Private split-dollar is a life insurance funding strategy in which two private parties-typically family members or an individual and a trust-share the costs and benefits of a policy under a written agreement. Unlike corporate split-dollar, private split-dollar does not involve an employer; instead, it may be used to help children or trusts acquire coverage with assistance from parents or grandparents. The arrangement specifies how premiums are paid, how cash value and death benefit are allocated, and how the deal will be unwound. For tax purposes, private split-dollar must follow detailed rules under the split-dollar regulations, often using either the economic benefit regime or loan regime to measure and report taxable transfers. Careful drafting and administration are essential to avoid unintended gift or income tax consequences.

In practice, private split-dollar arises in high-net-worth estate plans where older-generation family members wish to fund large policies efficiently for younger relatives or trusts. Advanced markets teams and estate planning attorneys design structures that coordinate premium payments, collateral assignments, and exit strategies such as rollouts or transfers. Annual calculations of economic benefit costs or imputed interest are prepared for tax reporting. Advisors monitor policy performance and the viability of the split-dollar arrangement over time, adjusting funding or restructuring if interest rates, tax laws, or family needs change. Because of complexity and regulatory scrutiny, private split-dollar is generally reserved for sophisticated clients who can invest in legal advice and long-term administration.