While Section 1035 exchanges do not make sense in all situations and the protection and coverage provided by the current contract should be carefully weighed and considered, you and I know that clients' situations do change.
In particular, these changes have converged to create an opportunity to use an Internal Revenue Code Section 1035 exchange to address potential long-term care funding needs.
So-called section 1035 exchanges are useful, but often overlooked, financial planning tools.
There are no Internal Revenue Service regulations on how to treat outstanding policy loans during section 1035 exchanges.
AMONG THE FACTORS CPAs should consider in advising clients about section 1035 exchanges are potential uninsurability, acquisition costs, cancellation penalties and unfavorable tax rules.
BECAUSE SECTION 1035 exchanges are complicated, a clear understanding of the rules is essential.
Since a number of financial and tax factors must be considered, the CPA may be in the best position to help a client make an objective determination about the appropriateness of using a section 1035 exchange to replace a policy.
This article discusses the factors to consider when evaluating policy replacement and offers planning tips for executing a section 1035 exchange.
When circumstances warrant policy replacement, a section 1035 exchange may be the tax-wise way to do so.
If the new policy's indebtedness equals the old one's, the exchange may qualify as a section 1035 exchange.