Last month, Texas Lawyer magazine (which caters to 32,000+ members of the Texas legal community) invited Capstone to participate in a statewide panel discussion on key trends in insurance law, particularly captives, before a live audience in Dallas of 100+ attorneys and insurance professionals.
Consistent throughout the symposium was the consensus that conventional carriers provide, without fail, stubborn resistance in responding to even bona fide claims. The shortcomings of conventional insurers were bantered about at length with captive insurance companies recommended as an effective alternative risk planning mechanism for the closely-held business.
More Captive Insurance in the News
Recently there has been an increase in articles on alternative risk/captive planning as the concept has become more widely known. Articles have appeared in The New York Times, The Wall Street Journal, The CPA Journal, and most recently in an American Bar Association publication.
In addition to the Texas Lawyer symposium, Capstone was also featured in the July issue of Captive Review, an international publication serving the global alternative insurance market. My article, “Servicing the Middle Market,” is a more technical analysis of captive planning and its continued growth among middle market companies.
Teamwork Approach with our Client's Advisors
Randall S. Bond, Attorney
The Feldman Law Firm LLP
There are many rewards in practicing law in the tax and estate planning arena. One of those rewards is the interaction we have with those financial advisors who care deeply about their clients.
No matter the level of skepticism that is present today, we have found that most advisors we work with as colleagues “in the trenches” are diligent and well informed on a number of financial topics including the broader definition of “estate planning”.
We particularly enjoy our relationships with advisors who focus on the clients' lifetime needs and on critical concepts such as “core capital”. Core capital is the amount of assets a person requires to meet their objectives during their life. A client without an understanding of the necessary capital for his/her own financial security is a client who needs further Counseling before committing to an estate plan. Absent an understanding of what residual net worth it takes to rest comfortably at night no matter what the market conditions, a client should pause before committing to an estate plan.
As a sophisticated tax firm, we appreciate the variety of complex instruments available for estate planning clients. For example, sales to “defective” grantor trusts and the funding of multi-generational life insurance trusts, are valuable to those clients who appreciate and respect core capital.
With the cataclysmic shift in financial markets over the last eighteen months, the financial security afforded by what was thought to be “core capital” has dramatically changed.
Now, more than ever, clients are respecting the importance of determining core capital before beginning an advanced gifting program to lower generations. The question is whether that capital has been well defined and subjected to sensitivity testing. This we consider a “must” before drafting more advanced plans.