Sam Kaufman, President, Agent Support Group
As an aside, this past Friday I was asked to participate on a conference call with a group of lawyers and there advisor. The Partners had “Buy-Sell” insurance in place where the firm owned the policy and the beneficiary was split between the firm and the Partner’s named beneficiary. This was clearly a Goodman violation and I brought it to their attention which did not exactly make them happy. Their accountant, wait till you hear this, suggested they create a split dollar agreement to circumvent Goodman. Since these were term policies, I told them I have never seen a split dollar agreement associated with a term policy and at best it would likely mean transferring the ownership to the partner and creating an endorsement. I said the easiest solution is to either replace all the policies and have each half owned by the respective beneficiary(s) or to reduce their current policy in half and purchase new insurance for the other half. I further went on to tell them that if the personal beneficiary did not sign off on the death claim the entire proceeds would be frozen, leaving them in a vulnerable position.
This was an hour long call that ended at 4PM Friday. I am still scratching my head wondering how these 10 attorneys had no idea.