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Technical Webinar©2013. InKnowVision LLC. All rights reserved. www.inknowvision.com
(630) 596-5090 www.InKnowVision.com All Content Copyright © 2013@InKnowVisionInKnowVision, LLCInKnowVisionTheComplexEstate...
www.InKnowVision.com All Content Copyright © 2013Agreement that controls what happens tobusiness ownership interests in th...
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 sh...
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 insur...
www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger EventBusiness has 1stoption to buyThen sha...
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 ...
www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger EventSharesMoneySharesPartnershipOwnedInsu...
www.InKnowVision.com All Content Copyright © 2013• Makes multiple owners/policies manageable• Removes life insurance from ...
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• Discoun...
www.InKnowVision.com All Content Copyright © 2013• Shotgun• Chinese Auction• Texas Shoot-out• Mexican Standoff• Russian Ro...
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• Ca...
www.InKnowVision.com All Content Copyright © 2013• Life insurance with CSV is a form of sinking fund• Any other type of in...
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 $10MTri...
www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1Insures Owner #2for $5MOwner 2Insures Owner #1for $5MTrigg...
(630) 596-5090715 Enterprise DriveOak Brook, IL 60523All Content Copyright © 2013www.InKnowVision.com@InKnowVisionInKnowVi...
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InKnowVision June 2013 HNW Technical PPT - Buy Sell Planning

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"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.

Published in: Economy & Finance, Business
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Transcript of "InKnowVision June 2013 HNW Technical PPT - Buy Sell Planning"

  1. 1. Technical Webinar©2013. InKnowVision LLC. All rights reserved. www.inknowvision.com
  2. 2. (630) 596-5090 www.InKnowVision.com All Content Copyright © 2013@InKnowVisionInKnowVision, LLCInKnowVisionTheComplexEstateInKnowVision Technical Webinar
  3. 3. 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
  4. 4. www.InKnowVision.com All Content Copyright © 2013
  5. 5. www.InKnowVision.com All Content Copyright © 2013• Cross purchase• Redemption• Wait and see• Trust• Partnership
  6. 6. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1Trigger EventSharesMoneyOwner 2
  7. 7. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1Shares (Basis Increase)MoneyOwner 2
  8. 8. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1SharesMoney (Capital Gain)Step UpNo GainOwner 2
  9. 9. 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
  10. 10. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger Event
  11. 11. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2
  12. 12. 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
  13. 13. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger EventBusiness has 1stoption to buyThen shareholderhas option to buy
  14. 14. www.InKnowVision.com All Content Copyright © 2013• Allows flexibility with regard to tax treatment• Same disadvantages apply
  15. 15. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger EventTrustOwnedInsuranceSharesMoneyShares
  16. 16. 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
  17. 17. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1 Owner 2Trigger EventSharesMoneySharesPartnershipOwnedInsurance
  18. 18. 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
  19. 19. www.InKnowVision.com All Content Copyright © 2013• Good checklist here from Attorney WilliamStaley
  20. 20. www.InKnowVision.com All Content Copyright © 2013• Book value• Capitalization of earnings• Excess earnings method• Discounted cash flow• Sales-multiple valuation
  21. 21. www.InKnowVision.com All Content Copyright © 2013• Shotgun• Chinese Auction• Texas Shoot-out• Mexican Standoff• Russian Roulette• Savoy Clause• Push-Pull• Coin Flip
  22. 22. www.InKnowVision.com All Content Copyright © 2013• Life Insurance• Sinking Fund• Installment Payments
  23. 23. 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
  24. 24. 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
  25. 25. www.InKnowVision.com All Content Copyright © 2013• Principal• Interest• Variable terms based on performance• Look back terms
  26. 26. www.InKnowVision.com All Content Copyright © 2013• Goal – Reduce estate tax• Basis for survivor not important
  27. 27. www.InKnowVision.com All Content Copyright © 2013BusinessOwner 1Insures Owner #2for $10MOwner 2Insures Owner #1for $10MTrigger EventOwner #1DiesEstate Valuefor Owner #1is $10M
  28. 28. 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
  29. 29. (630) 596-5090715 Enterprise DriveOak Brook, IL 60523All Content Copyright © 2013www.InKnowVision.com@InKnowVisionInKnowVision, LLCInKnowVisionTheComplexEstateGoogle+Scott@ikvllc.com(630) 470-6480www.inknowvision.comQuestions?

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