PPLI as a Tax-Efficient Investment Wrapper for Liquidity Event Proceeds
Fresh off a $30M liquidity event, Jennifer didn’t just want to invest—she wanted to invest without the tax drag. By placing her capital inside a private placement life insurance structure, she found a way to let hedge funds and private deals grow unburdened, while quietly building a legacy her heirs won’t see diminished by estate taxes.
Andrew Perez
September 17, 2025
Client profile
Age
57
Occupation
Business Founder (recently sold company)
Marital Status
Married, three adult children
Net Worth
$55M (including $30M from liquidity event)
Challenge
After the sale, Jennifer faced significant taxable income from dividends, interest, and capital gains on her newly liquid portfolio. She wanted to keep her assets invested in hedge funds, private credit, and direct deals but eliminate annual tax drag — and simultaneously reduce future estate tax exposure.
Solution
- Structure: PPLI policy owned by an Irrevocable Life Insurance Trust (ILIT)
- Premium: $15M single premium
- Death Benefit: Minimum non-MEC death benefit (approx. $17M)
- Investments: Custom segregated account holding hedge funds, credit funds, and private equity
Why It Worked
- Converts a taxable portfolio into a tax-free compounding vehicle
- Allows reallocation between funds without triggering taxable events
- Removes death benefit from taxable estate
- Maintains liquidity and access through tax-free policy loans
Outcome
Projected policy cash value grows to $30M+ after 15 years, completely tax-free. Jennifer’s heirs receive the death benefit income- and estate-tax-free, covering estate obligations and leaving a substantial legacy.