Should a captive ever be set up as a tax strategy?
No, and an attorney who builds them says so plainly
Queen's answer is not a balanced one. Every captive he has put together or managed, he says, existed to solve an insurance problem, and if anything other than the insurance is coming first the honest advice is to do something else. He points out there is a task force inside the tax authority whose job is auditing captives, so a structure built for the deduction is a structure built to be found.
The reason his practice concentrates where it does follows from the same test. He talks most about healthcare captives, skilled nursing, assisted living and medical malpractice, because those are businesses that genuinely struggle to pay for cover. Obstetric exposure is his example of a market where the cost of insurance is punishing, and where professionals have gathered into captives as a result.
Key takeaways
Queen says every captive he has built or managed was solving an insurance problem, and treats that as the test rather than a preference.
His practice concentrates in healthcare because those businesses genuinely struggle to buy cover, which is what makes the structure defensible.
He points to a dedicated audit function inside the tax authority as the practical reason a tax motivated captive is a bad plan.
That is the shape of a defensible captive: a real insurance problem, with the tax treatment following the structure rather than motivating it. Queen's warning to anyone approaching from the other direction is unusually direct for a lawyer on the record, and he closes it by pointing out that captives are complicated and expensive enough that using one as a scheme is a poor way to run a scheme.
From the conversation
Matt Queen
Captive Insurance Attorney and MGA Executive, Author of Modern Captive Insurance
“And that's why I speak so often about healthcare captives, whether it be skilled nursing, assisted living, medical malpractice.”
Transcript
Read the full transcript 6 turns
HostIt's not a tax strategy. How do you feel about that? Every
Matt Queencaptive that I've ever put together or I've ever managed has been an insurance issue. And that's why I speak so often about healthcare captives, whether it be skilled nursing, assisted living, medical malpractice. That's my bread and butter. And those people struggle with paying for insurance. Do you realize how expensive baby making insurance is? The obstetricians have extraordinarily
Matt Queen, expensive insurance because everyone feels it's a big claim. So
Hostyou're going to sue the pants
Matt Queen. I mean, it doesn't matter if the baby comes out with the skin inside out. If that baby is not perfectly healthy, you are going to sue. I mean, look, I'm not even cynical about it. Like, there's anything wrong with the baby. Yeah, like whatever. So as a consequence, these professionals have disproportionately gathered into the captive area. And some number of them have made the
Matt Queeneighth of the election. And that's the way you have to look at it. If you ever put anything under the insurance first, you should do something else. There's a lot of good scams out there. Get out of captives. There's so many different ways to rip off the government. You don't need to be in captive insurance. I mean, just look at anything going on in the CMS news of the day. There's plenty of other areas. So captives are incredibly complicated, they're very expensive, and the
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