Getting Money Out Of The Company: Insurance Policy Transfers

Insurance Policy Transfer Tax ImplicationsIt may be possible for a shareholder to transfer his/her life insurance policy to a Corporation and receive cash at a low or nil tax cost. There are many calculations and implications to consider.

For example, where a policy has a fair market value of $100,000, the policy, under the right circumstances, may be eligible to be transferred to the Corporation in exchange for $100,000 with little or no tax cost.

There are, however, a number of cautions to be considered, such as the potential for significant tax where the policy is subsequently transferred back to the individual. Professional advice is advised before any transfer is made.

Action Item: Let us know if you personally own a life insurance policy to determine if this involved planning strategy may be appropriate for you!

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