Government Update

Congress Bars Charitable Split-dollar Insurance.
On November 19 Congress approved a year-end tax package that eliminated the deduction for charitable split-dollar insurance, which allowed for the wealthy to pay for life insurance premiums with tax deductible dollars. Under the arrangement, a donor would make a "gift" to a charity, claiming a tax deduction for the full amount. The charity would then invest the gift in a life insurance policy giving the charity only a small part of the benefit, with the donor's heirs getting the bulk of the proceeds. (The premium wouldn't be tax deductible if paid by the insured person directly.) The provision applies to any premiums paid after February 8, 1999. The legislation was signed into law by President Clinton.