Two parties that are
associated, one with a need
for capital at death and the
other with funds available
Parties to the split dollar
agreement may include:
– Corporation/RCA trust
Parties willing to jointly administer their split dollar agreement. Willing to seek professional advice.
Two parties enter into a formal split dollar agreement. Parties jointly purchase a life insurance policy. One party pays for and owns the level death benefit and the other party pays for and owns the cash value.
Show how costs and benefits of a jointly owned life insurance policy can be allocated between two parties.
Provides life insurance protection for one party. Provides a tax-sheltered investment for another party Flexibility to determine split of benefits. Flexible method to determine costs payable by each party. Benefits payable at death received tax free. Proceeds received by corporation may generate credit to Capital Dividend Account.