New valuation methodologies for life insurance use real-time comparative data from the secondary market for life insurance for HNW (high net worth) clients. The Secondary Market Valuation (SMV®) gives tax practioners an alternative appraisal to the safe harbor Form 712 values in situations where the IRS has defined no definitive rules. Health agnostic valuation methodologies are outdated and often grossly over value universal life insurance products involved in transfer or sale. The SMV®, is a mark-to-market life insurance valuation that incorporates individualized longevity analytics and complies with the IRS willing buyer/willing seller definition of fair market value.
 
Learning Objectives:

• Review the impact of the Tax Cuts and Jobs Act of 2017 regarding the taxation on the sale of a life insurance policy in the secondary market.


• Understand the value of having an alternative valuation to determine fair market value for tax scenarios where IRS rules are not specific.


• Recognize planning scenarios where it’s important to get an SMV® value to ensure all options are discussed with clients and they can make informed decisions about life insurance and whether to hold/pay/change/sell such as:
  
  
  
  • An alternative to Form 712/ITR values
  
  
  • Term policies have SMV® value
  
  
  • Charitable life settlement gifts of cash
  
  
  • Business-owned policy appraisal - M&A
  
  
  • ILIT policies – appraise for SMV® value
  
  
  • Longevity analytics – planning horizon
  
  
  • Fiduciary duty – client best interests
  
  
  • Policies no longer wanted or needed