In A Year Of Critical Issues, AALU Says Access To Lawmakers Is Critical

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Washington, D.C.

The past year has been a turbulent one in the legislative arena, according to speakers at this year’s annual meeting of the Association for Advanced Life Underwriting.

With estate tax reform and the new split dollar notice, the association, based in Falls Church, Va., has been very busy making sure the voices of its members are heard, they said.

Over a year ago the idea of a death tax repeal was sweeping the nation, with the support of Congress and the President. AALU was the only organization to take a look at the position seriously to see if it made sense to our country, said Campbell Gerrish, president of AALU, during his opening comments here.

“We recognized that the estate tax has been repealed and reinstated four different times in the history of this country,” said Gerrish.

“As a result, we came to the conclusion that repeal was ephemeral but reform could be permanent,” he said.

AALU formed a task force that brought people together from different organizations to form an alliance to take a good look at the question of estate tax reform.

“We don’t agree on everything, but on the issues we do agree on, we have become a real force here in Washington,” he said.

Gerrish explained the real benefit of supporting AALU is the access the organization has to lawmakers in Washington. AALU raised about $950,000 this year for their endorsed candidate program. “People in Congress know about the endorsed candidate program and they come to us to find out more about it–that makes a tremendous difference in our access to these people when we need them,” said Gerrish.

“Our support is what gains us access in Washington, and it is our ideas that allow us to have influence,” he said.

Gerrish gave a vignette illustrating just how much access AALU has: Just before last years annual meeting he was called into an unscheduled session with the chairman of the Senate Finance committee and had a discussion on the issues immediately prior to the committee going into conference.

“Whether we like the outcome or not, we have the access when we need it and that is crucial in this town,” he said.

Recently, when split dollar life insurance came to the forefront, AALU formed a task force to deal with it, said Gerrish.

“This is an example of government working, where we sat down and worked with representatives of industry; we were able to evaluate how best to move forward,” said Mark Weinberger, assistant secretary of tax policy for the U.S. Department of the Treasury, via satellite.

“We had a dialogue with the treasury. We had significant input into the outcome of this situation,” said Gerrish.

While this situation has not quite played out yet, Weinberger has committed to making any tax arrangements on split dollar effective on a going forward basis.

Senator Max Baucus, D- Mont., chairman of the Senate Finance Committee, agreed with this approach: “When the committee makes changes retroactively it’s just not fair to people. I think a very strong rule of thumb should be prospective only.” Baucus joined in the discussion via satellite.

“We felt strongly that because for the last 30 years there has been no enforcement of taxation of these instruments, it was necessary for us to make these rules apply prospectively,” said Weinberger.

Weinberger noted that the Treasury Department will issue regulations which will treat these split dollar arrangements either as a loan or through the economic benefit test, similar to the notice that was put out by the previous administration in 2001.

“We look forward, as we put out proposed rules, to get additional comments and give the industry the ability to give its input,” he said.

Lawmakers are working on the new split dollar regulations right now, and expect to have the initial draft out in the next 1-2 months.

Another issue that Weinberger expected to address this year is an above the line deduction for long term care insurance expenses. “We hope that will be a good initiative to allow individuals to go out and purchase long term care insurance coverage,” he said.


Reproduced from National Underwriter Life & Health/Financial Services Edition, April 22, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.