Generational Wealth Transfer Strategies

Generational Split Dollar

We are entering the era for the Great Wealth Transfer where $84 trillion is expected to be passed down to the next generation over the next 20 years. Ultra wealthy families need to approach this transition with comprehensive, multi-faceted plans and should rely on guidance from their advisory team to navigate the complexities of the process.

While older generations are still alive, an option to fund policies for future generations is generational split dollar.  Typical split dollar funding uses premium payments on a life insurance policy from a third party, usually through an irrevocable life insurance trust (ILIT) where the ILIT owns the life insurance policy and the grantor loans the premiums to the ILIT. Generational split dollar is a variation on split dollar where the older generation (Gen 1), typically a parent, funds a life insurance policy held in trust insuring a younger generation (Gen 2), typically children, for the benefit of grandchildren and future generations (Gen 3+).

There are several aspects to consider when implementing life insurance using generational split dollar.  The article below explores best practices and points of contention from three notable cases.

Click here to read: Generational Split Dollar Lessons Learned

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