How the wealthy use life insurance to escape estate tax and why the tactic is now attracting scrutiny

Morning everyone! I’m Jeffrey Canestepping out from behind the 10 Things on Wall Street newsletter curtain to help catch you up on all things financial today.

Wall Street may be bracing for a sobering day of third-quarter results later this week, but there’s still a lot of forward-looking initiatives going on, including pushes into crypto and private banking and the boom town that is “Wall Street South.” Ray Daliohenceforth, says he will still be an active investor, post-Bridgewater.

But first: Could I interest you in some life insurance?

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A three-generation rich family strolls down a boat dock on a sunny day

A three-generation rich family strolls down a boat dock on a sunny day

Now is a prime opportunity for rich Americans to transfer wealth to their children and save on taxes.Johnny Greig

1. How do the ultra-wealthy shield their enormous fortunes from taxes? Yes, life insurance is one answer, but it’s life insurance with a twist. This little-known tax tool, which may be coming under increasing scrutiny, is called private placement life insurance, or PPLI. It is effectively a life insurance policy that is owned by an offshore trust. Assets that are put into the trust are treated as premiums, explains Insider’s Hayley Cuccinello.

When structured correctly, the assets in a family’s policy – ​​whether they are stock holdings or luxury yachts – can be passed down to the children without incurring estate tax. That can mean savings in the tens of millions of dollars.

Michael Malloy, a wealth advisor who specializes in PPLI, told Hayley that he advises that clients have at least $10 million in assets to make this tactic worthwhile.

A tax tool for the very rich will not find friends in every corner, however. And that is the case with

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