A death benefit in a life insurance policy is exempt from income tax and estate tax.
A Trust may replace a Will as a tool for estate planning. Putting assets into a trust can avoid a costly and drawn-out probate process.
A trust is a fiduciary relationship in which one party, known as a settlor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.
The trust is governed by the terms under which it was created.
Life Insurance combines the US irrevocable trust to bring more benefits
A limited liability company (LLC) is the United States-specific form of a private limited company. A LLC member has financial liability up to the amount of capital contribution provided by the member. Member cannot be personally liable for the company’s debts or liabilities.
- Company assets and personal assets are separated. Member shall not bear the internal and external risks of the company loss (Ex: Credit of other members).
- Non-Recourse Debt
- Recourse debt is limited to assets within LLC
- Creditors are not able to access to personal assets
Please consult with your tax advisor and / or attorney in choosing the right form of asset ownership or planning the best asset protection strategy for you.
Trust Case Study
Combine your US life insurance with trust, the best option for high net worth individuals
In the past few years, Mr. Li who is 50 years old, has accumulated a substantial wealth. He dreams of leaving a lasting legacy that secures a high quality of life for all of his descendants with a perfect solution. After the birth of his first grandson, Mr. Li immediately starts to look for a solution that includes the third generation into his wealth inheritance plan.
After consulting with PWS profession team, Mr. Li wants to have a larger amount of protection for his whole family from generation to generation and he also worries about the family problems that might be caused by the inheritance distribution. PWS suggests him to combine a universal life insurance with an irrevocable trust, which maximizes the inheritance while Mr. Li can still distribute his asset by his own will. This is a very common asset inheritance tool between high net worth individuals. It ensures the financially protection for his family and reduces the potential high taxes caused by asset proceeds and estate inheritance.
Estate Tax Case Study
Prevent estate tax for your overseas assets
Mr. Cai has been working in Asia for many years. Both his children went to study in the United States after graduating from secondary school. In order to take care of their children, his wife moved to the United States last year. Since his family are all living in the United States, Mr. Cai purchased a property in the US last month, he is still looking for a comprehensive tool that can make sure the financial protection for his family is secured and so as his US assets.
PWS has many years experiences in serving high net worth Chinese clients in the United States. With the shortest time period, PWS proposes a solution for Cai family according to their situation and needs. Finally, Mr. Cai chooses US life insurance as a tool for protecting his family and assets. With US life insurance, the overseas assets is well protected and Can family will not be subject to estate tax.
The process of applying a US life insurance is simple which is the most convenience choice for the busy businessman like MR. Cai. When Mr. Cai travels to the US to visit his family, PWS arranges the schedule of medical check and application fill-in and signing for him during his visit.
After the evaluation, Mr. Cai has a $10 million value of US assets, including his new property and others US stocks and bonds. In the situation, without proper planning, as a non-US person, Mr. Cai and his family would have to pay almost $4 million for estate tax. If you starts to include a US life insurance into your financial tool, you can save a large amount of estate tax for your inheritance. You can also avoid the extra family or legal problems if your inheritances have to bear a large amount of estate tax.
The are other benefits that a US life insurance policy can give it to you. The growing cash value in the policy can be used to be a source of fund for family’s living expenses, children’s education, investment fund and business start up fund. Whether it is a high amount of death benefit or a cash value that can be used, it is the greatest protection for the family.
Through planning in advance, Mr. Cai is able to leave a grand legacy to future generations that could last for hundreds of years, securing a carefree and high quality standard of living for him and for all of his descendants.
New Immigrant Case Study
A asset protection for the new immigrants
Mr. Wang has lots of friends and relatives living in the US. With his American dream, Mr. Wang and his family has planned to moved to the west coast of the US in recent years. Although he is still unfamiliar with the US, Mr. Wang still has the needs to set up his local property and establish wealth protection. He hopes that the his family will be under a perfect protection no matter how much scale of his future business will develop in the US. Therefore, he sought assistance from the PWS team who is familiar with the US financial market and who has a lot of experiences in helping Chinese to set up the assets allocation in the US.
PWS recommends that Mr. Wang set up a trust as a wealth planning tool which is commonly used by high-net-worth families in the US. The trust assets can be separated from personal assets. If Mr. Wang’s individual or company faces debt or lawsuits, or even divorce proceedings in the future, the privacy and security of the trust assets will not be affected, and will be protected from creditors. Besides, with a proper trust structure setup, Mr. Wang can also plan for his taxation ahead, reducing the large amount of tax payment from income proceeds and estate.
After setting up trust, PWS suggests Mr. Wang to buy a US life insurance, which the growing cash value and death benefit provides the stable protection for Wang family in the US. Combining his life insurance policy with his trust as his tool of wealth inheritance, it also meets Mr. Wang’s need of asset protection, wealth inheritance and tax planning.
Compare to consulting with the US life insurance companies, consulting with PWS is a better option for Mr. Wang. Because PWS has offices in the US and in Asia with the professional bilingual team, PWS has the deeper understanding about the needs of Chinese immigrant, so that that can provide clients with the more suitable solutions.
CRS Case Study
US life insurance can solve your tax issue caused by CRS
There are 108 countries formally adopted CRS (Common Reporting Standard) in 2018, including China Hong Kong, Taiwan, Singapore, and the British Virgin Islands. These countries will exchange financial information of their foreign citizens’ accounts to their home countries. Many entrepreneurs worry about their overseas account information will be disclosed and will encounter taxation in the future. Mr. Chen is a successful entrepreneur. His career has gradually expanded to overseas in recent years. He is worrying about the impact of CRS. Following the advice of an accountant, he contact PWS team to discuss how to reallocate assets to overseas markets.
Mr. Chen is very interested in US life insurance. The United States is not included in the CRS jurisdictions. The proceed of US life insurance is exempted from taxation. And it also has a high degree of asset confidentiality which means the policy information is not exchanged, and there is no exposure risk. However, Mr. Chen does not have US citizenship nor any assets in the United States. After understanding his needs, PWS team recommended the products that could be purchased by non-US person without any US nexus. Mr. Chen chose a Universal Life insurance which has a steady return. PWS arranges the schedules for him to do the medical exam and sign the policy application. After around 4 weeks, the underwriting result came out which made him very satisfied. Mr. Chen officially signed the insurance policy.
Even without US nexus, PWS professional team can provide a suitable asset allocation plan, implementing the confidentiality of client’s needs, and establish a solid protection for Mr. Chen overseas assets.