Client Success Stories

Mid 70s Winding Down Business. No Liquidity or Life Insurance HNW Grandparents, Mid 80s. Financially Conservative. Not Aware of Huge Estate Tax Liability

 

SITUATION:
 

Bob and Carol are in their mid-70s. They have two grown children and two grandchildren and a net worth of about $35 million. Bob has a successful $20 million business that he has been selling off to partners in stages each year But, he still has $4 million left to sell. In addition to the business, the couple has real estate, investments and $3.5 million in his Bob’s IRA–fund he will never need for his lifestyle. The family has no life insurance and their net worth is very illiquid.
 

SOLUTION:
 

1. • Installed a pension rescue plan and converted the IRA to $12 Million of life insurance and removed it from the estate. Tax cost of $450,000 instead of $1.4 Million

   • $4 Million gift to IGNĪT PLAN ™ saving $2.1 Million of income tax. Income to children and grandchildren for their lifetimes and $17 Million ultimate git to charity.

   • Created an LLC and transferred $9 Million of assets. Sold to a Family trust for a note and moved all future growth out of the estate.

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RESULT: 

Children and grandchildren receive $20 Million more. Charity gets $17M. IRS will get $0-$3Million

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Mid 80s. Financially Conservative. Not Aware of Huge Estate Tax Liability
 

SITUATION: 

Ted and Alice are both in their mid-80’s. Ted has built a significant stock portfolio with his buy and hold philosophy. They have four children and six grandchildren who are all unaware of any family wealth. Ted and Alice enjoy a modest lifestyle and because of this, keep accumulating assets. Currently, they are worth $45 Million and don’t even have simple wills. Ted claims he didn’t know anything about estate taxes being due.

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SOLUTION:

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1. • Since they are very unsophisticated planning has been very challenging. We have implemented revocable living trusts and other foundational documents.

   • We transferred $10 Million to an IGNĪT PLAN ™ that will leave income for children and grandchildren. Ted has not sold the stock yet but has already saved $100 K of income tax and he has five more years of carry forward left. We also got most of the $10 Million out of the estate which will save the family close to $4 Million.

   • There’s more to do but we’re taking it slowly.

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Widower to Remarry Soon. Needs Cash, but Most of Net Worth in Retirement Plan
 

SITUATION:

 

Frank is a 58-year-old widower and has recently retired. Most of his $12 Million of net worth is in his retirement plan and he faces both income and estate tax issues since he must make IRA withdrawals in order to live. He has three children and two young grandchildren and he is considering re-marrying soon. While he doesn’t live lavishly, he still requires a large amount of cash to net what he needs.

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SOLUTION:

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1. • We have created an LLC to own his two small investment properties. Frank will be the manager of the LLC.

   • His LLC has created a profit sharing plan and Frank will roll his IRA into the profit sharing plan. The profit sharing plan buys an insurance policy, paying premiums for six years and consuming most of his funds.

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RESULT: 

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After the sixth premium is paid, we distribute the policy to Frank and pay the taxes with a loan from the policy. At the end of the ninth year we have Frank take policy loans which are income tax free. We have turned tax of $5 Million into tax of $2 million and Frank has escaped the uncertainty of future changes to the tax law.