Age: 70 to 85 and insurable. The strategy can be effective with clients younger than 70 and older than 85, however, the “arbitrage” may be reduced.
Concern: Needs more after-tax income and/or wants to increase family inheritance.
Suitable Assets: Assets that can be sold with little or no capital gains tax consequences; for example, CDs or bonds or existing deferred annuities that can be converted to a single premium immediate annuity (SPIA).
Tax Status: Works best at highest income and estate tax brackets.
Other: Individual should have other signifi cant sources of liquidity since this strategy consumes liquidity.