EAG Estate Planning Solutions




   This is not a solicitation to enroll in any program, nor an offer to provide coverage...
A person reaches a certain age at which he or
she starts to think about the legacy they leave
behind. Whether they want to...
No Will, No Planning Scenario
When there is no Will, the entire estate is subject to the
Probate Courts, attorneys and jud...
Last Will & Testament Scenario
  The Individual determines how the property and
  assets are allocated to his heirs or oth...
The Trust Scenario
 A Trust, considered to be the ultimate in
 estate planning, keeps the Estate intact, and
 minimizes th...
What is the Solution?
 While you cannot avoid estate taxes , you can
 make paying them considerably less
 painful, and lea...
Benefits:
  Let’s say a Small Business has one heir who wants to
  remain in the business, but three who really don’t
  wa...
   Other Small Business Options:
    Coverage for partnerships. One partner buys
    out the other in the event of a cata...
Sounds Expensive
  Not as Expensive as doing nothing. While currently the
  Federal Estate Tax rate is at 35%, it is bound...
An Example
 A recent example involves a 70 year old
 individual who had a net worth of about $10
 million. After looking o...
After Two Years,
Our example has three options:
 He can keep the protection package in place
  for the rest of his life.
...
Option One, Keep the Protection
   No additional costs out of pocket.
   Protection continues for Life.
   His Estate h...
Selling the Protection Scenario
 After 2 years, he has the option to sell all or part of the
  protection package to an o...
I am not a Millionaire!
Think about that. What is the value of real
   estate owned? Inventory?
What is your annual Gross?...
Wow!
 Impressive program, isn’t it? The current
 minimum age is 65 years, with decent
 health, and the current minimum net...
   The Components:
     The Agent
     The Applicant
     Investor Group
     Major Insurance Company
     Stand Alo...
The Components
  The Agent:
   ▪ Pre- Qualifies Applicant.
   ▪ Obtains Authorizations and Applications.
   ▪ Delivers Pr...
   The Components:
     Applicant
      ▪ Fills Out or Provides Information for proper completion
        of Application...
   The Components:
     The Investor
      ▪ If Applicant chooses to Finance the Premium Costs, the
        Investor, wh...
   The Components:
     Major Insurance Company
      ▪ Issues contract on Applicant, depending on Medical
        Statu...
The Components:
  Stand Alone Trust
   ▪ Listed as beneficiary of the proceeds of the policy.
   ▪ Distributes the procee...
The Components:
  The Beneficiaries or Heirs
   ▪ Receive Payment of Proceeds as designated upon policy payout.
   ▪ Thes...
Insurance Capacity
  Everyone has an Insurance Capacity. In working
  years, it can be defined as your earnings
  multipli...
For More Information:

Estate Advisors Group
PO Box 950128
Oklahoma City, OK 73195-0128
405-370-0696 phone
888-866-5709 to...
Upcoming SlideShare
Loading in …5
×

Estate Planning for Small Business Owners

1,510 views
1,419 views

Published on

EAG offers unique solutions for small business owners wishing to pass along their business without those painful estate taxes. Estate Advisors Group offers options for planning Estates. Wills, Trusts, and a unique combination of both are covered! Minimize the Estate Taxes, Cash Out Options, Plan for the Future with EAG! Learn more at http://estateadvisors.blogspot.com/ or http://estateadvisor.wordpress.com
Also on YouTube:http://www.youtube.com/watch?v=TgBPlYeUNyI

Published in: Economy & Finance, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,510
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
0
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Estate Planning for Small Business Owners

  1. 1. 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. To end this Presentation, press the “escape” key at any time.
  2. 2. 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.
  3. 3. 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.
  4. 4. 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.
  5. 5. 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.
  6. 6. 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!
  7. 7. 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.
  8. 8.  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.
  9. 9. 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.
  10. 10. 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.
  11. 11. 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…..
  12. 12. 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.
  13. 13. 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!
  14. 14. 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?
  15. 15. 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.
  16. 16.  The Components:  The Agent  The Applicant  Investor Group  Major Insurance Company  Stand Alone Trust  Heirs or Beneficiaries
  17. 17. The Components  The Agent: ▪ Pre- Qualifies Applicant. ▪ Obtains Authorizations and Applications. ▪ Delivers Protection Package to Applicant.
  18. 18.  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.
  19. 19.  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.
  20. 20.  The Components:  Major Insurance Company ▪ Issues contract on Applicant, depending on Medical Status and Insurance Capacity.
  21. 21. 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.
  22. 22. 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.
  23. 23. 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.
  24. 24. 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

×