Beware of Forming a Captive for Estate Planning or Tax Avoidance

August 07, 2017

In this video, Steve McElhiney, president and CEO of EWI Reinsurance, reviews some of the motivating factors behind forming 831(b) micro-captive insurance companies. Micro-captives are designed for small organizations with a small degree of premium spend and capitalization. When micro-captives are established for the appropriate risk control and insurance reasons, they can be as appropriate and successful as any captive. Micro-captives fail when they are done for estate tax-planning reasons or solely for tax reasons. Regardless of organization size, if the reason for forming a captive revolves around risk control, risk retention, and outcome participation, success should follow. If driven by the tax element, such a captive is prone to abuse and an area to avoid.


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August 07, 2017