(617) 917-5040

(617) 917-5040(617) 917-5040(617) 917-5040

(617) 917-5040

(617) 917-5040(617) 917-5040(617) 917-5040
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  • More
    • Home
    • Who We Are
    • WHAT WE DO
      • Tax Optimization
      • Asset Protection
      • Estate Planning
    • Resources
      • Irrevocable Trusts
      • PPLI
      • PPVA
      • FLP
      • LLC
      • Captive Insurance
      • Asset Armour
      • Defender Trust
      • 1035 Exchange
    • Contact Us
  • Home
  • Who We Are
  • WHAT WE DO
    • Tax Optimization
    • Asset Protection
    • Estate Planning
  • Resources
    • Irrevocable Trusts
    • PPLI
    • PPVA
    • FLP
    • LLC
    • Captive Insurance
    • Asset Armour
    • Defender Trust
    • 1035 Exchange
  • Contact Us

Private Placement Variable Annuities (PPVA)

Why PPVA?

Private Placement Variable Annuities (PPVA) provide the periodic income of a traditional annuity combined with tax-deferred growth on an unlimited universe of investments, including hedge funds and other alternative investments. The insurance company creates separate tax-deferred accounts for your chosen investment advisor to invest at their discretion.


PPVAs are valuable for the elderly, the retired, the uninsurable, and families with charitable intentions. They offer a way to participate in hedge funds and other alternative investments with deferred taxation. You can make deposits and receive income from your PPVA. Your advisor can adjust PPVA allocations among investment options, and you can change the beneficiary designation at any time.

PPVA Benefits:

  • Retirement
  • Charitable giving


Below we explore the basic structure and benefits of PPVA. 

THE BASIC PPVA STRUCTURE

Explanation of the structure

  1. The Annuitant (parents) purchases a PPVA.
  2. The Insurance Company pays the Annuitant an annuity.
  3. The insurance company places your payment into the PPVA's separate IBC account.
  4. Your selected Investment Advisor makes investment decisions.
  5. On death, your beneficiaries will receive the money remaining in your PPVA.

Benefits

Retirement. PPVAs are especially beneficial if you intend to retire to a lower-tax state. You can defer the income tax on your investment gains until you've relocated. Now, you would take distributions and pay a lower effective tax rate.


Charitable giving. Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) require assets to be gifted irrevocably in exchange for a current tax deduction. The PPVA allows charitably inclined individuals to maintain ownership and control of PPVA assets throughout their lifetime while deferring taxation on the investment gains within those assets. If a charity is designated as a beneficiary at the time of your death, assets are passed to that charity tax-free.

PPVA Applications

There are multiple reasons why you may need to use the PPVA:

  • I’m leaving everything to Charity: PPVA assets pass to charitable beneficiaries tax-free
  • I’m Uninsurable: Clients who are medically uninsurable can access PPVA
  • I don’t have enough money for PPLI: 500k minimum and lower costs
  • I got sold a bad annuity: 1035 exchange your underperforming annuity for a PPVA

PPVA vs. PPLI

PPVA contracts may be a more appropriate vehicle than PPLI for those averse to the medical and financial disclosures required in the PPLI underwriting process. The PPVA process is simpler, and its cost structure is less than that of a PPLI since there is no life insurance cost. The downside is that assets passed to beneficiaries at death are taxed as ordinary income.


If clients aren’t ready to part with assets permanently, they could place them into a PPVA, where they grow tax-deferred and accumulate faster than if exposed to taxes. 


The donor can access cash but cannot borrow cash tax-free as with A PPLI. 


At death, if a private foundation or charity is designated as the beneficiary, deferred gains become exempt from income tax, and the PPVA will not be subject to estate tax. 


This constitutes a tax-efficient means of giving assets away without losing control during one’s lifetime.

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Asset Protection Law

(617) 917-5040

  1. This material is intended for informational purposes only. It should not be construed as legal, tax, or investment advice and is not intended to replace the advice of a qualified attorney or tax advisor. We are not a law firm or a substitute for a law firm or an attorney. We do not provide legal advice or investment advice of any kind nor legal strategies, opinions or rights.  
  2. Private Placement Life Insurance and Annuities are unregistered products and are not subject to the same regulator requirements as registered products. As such, Private Placement Life Insurance and Annuities can only be offered to accredited investors or qualified purchasers as described by the Securities Act of 1933.


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