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InKnowVision June 2013 HNW Technical PPT - Buy Sell Planning
 

InKnowVision June 2013 HNW Technical PPT - Buy Sell Planning

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"Buy Sell Planning" ...

"Buy Sell Planning"

Redemption, cross purchase, hybrid or entity. Which is the best way to approach a buy sell for your clients? How best to fund the buy sells? And should you be using these agreements at all? Each of these will be on the table for discussion during this engaging session.

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InKnowVision June 2013 HNW Technical PPT - Buy Sell Planning InKnowVision June 2013 HNW Technical PPT - Buy Sell Planning Presentation Transcript

  • Technical Webinar©2013. InKnowVision LLC. All rights reserved. www.inknowvision.com
  • (630) 596-5090 www.InKnowVision.com All Content Copyright © 2013@InKnowVisionInKnowVision, LLCInKnowVisionTheComplexEstateInKnowVision Technical Webinar
  • www.InKnowVision.com All Content Copyright © 2013Agreement that controls what happens tobusiness ownership interests in the event of:• Death• Disability• Retirement• Divorce• Bankruptcy or insolvency• Other event
  • www.InKnowVision.com All Content Copyright © 2013
  • www.InKnowVision.com All Content Copyright © 2013• Cross purchase• Redemption• Wait and see• Trust• Partnership
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1Trigger EventSharesMoneyOwner 2
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1Shares (Basis Increase)MoneyOwner 2
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1SharesMoney (Capital Gain)Step UpNo GainOwner 2
  • www.InKnowVision.com All Content Copyright © 2013• Complex if more than 2 shareholders• Funding is subject to claims of shareholderscreditors• Surviving spouse might refuse to sell• Premium burden is not allocated equally
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger Event
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2
  • www.InKnowVision.com All Content Copyright © 2013• In a C Corp, no increase in basis for remainingshareholders• Life insurance owned by an entity is subject toclaims of creditors• State law may prohibit redemption if corp isinsolvement• Insurance proceeds may be subject to 15% AMT
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger EventBusiness has 1stoption to buyThen shareholderhas option to buy
  • www.InKnowVision.com All Content Copyright © 2013• Allows flexibility with regard to tax treatment• Same disadvantages apply
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger EventTrustOwnedInsuranceSharesMoneyShares
  • www.InKnowVision.com All Content Copyright © 2013• Makes multiple owners/policies manageable• Removes life insurance from claims of creditors• Takes care of recalcitrant spouse• Untested on transfer for value (multiple insured’s)• Step up in basis
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger EventSharesMoneySharesPartnershipOwnedInsurance
  • www.InKnowVision.com All Content Copyright © 2013• Makes multiple owners/policies manageable• Removes life insurance from claims of creditors• Takes care of recalcitrant spouse• No transfer for value• Step up in basis
  • www.InKnowVision.com All Content Copyright © 2013• Good checklist here from Attorney WilliamStaley
  • www.InKnowVision.com All Content Copyright © 2013• Book value• Capitalization of earnings• Excess earnings method• Discounted cash flow• Sales-multiple valuation
  • www.InKnowVision.com All Content Copyright © 2013• Shotgun• Chinese Auction• Texas Shoot-out• Mexican Standoff• Russian Roulette• Savoy Clause• Push-Pull• Coin Flip
  • www.InKnowVision.com All Content Copyright © 2013• Life Insurance• Sinking Fund• Installment Payments
  • www.InKnowVision.com All Content Copyright © 2013• Death Benefit• Term• Whole Life• UL – minimum funded vs. guaranteed• Cash Value• Current assumptions UL• Whole Life• Equity Indexed UL
  • www.InKnowVision.com All Content Copyright © 2013• Life insurance with CSV is a form of sinking fund• Any other type of investment• Disability Insurance• Base• Excess
  • www.InKnowVision.com All Content Copyright © 2013• Principal• Interest• Variable terms based on performance• Look back terms
  • www.InKnowVision.com All Content Copyright © 2013• Goal – Reduce estate tax• Basis for survivor not important
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1Insures Owner #2for $10MOwner 2Insures Owner #1for $10MTrigger EventOwner #1DiesEstate Valuefor Owner #1is $10M
  • www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1Insures Owner #2for $5MOwner 2Insures Owner #1for $5MTrigger EventOwner #1DiesEstate Valuefor Owner #1is $5MILIT for Owner 1Insures Owner 1for $5MILIT for Owner 2Insures Owner 2for $5MFamily receives $10M
  • (630) 596-5090715 Enterprise DriveOak Brook, IL 60523All Content Copyright © 2013www.InKnowVision.com@InKnowVisionInKnowVision, LLCInKnowVisionTheComplexEstateGoogle+Scott@ikvllc.com(630) 470-6480www.inknowvision.comQuestions?