Trust the Leaders

Issue 4 / Summer 2003

• SPLIT-DOLLAR LIFE INSURANCE: Is There A Future? During the last four decades, a popular way to purchase permanent life insurance has been through so-called “split-dollar” life insurance arrangements, where two or more parties share the costs and benefits of the life insurance policy. Favorable tax treatment has been a major reason for the popularity of these arrangements. The IRS recently has announced changes in the taxation of split-dollar plans, and these changes cast doubt on the future utility of some of these arrangements and create a risk of potentially disastrous tax consequences for participants in certain existing split-dollar arrangements.
• Intellectual Property Basics Intellectual Property law developed to reward an innovator with some type of limited property right in the fruits of his or her innovative endeavors. The need to provide an incentive for innovation and creativity was recognized in the U.S. Constitution, which provides:

  The Congress shall have power…to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. Art. 1, Sec. 8, Cl. 8.

• Corporate Strategies for Combating Cybersmear The Internet quickly distributes information to a wide audience, facilitating a virtually instantaneous interaction and exchange of ideas between far-flung people. As the United States Supreme Court has observed, with the Internet “… any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox.”
• Immigration: A Matter of National Security Our country was forever changed on September 11, 2001. Because the terrorist acts were committed by people who were in the United States temporarily with valid visas, immigration suddenly emerged as a hot topic of discussion. In 2001 alone, a total of 32.8 million people came to the U.S. from other countries. Immigration is now clearly a security issue rather than just a social or economic issue.
• Trust Preferred Securities: They’re Not Just For Big Banks Anymore! Since their first appearance in 1993, “trust preferred” securities have become a popular way for regulated companies, such as bank holding companies and insurance companies, to raise required regulatory capital. In 1996, the Board of Governors of the Federal Reserve System, in a one-page press release, clarified for the banking world that the proceeds from the sale of these hybrid securities, which share characteristics of both debt and equity, could be treated as coveted “Tier 1” capital by bank holding companies.