EAG Estate Planning Solutions
This is not a solicitation to enroll in any program, nor an offer to provide coverage to any individual.
This is for informational and educational purposes only, and not for general circulation.
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A person reaches a certain age at which he or
she starts to think about the legacy they leave
behind. Whether they want to leave that legacy
to their heirs, or to a Church, University, School
or other favorite entity is their choice. How they
do it can mean a huge difference from a tax
liability standpoint to the beneficiary. Taxes can
actually make the beneficiary sell off or
refinance the inheritance in 9 months, not
exactly what the individual who dedicated a
lifetime building the estate had in mind.

No Will, No Planning Scenario
When there is no Will, the entire estate is subject to the
Probate Courts, attorneys and judges determine the
dissolution of the estate, and the division to each of the
heirs. Large Estates can be subject to Federal Estate Taxes
of 35% of the total Estate, as well as State and even local
Estate Taxes. The total Taxes due could amount to half of
the estate, requiring liquidation of the property, or large re-
financing problems.

Last Will & Testament Scenario
The Individual determines how the property and
assets are allocated to his heirs or others, such
as a University or Charity, but there is still the
liability of 35% Federal Estate Taxes, (not to
mention State or even local Estate Taxes) which
are due 9 months after the estate passes to the
beneficiary, this can destroy a small business
requiring refinancing or sale of things a person
has worked his whole life for, and wanted to pass
on to his heirs. Improper planning could cause
the loss of half of the estate to taxes.

The Trust Scenario
A Trust, considered to be the ultimate in
estate planning, keeps the Estate intact, and
minimizes the initial Estate taxes.. But there
is a catch, payouts from the trust to the
beneficiary are taxed as income in the year
they are received, just as ordinary
income, and a trust has unique qualities that
can make it a challenge over the years to
come.

What is the Solution?
While you cannot avoid estate taxes , you can
make paying them considerably less
painful, and leave a larger estate or charitable
donation behind. Utilizing the untapped
insurance capacity of high net worth
individuals can allow them to leave behind
complete estates, the entire operation keep it
intact for tax purposes and add a tax free
addition to the estate at the same time!

Benefits:
Let’s say a Small Business has one heir who wants to
remain in the business, but three who really don’t
want to. This Program can allow a substantial tax free
inherited cash payment to the three who want
out, while the heir who wants to stay in the business
can be left the entire operation. It could work the
same with any business entity or profession, allowing
the one who stays in the business to do so without
having to buy out the shares of those siblings who do
not. No financial burden on those wanting to carry on
the business, and equal treatment for all of the
heirs, with a pre-planned buy-out.

 Other Small Business Options:
Coverage for partnerships. One partner buys
out the other in the event of a catastrophe.
Key Man coverage, Cover a primary
employee.
Husband/Wife can work much the same as
Partnership coverage.

Sounds Expensive
Not as Expensive as doing nothing. While currently the
Federal Estate Tax rate is at 35%, it is bound to only
increase in the years to come.
A self financing option is available to enroll in the program
and reap the benefits without an initial cash outlay for the
client. None of the client’s assets are tied up as collateral.
Self Financing available up to 100%.
Individuals with liquid assets have other options available
to them, payment from existing cash assets.

An Example
A recent example involves a 70 year old
individual who had a net worth of about $10
million. After looking over the program, he
chose to protect his estate for about $5
million, and paid for it with his liquid assets. He
could have done the program using 100 %
financing, but chose not to. Now his estate is
worth $15 million, with $5 million of highly liquid
capital available tax free to pay off those pesky
tax collectors, and keep the rest of his estate
intact.

After Two Years,
Our example has three options:
 He can keep the protection package in place
for the rest of his life.
 He can sell a portion of the protection, and
keep the balance.
 Or he can sell the protection, and recover his
costs and more, sometimes much more…..

Option One, Keep the Protection
 No additional costs out of pocket.
 Protection continues for Life.
 His Estate has gained $5 million of tax free
income to pay the taxes when needed.
 If he had financed the premium, he would not
have had to pledge any current assets as
collateral.

Selling the Protection Scenario
 After 2 years, he has the option to sell all or part of the
protection package to an outside investor.
 In this example, the market value should be about $1.3m.
This client has the possibility to make a net profit of around
$1 million over the initial investment.
 His Estate is now about $11 million, after that single
transaction.
 In this case, he still has considerable insurance capacity to do
the program again.
 He has recouped his initial investment several times
over, and increased his estate value. That is asset protection!
 No out of pocket costs! A great way to obtain cash from fixed
assets!

I am not a Millionaire!
Think about that. What is the value of real
estate owned? Inventory?
What is your annual Gross?
What would your business be worth if you
sold it?
Now add up the vehicles in your fleet.
Now factor in your debt.
Stocks, Bonds, Retirement Accounts
Still think you are no millionaire?

Wow!
Impressive program, isn’t it? The current
minimum age is 65 years, with decent
health, and the current minimum net worth is
$2 m.

 The Components:
 The Agent
 The Applicant
 Investor Group
 Major Insurance Company
 Stand Alone Trust
 Heirs or Beneficiaries

The Components
 The Agent:
▪ Pre- Qualifies Applicant.
▪ Obtains Authorizations and Applications.
▪ Delivers Protection Package to Applicant.

 The Components:
 Applicant
▪ Fills Out or Provides Information for proper completion
of Applications and Medical Releases.
▪ Decides how much of his/her assets to protect.
▪ Chooses whether to finance Premium or Pay for it with
liquid assets.
▪ Decides how to pay out proceeds of the policy.
▪ Decides whether to keep the Protection Package
or Cash out at the two year mark.

 The Components:
 The Investor
▪ If Applicant chooses to Finance the Premium Costs, the
Investor, whether an individual or company, pays the
Premium Fee for the Applicant. The Investor is repaid at
the two year mark, or at the Payment of the Policy by
the Stand Alone Trust.

 The Components:
 Major Insurance Company
▪ Issues contract on Applicant, depending on Medical
Status and Insurance Capacity.

The Components:
 Stand Alone Trust
▪ Listed as beneficiary of the proceeds of the policy.
▪ Distributes the proceeds as directed and authorized upon
payment of the
policy.
▪ Then self dissolves.

The Components:
 The Beneficiaries or Heirs
▪ Receive Payment of Proceeds as designated upon policy payout.
▪ These payments are made outside the Estate of the Applicant, via
the stand alone trust.
▪ Have the option of using the Proceeds as needed.

Insurance Capacity
Everyone has an Insurance Capacity. In working
years, it can be defined as your earnings
multiplied by your anticipated working years. In
later years, it can be your net worth combined
with your long term obligations, such as an
unpaid mortgage. It can be the market value of a
business or real estate owned, either as a sole
proprietor, partner, or corporation share.
Simplified, that is Insurance Capacity.

For More Information:
Estate Advisors Group
PO Box 950128
Oklahoma City, OK 73195-0128
405-370-0696 phone
888-866-5709 toll free
888-370-8551 fax
eag.steve@gmail.com email