1. Protect your family

2. Protect your business partners

3. Protect your employees

It doesn’t have to be anymore complicated or complex than the fundamental reasons listed above. A person's income and their ability to continue to earn an income in the future is their most valuable asset. Disability/Income Replacement Insurance protects a person’s ability to earn income if they become physically or mentally unable to work. This type of coverage allows a person to continue to provide for their family by still receiving an income, it allows business partners to protect each other’s interests in the case a partner’s disability disrupts business and it may prevent an employer from hastily selling his/her business in case of a disabling event.

As a valued executive benefit for your high-income earners, additional Disability/Income Replacement Insurance can be an easy add-on to complement your existing group long-term disability plans. If you have any questions or would like to connect with a Rose Street Advisor, please contact us today.

Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact your Rose Street Financial Professional. Information obtained from third-party sources are believed to be reliable but not guaranteed.

Securities and Investment Advisory: Services offered through M Holdings Securities, Inc., A Registered Broker/Dealer and Investment Advisor, member FINRA/SIPC. Rose Street Advisors is independently owned and operated. Rose Street Advisors is a member firm of M Financial Group. #4491815

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While William Shakespeare once penned, “To be or not to be, that is the question” – when consulting on life insurance planning options, we field a similar question from clients, “To ILIT or not to ILIT?” Ultimately, should an Irrevocable Life Insurance Trust (ILIT) own my life insurance policy?

With a new year in full swing, major political changes in the federal government and uncertainty surrounding the upcoming sunset of the Tax Cut and Jobs Act at the end of 2025, clients are seeking guidance on how best to balance estate planning objectives with flexibility. Faced with a potential 40% tax on assets over the federal estate exemption, clients are asking if the use of an ILIT is right for them.

Specifically, clients in their late forties and early fifties considering retirement, selling their businesses or evaluating the financial legacy they want to leave for future generations, want to know how to maximize life insurance’s unique tax-advantaged status, not exacerbate a federal estate liability, and maintain flexibility with so much time and uncertainty ahead.

Below is a brief framework for those considering using an ILIT as an owner of their life insurance:

1. Purpose: Is the life insurance intended for purely estate planning purposes and not to replace income, pay off debt or intended to be a supplemental source for tax-advantaged retirement income?

2. Taxes: Due to the size of your estate (or the projected size of your estate), does the life insurance as currently owned increase your federal estate tax liability? If the life insurance proceeds are considered part of your gross federal estate, will 40% of the proceeds effectively be lost in taxes to Uncle Sam? The federal estate tax exemption has changed numerous times over the past 20 years, and if history repeats itself, it’s fair to assume that it may change again (and again) during a client’s lifetime.

3. Control: Are you willing to give up legal control of this asset? Policies inside an ILIT are no longer owned by the insured. This is a big one for our younger clients. It is not advisable nor enjoyable to try to recapture a life insurance policy and its cash value from an irrevocable trust - emphasis on IRREVOCABLE. For our clients with a lot of life ahead of them, flexibility is not totally lost, but it is severely hampered with an ILIT.

4. Logistics: If you don’t like following a set of prescribed rules and keeping a paper trail, you might need to re-think the ILIT route. As the insured, but not the owner of the policy (remember, the ILIT owns the policy), you make gifts to the trust so the trust can then pay the premiums. Things like setting up a trust account, drafting trust language, deciding on trust beneficiaries, sending out Crummey withdrawal notices, etc. take time and effort. If you can see past the logistics, don’t forget #5.

5. Cost: From paying your attorney to draft the trust, sending out the Crummey notices, paying the premiums and hiring a trustee to pay those premiums, time and money will be allocated to this process. A thoughtful, experienced estate planning attorney, a competent tax-advisor and a professional trustee are worth their weight in gold.

At Rose Street Advisors, we aim to provide insight and perspective that helps our clients make the best decisions for their specific situations. If you would like to talk further about how life insurance can protect what's important to you and positively impact your planning objectives, we are here to help.

Robert E. (Rob) Hunt II

LIC & CLU® | Principal & Chief Executive Officer

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The IRS is at it again! Partnerships should take notice.

While the case has drawn some attention by the advisor network, this ruling is worth another look. The 8th Circuit Court of Appeals finding in the Connelly Case was affirmed by the U.S. Supreme Court on June 6, 2024. In this case, the buy-sell liability offset was not recognized by the court and thus the corporately-owned life insurance paid at death significantly increased the value of the deceased’s estate and resulting estate-tax. Although the decision focused exclusively on Stock Redemption Agreements in the 8th Circuit Court jurisdiction, regardless of location, all business owners should take notice and consider a review of their existing buy-sell agreements and funding mechanisms.

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Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

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Over the years of working alongside a number of family offices, I continue to be impressed by the sincere care demonstrated for the family (or families) they serve. While we provide life insurance reviews, on-going service and marketplace insight on their current portfolios, we also strategize with family offices on how life insurance can support their overall objectives. After many discussions about the complexities and challenges of running a family office, could life insurance possibly be a “Family Office’s best friend”?

Initiating the Conversation

The process of buying life insurance is one focused on the next generation. As a mentor of mine told me early on, “Two types of people buy life insurance - those who care about someone and those who care about something besides themselves." Especially when working with younger generations, any opportunity to discuss the sense of responsibility they should have to future generations and their family legacy is meaningful. A conversation regarding life insurance planning is another occasion for the family to consider who and what they care most about

A Business Model of Service

My experience with family offices has been an atmosphere of high touch and high service. Family offices are intentional about being advocates for their families; their service model intertwines both the personal and professional workings of a family. In order to do that well, there must be wealth to manage and revenue generated so resources are available to support all those important functions. When family trees branch farther and farther out, the level of wealth can be diluted while the service expectation from each increasing family member remains constant. One way to counter that reality is to intentionally plan for ways to mitigate depleting family wealth; revenue must match expectations and obligations. With careful planning to minimize income and estate taxes, wealth spent over multiple generations is naturally replenished by an injection of life insurance.

Forced Savings Plan

Paying premiums can serve as a savings mechanism for those who depend on future trust dollars and prevent current recipients from leaving little behind. This strategy can help family offices and those in a fiduciary role balance the demands of the current generation with the responsibility to look out for the interests of future generations.

An Asset Without Equal

Life insurance is still the only asset that avoids taxation at all levels and continues to be a vehicle used by wealthy families to accomplish explicit wealth transfer objectives. While GST-exempt Dynasty Trusts may hold a majority of family assets, inevitably there will be situations where assets outside the trust are susceptible to future taxation. Life insurance does not recognize income or gains requiring complex annual tax reporting (cash values grow inside the policy free from current taxation). As a prime example, private placement life insurance (PPLI) provides access to alternative investments, while being tax-efficient and eliminating the need to track down another K-1 or further complicate tax returns. Life insurance may not be as warm and friendly as a golden retriever, but for a family office, at least you don’t have to worry about cleaning the carpets. If you have questions or would like to see how the advisors at Rose Street Advisors can help you better serve your clients, please contact us below. We are here to help. Click here to request a policy review!

Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

As Principal and CEO, Rob spearheads the vision, drive for growth, and pursuit of excellence at Rose Street Advisors. Rob loves being outdoors with his wife Erin and kids. He has slalom skied for the past 35 years, never missing a season. He also enjoys spending time at the lake and on the golf course. This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact your Rose Street Financial Professional. Information obtained from third-party sources are believed to be reliable but not guaranteed. Securities and Investment Advisory: Services offered through M Holdings Securities, Inc., A Registered Broker/Dealer and Investment Advisor, member FINRA/SIPC. Rose Street Advisors is independently owned and operated. Rose Street Advisors is a member firm of M Financial Group. #6610057.1

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Do you own a business? Do you want to pass wealth to your business and/or your family? Do you want to ensure that your business and/or wealth passes to multiple generations? While the future is uncertain, it is important to plan. When our clients create estate and succession plans, they are limited by the information at hand at this moment; whether that be their current family and business environment, recently updated IRS guidelines, acceptable planning techniques, or current estate and income taxation regulations. Almost all plans will need to extend over numerous decades and multiple generations. Change is not probable, it is inevitable, and that is why liquidity, and the flexibility it provides, will never go out of style. At Rose Street Advisors, we have the unique opportunity to work alongside our clients and their advisors (attorneys, CPAs, etc.) to safeguard their families and businesses to create a blueprint that meets their planning objectives. As a flexible instrument, life insurance provides unencumbered, tax-efficient liquidity when needed most. Life insurance is used as a tool to provide funds needed to: • Help divide an illiquid asset among children; such as a family business, farm, or cottage when interest and ability to manage the asset is varied, but a desire to be “fair” is of utmost importance. • Create a guaranteed market for an owner’s business interest so that a spouse is not dependent on the future success of a business. It can also provide a surviving business partner tax-free liquidity necessary to acquire the deceased partner’s interest in the company. • Provide funds that can be used to pay a federal estate tax that comes due within 9 months following the passing of an individual with a large estate exceeding the current estate-tax exemption amount. • Compensate a key employee’s family in full when a deferred benefit has been promised to the deceased. • Provide working capital to a business needing to replace a key member of a company who has unexpectedly passed. Are you facing an uncertain future? We all are, and the only way to get ahead of it is to plan. If you would like to speak with us regarding your situation or how best to use life insurance in your planning process, please contact us. We look forward to your call!

Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

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New IRS Ruling for Grantor Irrevocable Trusts: If you have an Irrevocable Trust as part of your estate plan, you should be aware of a new IRS ruling that was issued on November 28, 2023. With this CCA, the IRS has taken the position that a modification to a Grantor Trust, with the beneficiary’s consent, will result in a taxable gift by the beneficiaries. This new CCA may not directly impact your planning, but demonstrates that the IRS is still looking at the tax benefits of Grantor Irrevocable Trusts. So, if you are considering the establishment of an Irrevocable Trust or amending an existing Trust, special care should be given to avoid this issue. A qualified estate planning advisor is key… Click Here for More Info If you have questions or would like more information, please contact us, we look forward to your call.

Craig Platt

CLU®, CHFC®, CFP®, LIC | Life Insurance Advisor

Since 1993, Craig has worked extensively in the life insurance, employee benefits and investment areas at Rose Street where he assists clients in designing, implementing and monitoring their programs. In free time, Craig enjoys watching college football, traveling and golfing. This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact your Rose Street Financial Professional. Information obtained from third-party sources are believed to be reliable but not guaranteed. Securities and Investment Advisory: Services offered through M Holdings Securities, Inc., A Registered Broker/Dealer and Investment Advisor, member FINRA/SIPC. Rose Street Advisors is independently owned and operated. Rose Street Advisors is a member firm of M Financial Group. #6203126.1

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162 Bonus Plan

Are you evaluating a "reward" program for your key people? Do you want a plan that is meaningful, but not overburdensome and complex? A 162 Executive Bonus Plan may be the plan for you.

A recent article in Forbes from our friend and HR expert Tracy Brower, PhD, explains that employer retention is on the rise. A new poll from B2B Reviews finds 70% of employees aren’t currently looking for a new job. That’s good news for employers and employees; employers are enjoying stability and continuity, while employees are experiencing job satisfaction and security. Employers are focusing on organizational culture and offering benefits that resonate with their workforce. Providing competitive salaries, robust benefit plans, and key person reward programs enhances overall retention. This emphasis on retention seems to be most fruitful for small to medium-sized businesses and non-profit organizations. That is all good news.

When it comes to retaining and rewarding their highly skilled, uniquely experienced, and key drivers of organizational success, most organizations are evaluating some form of deferred compensation plan. Many small businesses consider offering some form of minority ownership or equity stake. Ultimately, for family succession plan reasons, a general sense of uneasiness, and the permanence that comes with bringing on a new owner, they choose programs that avoid direct ownership. An equity stake certainly creates a common financial incentive to grow the business, but a properly structured bonus plan may accomplish similar objectives while avoiding the legal, financial, and disruption that fractional ownership can sometimes cause.

In a recent client conversation, our firm had the opportunity to talk through a variety of key employee reward/retention plans available. A non-qualified/non-ERISA deferred compensation plan can be very specific when it comes to participation, performance, loyalty, contribution rules and requirements while still providing some level of employee involvement. The more complex the plans, the more they require external expert advice, ongoing management, and professional record-keeping support. For a large group of key employees, spending time and money on such a plan can make sense. For employers that want something more easily managed for a smaller group of individuals (10 or less), a 162-Bonus plan may be a great fit. A 162-Bonus plan, once in place, can be efficient and internally managed with minimal oversight. The ease of execution and the straightforwardness of the plan can be appealing to both the employer and the employee.

If you are struggling with the recruitment and retention of your best people or simply want to stay ahead of the pack, a reward program may be the missing piece to your organization’s benefit puzzle. Could a 162-Bonus program be the differentiator that nudges a highly sought-after person to join your team or a key person to reject another employer’s offer? Below are the basics of a 162-Bonus Plan.

What is it and how does it work?

An employer designs an additional compensation benefit for a specific employee or group of employees where each year money is contributed to a life insurance policy owned by the individual employee

• Contributions are considered compensation when made and are thus an immediate deduction for the employer
• Due to the contribution being considered compensation, the employee will have the contribution included in his or her taxable earned income. Some employers will “double bonus” the employee contribution to cover the estimated tax generated payable by the employee
• Contributions can be tied to performance objectives and reviewed annually by the employer
• Neither participation nor contribution limits are subject to ERISA rules and regulations
• In many cases, employers will contractually limit the participants access to the cash values for a certain amount of time via a Restrictive Employee Bonus Agreement (REBA) and spell out the basis for making contributions to the plan (i.e. profitability, gross revenue, performance objectives, etc.)

The Good, the Bad and the Ugly (or Pros, Cons and Items to Note)

Good:

• Highly compensated individuals can be under insured to protect their family and value the fact that their employer is providing a mechanism for additional life insurance coverage
• Due to the tax-advantaged nature of life insurance, cash values grow tax-deferred and may be accessed as tax-free supplemental retirement income at some point in the future via policy withdrawals and loans
• Contributions are immediate deductions for the employer
• Plans are easy to explain, implement and manage. Unlike other non-qualified executive bonus plans, 162 Bonus plans have very little ongoing administration requirements, while providing some measure of a “golden handcuff” arrangement between the employer and the employee

Bad:

• Once contributions are made, there is no automatic recapture provision for the employer to claw back any bonus already paid
• While there negative consequences for an employee leaving early, a 162 Bonus Plan may not provide as much employer control over plan forfeiture as other non-qualified deferred compensation plans

Ugly: (more like important items to take note of prior to implementation)

• In most cases, individual participants will need to qualify for life insurance coverage. Plans with multiple participants can sometimes avoid full medical underwriting and help get coverage for participants that may otherwise not qualify for favorable rates.
• Due to the taxation particulars of life insurance, employees will need to have access to advisors who know how to avoid extremely punitive consequences if policies are not managed correctly.

Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Advisor, Member FINRA/SIPC. Rose Street Advisors is independently owned and operated. #3947005.2

Robert (Rob) E. Hunt

Principal & CEO LIC, CLU®

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For those individuals and families planning their financial legacy, December 31st, 2025, is an important date to keep in mind when thinking about taking advantage of unprecedented transfer and gifting opportunities under the current tax environment. While taxation should never be the only reason to transfer assets or make major gifts, December 31st 2025 currently sits as the time to get the most out life insurance decisions within estate planning.

What To Do?

1. Identify and then engage your trusted advisors (legal, tax, trust, financial and insurance) Don’t wait. If the anticipated tax changes happen, the lines will be long and the time will be short to discuss, decide, draft and implement all that will need to be done by December 31, 2025. 2. Review your current legal documents and insurance portfolio. How has your situation changed and what legal documents need to be updated? From ownership and beneficiary designations to policy performance, when is the last time you had your insurance portfolio reviewed? Are there reasons to consider 1035 exchanges, ownership situations and life settlements? 3. Start the Process Life Insurance can be underwritten without an obligation to buy. This allows you to know where you stand in terms of pricing and available capacity, specifically for you. •Assess ownership and beneficiary status •Review your current portfolio •Complete the medical portion of the underwriting process (medical records and possibly an insurance exam) Have a general understanding of certain succession and estate planning techniques.   •Annual Exclusion Gifts – are you using these to your fullest? •Sale to a defective trust •Spousal gift trusts •Irrevocable Life Insurance Trusts Questions to consider: •Will you need a 3rd party valuation? If yes, who will complete the appraisal and how much time will that take? •How will a significantly lower federal estate tax exemption impact your planning and tax liability? •How will a change in the capital gains rate affect you? • How does a potential change in the “step up in basis” treatment of assets affect your need for liquidity? If you have questions or would like more information, please contact us, we look forward to your call.

Mark Denenfeld

LIC | Life Insurance Advisor

Mark joined Rose Street in 2017 and helps clients with their estate, business succession, and family/business planning through the use of life insurance products. He loves golf, skiing, hiking, and reading. Fun fact: Mark has both played and coached tennis at the collegiate level. This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact your Rose Street Financial Professional. Information obtained from third-party sources are believed to be reliable but not guaranteed. Securities and Investment Advisory: Services offered through M Holdings Securities, Inc., A Registered Broker/Dealer and Investment Advisor, member FINRA/SIPC. Rose Street Advisors is independently owned and operated. Rose Street Advisors is a member firm of M Financial Group. #5797855.1

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They say there are only two certainties in life: Death & Taxes...

If you have been successful and built a large estate, when you pass away, Uncle Sam comes calling (again). One can argue over whether or not this is fair, but as it stands today, you are only able to pass so much to the next generation without paying the federal estate tax of 40% on your includable assets. In most cases, to add injury to insult, the tax is due within nine months of your passing. Some advisors argue that if you have a large estate, you have the assets to pay Uncle Sam. I would ask you to consider: Why give up a dollar of the asset or full value, which you may or may not have had to pay tax on, and potentially lose future earnings power of that dollar? To maximize the passing of accumulated wealth from generation to generation, we help clients understand and implement a tax-efficient life insurance strategy. If structured properly, life insurance provides tax-free dollars or discounted “pennies for dollars” to pay Uncle Sam. Should you consider leveraging the tax-free benefits of life insurance to plan for a future federal estate tax? If you have questions or would like more information, please contact us, we look forward to your call.

Mark Denenfeld

LIC | Life Insurance Advisor

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Group Term Life Insurance - The Cherry on Top of the Sundae...You Still Need the Sundae

One of the valuable benefits employers often provide their employees is group term life insurance. The amount of life insurance benefit offered in these plans can vary, but it’s common for employees to receive only one or two times their income in group term life insurance benefit. I often hear, “I already have life insurance through my employer, so I’m all set.” Unfortunately, although this is a great employee benefit, it’s not adequate to truly protect a family. On top of that, there are additional reasons to acquire life insurance outside of an employer provided benefit. The general, and simplistic rule of thumb when determining the appropriate amount of life insurance is 10-12 times your annual income. This provides beneficiaries with enough liquidity to invest and live off the earnings for quite some time. The more complex approach, which often results in the same outcome, is taking stock of the debt you’re carrying along with education funding for children and standard of living for the surviving spouse. In addition to group life insurance typically not being a sufficient amount of coverage, there are three reasons to carry personally owned life insurance that I would like to highlight: 1. Portability. Do you want your life insurance coverage tied to your employment status? 2. Cost. For a young and healthy individual, it is often more cost effective to acquire your own life insurance than to participate in an employer sponsored "buy up" option. 3. Flexibility. If coverage is dependent on decisions made by an employer, there isn't much flexibility and/or control over an important financial instrument. If you are considering personally owned life insurance, or want to discuss your specific situation, I look forward to a good conversation.

Mark Denenfeld

LIC | Life Insurance Advisor

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1. Protect your family

2. Protect your business partners

3. Protect your employees

Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

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Robert E. (Rob) Hunt II

LIC & CLU® | Principal & Chief Executive Officer

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The IRS is at it again! Partnerships should take notice.

Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

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Initiating the Conversation

A Business Model of Service

Forced Savings Plan

An Asset Without Equal

Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

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Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

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Craig Platt

CLU®, CHFC®, CFP®, LIC | Life Insurance Advisor

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162 Bonus Plan

Are you evaluating a "reward" program for your key people? Do you want a plan that is meaningful, but not overburdensome and complex? A 162 Executive Bonus Plan may be the plan for you.

What is it and how does it work?

An employer designs an additional compensation benefit for a specific employee or group of employees where each year money is contributed to a life insurance policy owned by the individual employee

• Contributions are considered compensation when made and are thus an immediate deduction for the employer

• Due to the contribution being considered compensation, the employee will have the contribution included in his or her taxable earned income. Some employers will “double bonus” the employee contribution to cover the estimated tax generated payable by the employee

• Contributions can be tied to performance objectives and reviewed annually by the employer

• Neither participation nor contribution limits are subject to ERISA rules and regulations

The Good, the Bad and the Ugly (or Pros, Cons and Items to Note)

Good:

• Highly compensated individuals can be under insured to protect their family and value the fact that their employer is providing a mechanism for additional life insurance coverage

• Due to the tax-advantaged nature of life insurance, cash values grow tax-deferred and may be accessed as tax-free supplemental retirement income at some point in the future via policy withdrawals and loans

• Contributions are immediate deductions for the employer

• Plans are easy to explain, implement and manage. Unlike other non-qualified executive bonus plans, 162 Bonus plans have very little ongoing administration requirements, while providing some measure of a “golden handcuff” arrangement between the employer and the employee

Bad:

• Once contributions are made, there is no automatic recapture provision for the employer to claw back any bonus already paid

• While there negative consequences for an employee leaving early, a 162 Bonus Plan may not provide as much employer control over plan forfeiture as other non-qualified deferred compensation plans

Ugly: (more like important items to take note of prior to implementation)

• In most cases, individual participants will need to qualify for life insurance coverage. Plans with multiple participants can sometimes avoid full medical underwriting and help get coverage for participants that may otherwise not qualify for favorable rates.

• Due to the taxation particulars of life insurance, employees will need to have access to advisors who know how to avoid extremely punitive consequences if policies are not managed correctly.

Robert (Rob) E. Hunt

Principal & CEO LIC, CLU®

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What To Do?

Mark Denenfeld

LIC | Life Insurance Advisor

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They say there are only two certainties in life: Death & Taxes...

Mark Denenfeld

LIC | Life Insurance Advisor

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Group Term Life Insurance - The Cherry on Top of the Sundae...You Still Need the Sundae

Mark Denenfeld

LIC | Life Insurance Advisor

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