Annuities and life insurance enjoy very favorable tax treatment in the US. With annuities, the income and growth is sheltered from income tax until amounts are received as annuity payments, withdrawals or at surrender. At death, the income is still taxable if there are any payments remaining. All annuity income is taxable at ordinary income rates. Any remaining payments are also includable in the deceased’s estate for estate tax purposes.

Life insurance enjoys even greater US tax advantages. Not only are the income and gains sheltered from income tax while they remain in the contract, but the death proceeds are received by the beneficiaries income tax free. In addition, ownership of life insurance can be structured so the proceeds won’t be taxable for estate tax purposes.

Annuities, endowments and life insurance enjoy tax advantages in many other countries as well. Oftentimes, sound international tax and estate planning techniques to accumulate and pass wealth on to others in a tax efficient manner will involve the use of annuities and life insurance

True off-shore life insurance can frequently provide for wealth transfer with multiple tax advantages in several countries. IOSLI products also generally provide asset protection, confidentiality and avoidance of what may be considered unreasonable and unwanted taxation, regulatory restrictions on product design and available currencies, as well as the investment and taxation of company reserves.

The key is designing or selecting the right type of off-shore products to meet specific objectives. Just because a product might be issued in an off-shore jurisdiction does not mean it will accomplish the desired results. For example, using an off-shore subsidiary of a US carrier for a situation involving any US tax payers might defeat the legitimate purpose of having funds off-shore.

AG Transnational serves as an international advanced underwriting resource in the areas of international estate planning and wealth transfer.