Collateral Assignment Split Dollar Life Insurance Plan Considerations

Executive compensation and benefits are at the forefront of strategic issues facing the credit union industry.

The demand for strong leadership, shortage of executive talent, limitations on qualified plan contributions, and need to compete with for-profit banks has elevated the number of credit unions looking to long term compensation strategies to fill the gap. When exploring options, credit unions discover a crowded marketplace of design and investment options from a host of vendors, many of which promise a proprietary, complete, foolproof solution. In too many cases, a credit union is presented the potential positives of a strategy but not the potential risks.

The purpose of this paper is to explore the potential pitfalls that a credit union should understand before implementing a Collateral Assignment Split Dollar (CASD) strategy. D. Hilton has long believed that an effective retention and retirement strategy is one that is fully understood by the client and it is our goal that this commentary will assist credit unions in making an informed decision.