A Death Benefit plan is a "non-qualified" plan where your company agrees to pay a death benefit equal to two times your salary for one of your designated heirs. It is non-qualified because you donot have to offer this plan to all employeesand you can discriminate in favor of officers and directors. Your business can purchase life insurance to fund all or a portion of the benefit.
There are many situations in which a death benefit plan can be a useful tool for the small business and family-owned business. When the death benefit plan is tied into the estate plan and business plan, it can be a powerful tax saving and tax shifting tool. The plan requires careful drafting by your tax and business attorney and coordination with your insurance broker and other financial advisers. Call Ronald J. Cappuccio, J.D., LL.M.(Tax) at (856) 665-2121.