CAPAXA LLC is a Grantor Trust backed by institutional life insurance based-assets. The trust was created to increase the yield institutions earn on CUOLI assets and to help institutions sell their interest within Collateral Assignment Split Dollar (CASD) plans to lower duration risk, and to increase the participants projected annual benefits..

Why Capaxa?

For years, institutions have faced the challenge of offloading older CASD plans, recognizing the inherent need but lacking a viable solution. The Capaxa LLC trust emerged to fill this critical gap in the marketplace, offering a groundbreaking approach that was previously unavailable.

Our Unique Solution

Capaxa’s solution not only creates a supply of CASD plans but also ensures a healthy balance of supply and demand within the market. This dual approach guarantees that institutions can efficiently manage and divest their CASD interests, mitigating risks and enhancing financial stability.

Proven Success

The trust is backed by a robust pool of over $1 billion in life insurance-based assets, demonstrating the strength and reliability of our platform. By using the Capaxa LLC trust, institutions gain access to a trusted partner dedicated to optimizing their financial strategies and reducing risk.

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How It Works

Our approach involves the strategic pooling of policy assets to maximize their value and security. Here’s a step-by-step overview of how this process functions:

• Asset Contribution to Trust Fund Pool:

Policy assets are contributed to a Trust Fund Pool at their Cash Surrender Value.In exchange, the Credit Union receives a participation certificate that represents an undivided beneficial security interest in both the asset values and payments from the entire pool of assets.

• Shift in Policy Assets:

The policy assets transition from being "Carrier Named" to a "Pooled CUOLI" (Credit Union-Owned Life Insurance) format, effectively changing their designation from one type of asset to another.

• Collateralization:

The full-face par value amount, along with all accretion earnings, is fully collateralized by the insurance carrier’s guaranteed cash surrender values.This ensures that the values are secure and backed by the reliable guarantees of the insurance carriers.

• Earnings Maintenance:

Accrued interest and future earnings on these assets are maintained at the same rate for the benefit of the executives.This stability ensures that the executives continue to receive predictable and consistent returns on their policy assets.

‍COLI enhancement/Takeover offering

This process not only optimizes the value and security of the policy assets but also provides a structured and reliable way for Credit Unions to manage their life insurance policies, ensuring long-term benefits for all stakeholders involved.

SUB:  How It Works

A CASD Enhancement Buyout is A proprietary solution designed to:

• Shorten the duration risk of in-force CASD/LRSD plans from the institution's perspective
• Enhance and guarantee benefits for the participants involved

Benefits for ParticipantsOur solution offers several significant advantages for participants:

• Increased Annual Retirement Benefit: Elevate the projected annual retirement benefit by 110-150% of its current value.
• Guaranteed Benefits: Retirement benefits are guaranteed.
• Tax-Free Benefits: Retain the tax-free status of benefits, simplifying the financial planning and maximizing retirement income.
• No Imputed Income Taxation: Eliminate the burden of imputed income taxation, where applicable.
• Streamlined Access: Access annual benefits without the need for institutional sign-off, providing greater flexibility and control over retirement funds.

Benefits for Organizations/EmployersProvides significant advantages for organizations and employers:

• Capped Duration Risk: Manage and cap the duration risk on investments effectively. For example:
  
  • 20-Year Cap at current yield/Applicable Federal Rate (AFR)
  • 15-Year Cap at 1% yield moving forward
  • 10-Year Cap at 0% yield moving forward
• Protection in Case of Participant’s Death: If a participant passes away before the end of the stated term, the plan functions as originally intended. The employer is repaid all contributions plus interest immediately from the policy death benefit.
• Return on Investment: If the participant outlives the stated term, the pool repays the employer everything it is owed, ensuring the organization’s investment is protected and returned in full.

This innovative solution not only enhances the benefits for participants but also provides organizations with a secure and efficient way to manage their investment risks, making it a win-win for all parties involved

Case Study Example

Sample CEO’s Split Dollar Plan benefit projection currently shows 16 distributions of $60,000/year after tax (policy number yyyyyyyyy) and 19 distributions of $65,000/year after tax (policy number xxxxxxxx). To keep it simple, let's just call it $125,000/year for 19 years.

• Our recommendation is to add CEO’s rights in the Split Dollar Plan into a Trust Pool of similar pooled assets in exchange for one of the following options:
  
  • An annuity that will guarantee a benefit of 19 distributions of $180,000/year after tax and
  • An annuity that will guarantee a benefit of 25 distributions of $145,000/year after tax and retention of a fixed dollar portion of permanent life insurance for named beneficiaries.
  • A lump sum payout of $2,008,461.

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