Beware of Forming a Captive for Estate Planning or Tax Avoidance


Captive Tax Issues | Steven McElhiney | President & CEO | EWI Re, Inc.


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.