Richards Layton & Finger

New Private Placement, Trust-Owned Life Insurance Premium Tax Bill Signed into Law

May 20, 2016

On May 5, 2016, Delaware Governor Jack Markell signed into law House Bill 237, substantially lowering the premium tax rate for trust-owned, private placement life insurance contracts covering the life of an individual. The new law lowers the premium tax rate to 2% for the first $100,000 in net premiums and 0.0% on net premiums in excess of $100,000. With the enactment of this legislation, Delaware now has the lowest premium tax rate on privately placed, trust-owned life insurance in the United States. This change in premium tax rates coupled with Delaware's favorable trust laws, including laws specifically relating to insurance trusts, make Delaware a very attractive jurisdiction to consider for privately placed, trust-owned life insurance.

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