In a Split-Dollar Plan, how are the proceeds generally managed?

In a Split-Dollar Plan, the proceeds are generally shared according to a pre-established agreement between the parties involved, which typically includes the owner of the policy and the beneficiary. This arrangement allows for a coordinated management of life insurance benefits, where contributions and gains are decided upon mutually.

Split-Dollar Plans are designed to provide benefits while managing costs effectively, ensuring that both parties understand their rights and roles in regard to the insurance policy. The specifics of how proceeds are shared can vary depending on the terms of the agreement, often including the amount paid by each party and how benefits will be distributed upon death or policy termination.

The other options presented do not accurately reflect the nature of Split-Dollar Plans. Sole allocation to one party does not support the collaborative structure of the plan, automatic reinvestment does not typically occur within this context, and the proceeds are not inherently subject to a higher tax rate; taxation would depend on the specifics of how the policy is structured and utilized.