Faith-based organizations, deal with many of the same issues encountered by other non-profit entities when it comes to retaining and rewarding their senior staff members. Limited planning alternatives leave these organizations searching for answers and finding only dead ends and complexity. Further, maintaining the long-term financial viability of the organization is essential, making the decision strategically important.
The Client
Several years ago, TriscendNP assisted one such organization in designing and implementing a plan that was designed to achieve the following objectives that were deemed important by its leadership:
- Retain the services of a key senior staff member;
- Provide retirement cash flow for this staff member and benefits for his family in the event of premature death;
- Allow the organization to recoup its capital, including a rate of return when the staff member passed away.
The Solution
Working with organization leadership, TriscendNP was able to structure a split-dollar arrangement that achieved these objectives. Due to changes in the organization’s financial conditions, the split-dollar arrangement was funded with a combination of organization capital and the senior staff member’s permanent compensation reduction. The arrangement was designed with two life insurance policies intending to perform two specific functions:
- Repay the organization
- Provide retirement cash flow and death benefit for the senior staff member and their family
The Result
In 2020, this staff member passed away suddenly. With his death, both the organization and his beneficiaries received a portion of the death proceeds. This allowed the organization to continue pursuing its mission and provided much-needed, long-term cash flow for his family.
A funding and return summary is provided below:
| Total Plan Funding | $960,000 |
| Organization Death Benefit | $1,115,000 |
| Beneficiaries Death Benefit | $345,000 |
| Beneficiaries Annual Cash Flow (30 years) | $105,000 |
Determining the Right Fit
While split-dollar plans can be a viable solution, it is not a fit for all organizations or employees. TriscendNP finds that the following characteristics are a good indicator that a split-dollar arrangement could be a good choice:
- Strong balance sheet and cash flow
- Focus on long-term investments
- Desire to reward and retain essential leadership
Learn More
To discover more about TriscendNP and how we help non-profit organizations retain key leadership, make informed decisions and rest easy, contact:
David Wright, Chief Strategy Officer
(972) 410-3740
(214) 995-9022
