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201803 Tax Cuts and Jobs Act boost to LS market
The Tax Cuts and Jobs Act 2017 (TCJA) is perhaps the most
significant tax legislation to be introduced in the US since the
Tax Reform Act of 1986.
The new legislation was signed into US Federal law at the end of
2017, and has been broadly welcomed by the Life Settlement industry
as a change that will further support initiatives to increase
Whilst the scope of the TCJA is extensive, its impact on the
supply of Life Settlements in the market is twofold:
Given the IRS's taxation rulings on Life Settlements in recent
years, the TCJA brings welcome clarification on the future taxation
of LS transactions in the secondary market.
In essence, under the TCJA, a policy holder looking to sell
their policy in the secondary market can now offset their cost of
insurance against any gains realised through sale; hence reducing
their tax liability. This brings the taxation on policy sales in
line with the tax treatment for surrendered policies - a logical
Further, those seniors that took out policies in recent years
for estate planning purposes may find that the doubling of estate
tax exemption to USD22.4 million under the TCJA could mean their
policies have become surplus to their tax planning requirements;
resulting in the life settlement option becoming more
Ioan Roberts, Head of Life Settlement Trading at SL Investment
Management said, "There are a number of initiatives under way at
present in the US aimed at increasing policy supply to meet
investor demand. The implementation of the TCJA should provide a
welcome boost in this respect".
"Direct to consumer initiatives are just one important step that
life settlement providers are taking to raise consumer awareness of
the life settlement option and we are optimistic about the positive
impact these efforts are likely to have on secondary market supply
volumes in 2019 and beyond."
"Under the TCJA there are likely to be more reporting
requirements for parties involved in the origination chain, and
investment managers - but, this is all perfectly manageable given
the overall benefits to the industry".
For further information on the Life Settlement market, or to
discuss Life Settlement investments in general, please contact firstname.lastname@example.org.