Short Term Reversionary Trust
Financial instrument established irrevocably for a minimum of 10 years, after which the principal reverts to the grantor upon termination of the trust. A key feature is that earnings from the principal traditionally have been taxed at the beneficiary's tax rate instead of the presumably higher tax rate of the grantor. An example is the CLIFFORD TRUST commonly used to save for a child's college expenses. Another example is the funded irrevocable LIFE INSURANCE TRUST. Under a typical arrangement, a grandparent might establish such a trust to fund premiums for permanent insurance on the life of a son or daughter, with the grandchildren as beneficiaries. At termination of the trust, the grandchildren would have a fully paid policy on their parent's life, and the trust assets would revert to the grandparent. Congress curtailed the tax advantages of short-term reversionary trusts in the Tax Reform Act of 1969 and again in the TAX REFORM ACT OF 1986.
Popular Insurance Terms
Table used in calculating various nonforfeiture values for industrial life insurance policies. These tables give the minimum values that must be generated to the policyowner. The insured's ...
Liability incurred by one insured as the result of his or her damaging another insured when both insureds are covered under the same liability insurance policy. Each insured must be treated ...
Life insurance: Bonds most state regulations permit life insurance company investments in debentures, mortgage bonds, and blue chip corporate bonds. Stocks(a) preferred stock investment ...
fee that is the most consistently charged by the physician for a particular procedure. fee that is usual for a particular procedure charged by the majority of physicians with similar ...
Plan whereby adjustments are made in the premium, as the premium increases to reflect the non proportionate increases in expenses. Generally, the expenses of acquisition costs, ...
Same as term Convention Examination: audit of the convention blank (NAIC Statement Blank) every third year as to all of the financial activities of a company; company claim practices; and ...
Additional amount of surplus from an additional amount of capital necessary to act as a supplement to the cash flow in the event unforeseen contingencies occur that disrupt or impair the ...
Trade association whose objective is to further the interests of its membership, as well as to inform the public on the role of its members. ...
Payment of an employee's employee benefit insurance plan benefits to the employee's individual retirement account ( IRA) or to another plan maintained by the employer. ...
Have a question or comment?
We're here to help.