Date: Tue, 20 Dec 2005 10:26:51 -0600
From: "cal lester" 
Newsgroups: misc.invest.financial-plan
Subject: Re: 1035 transaction
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"Jason Profit"  wrote in message
news:eq1fq1hjq1fh0pjoco9948bfo7cokfshp6@4ax.com...
> I have a 72 year old make (standard) and 71 year old spouse (standard)
> sitting on a survivorship policy (1982 issue) inside an ILIT.  Face is
> $1.9 million; basis $520,000 and cash value $820,000.  We want the
> trustee to 1035 the policy into a joint life immediate annuity;
> receive the annuity payments, pay the tax on the ordinary income
> portion, and use the remaining payment to pay the premium on a new
> survivorship policy with a face amount of $2.2 million.
>
> So it looks like we're getting the couple an additional $300,000 of
> coverage for the cost of some paperwork (tax return filings, etc.).
> All the illustrations seem to have been run correctly, yet this
> transaction stikes me as something that "shouldn't" work, although it
> looks like it does.
>
> Are we missing "the elephant in the room here" (or perhaps it's King
> Kong) that makes this transaction unworkable?
>


Not only King Kong, but the Irrespoonsible Relations Service ! ! ! !
You can NOT do a 1035 from ANY form of Life Policy to an ANNUITY.

A 1035 can only be done from one product to another LIKE product.
Annuity to Annuity / Life to Life. You can however do a 1035 from Life
to Annuity, because there is NO transfer of RISK, only assets (C/V) from
the Life to the Annuity.
Cal Lester  CLU