Waterfall Concept
Categories: Company Management, Financial Theory
Want to add some panache to your backyard landscaping? Try a waterfall concept!
It’s also a life insurance structure. It involves passing on ownership of a policy to an heir (usually a child or grandchild). The money is moving downhill (generationally speaking)...like a waterfall.
You buy a tax-exempt whole-life policy. This structure means you're covered if you get tragically hit by a bus. The policy also accumulates a cash value as you pay premiums (it’s both insurance and investment).
Once it builds up an appropriate cash balance, you sign it over to your kid. It loses its tax-exempt status, but your kid gets the built-up cash.