Restricted Property Trust (RST)
This strategy allows business owners and high-income earners to reduce income tax liability, protect assets, and secure a death benefit — all through a single structure.
How it works:
✓ The Trust Is Established — A trust is created and funded with a business-owned life insurance policy.
✓ The Business Funds It — Tax-deductible contributions from the business pay the policy's premiums. Because these contributions count as a business expense, they reduce the business's taxable income in the process.
✓ The Funds Are Locked In — Contributions are restricted for a set period, typically ten years or more. Exiting early comes with significant surrender charges, which is why this strategy works best for those committed to the full term.
✓ Assets Grow Protected — Once inside the trust, funds grow shielded from creditors and outside claims, while the underlying policy builds cash value over time.
✓ The Death Benefit Delivers — Upon the participant's passing, beneficiaries receive the policy's death benefit — typically income tax-free — providing a secured legacy outcome alongside the tax and asset protection benefits realized during the contribution period.
Why it works as a tax strategy:
Deductible Contributions — Business contributions to fund the policy premiums are treated as a deductible business expense, directly reducing taxable income.
Asset Protection — Once inside the trust, funds are shielded from creditors and outside claims, adding a layer of protection beyond the tax benefit.
Tax-Free Death Benefit — Beneficiaries generally receive the policy's death benefit free of income tax, preserving the full value of the structure.
Long-Term Compounding — Because funds are locked in for the term, the underlying policy has an extended runway to build cash value.
Best suited for: Business owners and high-income earners with strong, consistent cash flow who want to reduce current taxable income while building a protected, long-term asset and legacy benefit — and who are committed to a multi-year funding horizon.
Note: This strategy involves a long-term funding commitment, surrender charges for early withdrawal, and specific structural and compliance requirements, and should only be implemented with guidance from a qualified professional.