourage your clients to consult their tax advisor or attorney.
Income tax free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans.  Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce death benefit, or cause the policy to lapse.  This assumes the policy qualifies as life insurance and is not a modified endowment contract.

Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy's account value and death benefit. Assuming a policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the ex that they exceed the policy owner's cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions.

The tax and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Partners Advantage does not provide legal or tax advice. Partners Advantage cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Partners Advantage does not assume any obligation to inform you of any subsequent changes in the tax law or other factors that could affect the information contained herein. Partners Advantage makes no warranties with regard to such information or results obtained by its use. Partners Advantage disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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Tuesday, January 10, 2017

Partners Advantage and Peloton Global Announce Strategic Alliance

FOR IMMEDIATE RELEASE

Partners Advantage and Peloton Global Announce Strategic Alliance

Riverside, CA (January 10, 2017) - Partners Advantage Insurance Services, LLC, a national insurance marketing organization headquartered in Riverside, CA, announced its strategic alliance with Peloton Global Distribution Services, Inc. (Peloton) of Newport Beach, CA. With this strategic business alliance, Partners Advantage will provide Peloton members with retirement solutions experience and Peloton will enable expanded growth for Partners Advantage in the arenas of long-term care and disability insurance.

"By working together, this strategic alliance will allow our two companies to enhance and expand our national platforms available to agencies and independent financial professionals," stated Partners Advantage President James Wong."


Peloton President Andy Holden stated, "Complimentary skill sets will create robust and exciting offerings to members of both entities.  And a shared emphasis on compliance, education and training will enable the organizations to experience rapid growth in selected sales initiatives.”


The evolution of a variety of factors, including more sophisticated products being introduced by carriers, continuous updates, and compliance demands within the industry led to the alliance which will bring impressive new training, technology, services and products to the financial professionals working with both companies. 


Partners Advantage places significant emphasis on training programs designed to improve and expand financial professionals' products, marketing and sales resources. The seasoned staff includes a full-time suitability and compliance officer, in-house underwriter and an advanced markets specialist. The company provides personal assistance by phone 12 hours each business day from 7 a.m. to 7 p.m. Central. The alliance will help financial professionals across the United States grow and stay on top of the cutting-edge developments in their field.


About Peloton Global Distribution Services®

Peloton is a consortium of elite individual organizations that are top performers within their industry.  By aligning with Peloton, members have access to the powerful synergy of shared market intelligence, world-class marketing and lead generation capabilities, extensive products, services, technologies, systems and a superior level of support to create unmatched performance in the insurance and financial services industry.  Peloton membership allows the individual member entities and the group as a whole to combine strengths in order to reach the highest level of competitive success. Membership includes some of the premier general agencies, valued specialty companies and innovative industry suppliers on a global level. To learn more about Peloton please visit: www.pelotonglobal.com.

About Partners Advantage

In business since 1993, Partners Advantage Insurance Services, LLC, is among the top national insurance marketing organizations in the country with associates located in offices across the United States. The company's Advantage Division is a one-stop brokerage for licensed agents and agencies throughout the United States who sell annuities, life insurance and linked benefit products. The company's Platinum and Premier Divisions work to enhance insurance marketing organizations and agencies throughout the country. The corporate headquarters for Partners Advantage is located in Riverside, CA. Regional offices are located in Huntington Beach, CA; Palm Beach, FL; Sioux City, IA; Ada, MN; Florham Park, NJ; Houston, TX and Henderson, NV. For more information about Partners Advantage, visit www.PartnersAdvantage.com.


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Thursday, January 5, 2017

Charlie Gipple's Big 16 in a DOL Rule - Private Right of Action World


By: Charlie Gipple, CLU®, ChFC®       Senior VP of Sales and Marketing,
Partners Advantage

Questions are whirling around about the upcoming DOL fiduciary rule. Is it really going to go through? Will the new administration make changes?  Can we leave things the way it is now? These are all valid things to consider despite the fact right now the DOL rule goes into effect in April 2017. But what if it remains status quo?

What we need to remember that this is the third time in 11 years the fixed indexed annuity world has been faced with a rule or regulation that would be daunting. All three of these “rules” sought to effectively take the annuity products and plug them into a securities world. The NASD Notice went through in 2005, while the Rule 151A by the Securities and Exchange Commission was vacated in 2010.

Now the industry is faced with the DOL proposing the agents be held to a “fiduciary standard” when working with qualified money; a standard that, up until now, has been largely associated with securities sales via “fee-based advisory” platforms. Furthermore, for indexed annuity sales with qualified money, after April 10, 2017 an agent has to be supervised by a “Financial Institution.” 

What should IMOs and financial professionals ask during this “in-between world” of uncertainty on whether the DOL will go through or not? This is especially stressful for the IMO whether they file to be a “Financial Institution” or not.

Here is my “Big 16” of items an IMO looking to become a financial institution should consider. However, even if the IMO does NOT become a “Financial Institution,” they will likely still need to implement some of the below IF the DOL Rule were to go through. Why? The reason is whatever financial institution the IMO relies on will most likely still hold them accountable for certain things to share the liability in the “Private Right of Action” world.

Big 16 items to Consider:
  1. Product platform (those that abide by the “reasonable comp” rule)
  2. Agent background checks
  3. Field force training on “fiduciary matters”
  4. Web-based financial planning tools
  5. DOL compliance review for client and agent facing material
  6. Best Interest Contract creation
  7. Negative Consent: IE. Notice to “retirement investors” of the fiduciary status
  8. Fact finding, risk tolerance, software sales system for “uniform” recommendations from client to client with similar objectives
  9. Staff and systems for suitability review
  10. Email surveillance
  11. Website for data retention and disclosures
  12. Ongoing compliance (audits)
  13. Designate person to identify conflicts of interest
  14. Recordkeeping/file retention for six years
  15. Primary legal liability
  16. Technology for business issuance, review and case management
Looking at this list can be daunting, especially if you implement all of these items. The question for the IMOs is “do I assume the DOL will go through and I invest in this stuff or do I assume the DOL is not going to happen and thus not invest in it at all?”

In reality, every IMO principal needs to consider putting in place some of the “Big 16” items whether or not the DOL rule is vacated or not. Because most likely changes like what’s found in the DOL rule are going to come eventually. It’s where it’s wise to invest into the training resources, technology, compliance, holistic planning, etc. and put them into place no matter what.

This places urgency on many shoulders should the April 10, 2017 date become official. But it’s best to be prepared rather than wishing you had.

Looking to find out more about how Partners Advantage can help you prepare? Contact me at 888-251-5525, Ext. 358.


For financial professional use only. Not for use with consumers.

Discussion of the Department of Labor (DOL) fiduciary rule is based on the information available from the DOL, pending litigations, and other sources deemed to be reliable as of the date this article was written. The views and opinions of author are subject to change as guidance from DOL becomes available and court opinions are published.

This article should not be considered legal advice and is intended for educational purposes only.

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Wednesday, January 4, 2017

Partners Advantage Announces Move to Salesforce

SPECIAL ANNOUNCEMENT

Partners Advantage Announces Move to Salesforce

Riverside, CA (December 30, 2016) – Partners Advantage Insurance Services, LLC announced its customer relationship management platform will now be powered by Salesforce, the world's #1 CRM solution. The new technology platform is designed to allow Partners Advantage to better serve its distribution network, including independent financial professionals and agencies across the country. The system easily integrates with other software to help the company communicate effectively and operate more efficiently. It positions Partners Advantage to provide more data driven services and sales analysis for its customers in the years ahead.

The company's migration from its current system to Salesforce is now underway and will be completed by the end of January 2017. All year-end production reporting, commissions and sales related information will be processed using existing systems technology.

Very few interruptions in service are expected due to the move, except that the company's "Smart Search" system will be down for a few weeks during the system transition. Please contact your Partners Advantage case manager or brokerage director if you have any questions, concerns or additional needs during the migration.

"We are very pleased about our move to Salesforce and look forward to enhancing our operational effectiveness and providing improved analytics and business reporting to our distribution network as a result of the options available through this platform, stated Partners Advantage President James Wong." Technology leadership has long been a priority at Partners Advantage and Salesforce will allow us to continue as an industry leader.


About Partners Advantage Insurance Services 
Partners Advantage Insurance Services, LLC, is a national insurance marketing organization with 60 associates located in offices across the country. It is one of the nation’s largest marketers of life insurance, annuity and linked benefit products.  The company provides personal assistance by phone 12 hours each business day from 7 a.m. to 7 p.m. Central with several offices across the United States. The seasoned staff includes a full-time suitability and compliance officer, in-house underwriter and an advanced markets specialist. 
For more information about Partners Advantage, visit www.partnersadvantage.com.


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Thursday, December 29, 2016

How the PILLAR System is Designed for Seasoned, Successful Financial Professionals



By: Charlie Gipple, CLU®, ChFC® 
Senior VP of Sales and Marketing, Partners Advantage

The Partners Advantage PILLAR System (Partners In Life, Long-term care And Retirement) is a system that packages all of the proven content that I have tested throughout my career, that Partners Advantage has tested, that MDRT-level financial professionals have taken from us and tested, and brings it all together to help financial professionals who work directly with Partners Advantage deploy this content to generate more sales. It is a client education system, a seminar system and also a complete sales system.  

Here's how it is designed to help top financial professionals. First, the PILLAR System material covers the spectrum from simple to complex.  The complex being more aligned with the needs of top financial professionals.  This material covers topics such as behavioral finance and how to overcome some of the 117 biases that may exist in the consumer’s mind. It also covers educational information on how indexed products are hedged and how insurance companies approach the overall process. It covers advanced sales strategies, legacy planning, and many other areas.

Secondly, it provides world-class client-facing material, all of which has been professionally created for you. This is nice because the top professional doesn’t always have time to create important educational materials.  This system provides it.

A third key point is that many of the best financial professionals I have known are great at speaking with clients one-on-one.  But, I do know a few that are not great in front of a room full of people.  For these financial professionals, if they can fill a room, I would volunteer myself for speaking with their clients in a seminar or one of our great speakers at Partners Advantage.

The fourth key to this system is accountability.  I used to use a personal trainer.  I didn’t use this personal trainer because I thought he knew more about lifting weights than I did.  I used him because of accountability!  When you have somebody you are accountable to, you tend to perform very well.  We want to be your accountability coach as well.  Regardless of how motivated an individual is, there can always be an accountability coach.

There is much more you need to learn about the PILLAR System and what it can offer you. Contact your Partners Advantage Brokerage Director today, to ask for more information: 888-251-5525, Ext. 700.


For financial professional use only. Not for use with consumers.

*Production results gathered from January-June 2016. Not all financial professionals in attendance experienced the same results and there is no guarantee of future success. The information provided is for your own practice management purposes and education.

The third party information and opinions included in these presentations have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Partners Advantage. Although we may promote and/or recommend the services offered by these companies, financial professionals are ultimately responsible for the use of any materials or services and agree to comply with the compliance requirements of their broker/dealer and registered investment advisor, if applicable, and the insurance carriers they represent.

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Thursday, December 22, 2016

Years of Testing and Proven Sales Results - Lead to Unveiling of the Partners Advantage PILLAR System

By: Charlie Gipple, CLU®, ChFC® 
Senior VP of Sales and Marketing,
Partners Advantage


The PILLAR System is coming! PILLAR is an acronym for: Partners In Life, Long-term care And Retirement.  It is a full system of professionally designed, client-ready materials and training to explain how to make it work for you. In short, this is a vehicle (a package) that takes all of the PROVEN content that I have tested throughout my career, that Partners Advantage has tested, that MDRT-level financial professionals have taken from us and tested, to help financial professionals who work directly with Partners Advantage deploy this content to generate more sales. It is a client education system, a seminar system and also a complete sales system.  

The PILLAR System was developed as a result of an epiphany I had on an airplane when I was analyzing some hugely successful sales results that we have experienced in 2016. While analyzing the numbers, I realized the education we provided to the financial professionals though our eight-hour road shows created really impressive results!  The data shows that financial professionals increased their annuity business by 72% shortly after the road shows and their linked benefits business by 143%.  I was also looking at numbers on client seminars that I've done for some of our top financial professionals that said the seminars were getting 60%-80% appointment ratios.  So, in short, I realized, and I already knew, that what we do at the financial professional level works and what we do at the client level works.  We know the training for financial professionals works and the client materials work, so how do we connect the two together? We created the PILLAR System to do this - Partners In Life, Long-term care And Retirement. This proprietary system brings it all together and it is only available to financial professionals working with Partners Advantage. This system is, packaging world-class content in an easy-to-use format all the way from educating yourself as a financial professional to deploying that content with your clients.


Stay Tuned...the PILLAR System is coming early in 2017!


For financial professional use only. Not for use with consumers.

*Production results gathered from January-June 2016. Not all financial professionals in attendance experienced the same results and there is no guarantee of future success. The information provided is for your own practice management purposes and education.

The third party information and opinions included in these presentations have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Partners Advantage. Although we may promote and/or recommend the services offered by these companies, financial professionals are ultimately responsible for the use of any materials or services and agree to comply with the compliance requirements of their broker/dealer and registered investment advisor, if applicable, and the insurance carriers they represent.

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Thursday, December 15, 2016

Serving Clients with Estate Planning Needs

As we head toward the end of 2016 and prepare for 2017, we wonder how the estate planning environment might change. There is even some pressure to abolish the Federal Estate Tax.  Regardless of where we stand on this issue, one thing remains and that is the federal deficit. The issues are complex, however, the chances of adopting any measure that significantly cuts tax revenue is slim. So, let's assume the current $10,900,000 portable unified gift and estate tax exemption will stand unchanged.1

How do we effectively help clients with estate planning needs? If we are to be the catalyst sharing ideas and bringing them to fruition, the process is still paramount. As we approach the end of 2016 it is more important than ever. In my work in this space I see cases sometimes fail because the correct process is ignored. You might get lucky and stumble upon an already developed case and make a product sale.  This is neither a sure or consistent entry into the market. 

Start with Fact Finding
The successful process begins with in depth fact finding. There are many great estate planning fact finders from carriers and other sources. They all have one thing in common. They guide you in asking the disturbing questions about estate reduction. They uncover client goals and dreams, for example do they want their children treated fairly or equally. Most importantly, they contribute to developing rapport with the client. Then, when you request all those private financial documents from your client or ask for a meeting with one of their other advisors, the client's answer is yes. I see more cases fail for lack of this step than for any other reason.

Learn how detailed fact finding, teamwork, and new alternatives available to insurance professionals can make a significant difference to affluent families during the largest wealth transfer period in history.  

Fill out my online form.


1Source: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax  

For financial professional use only. Not for use with consumers.

Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of un-recovered cost basis will be subject to ordinary income tax. Tax laws are subject to change. 

Partners Advantage Insurance Services and their representatives do not give tax or legal advice.  Accordingly, any tax information provided is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Encourage your clients to consult their tax advisor or attorney.
Income tax free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans.  Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce death benefit, or cause the policy to lapse.  This assumes the policy qualifies as life insurance and is not a modified endowment contract.

Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy's account value and death benefit. Assuming a policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the ex that they exceed the policy owner's cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions.

The tax and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Partners Advantage does not provide legal or tax advice. Partners Advantage cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Partners Advantage does not assume any obligation to inform you of any subsequent changes in the tax law or other factors that could affect the information contained herein. Partners Advantage makes no warranties with regard to such information or results obtained by its use. Partners Advantage disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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