InKnowVision March 2014 Buy-Sell Problem Solver Case Study

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Last month we unveiled our Buy-Sell Problem Solver™ client engagement tool which includes:

- Legal Audit
- Tax Minimizer
- Value Identifier
- Funding Review

This new tool is specifically designed to help advisors quickly engage new business clients and uncover advanced planning opportunities.

View the recording for a case study showing how InKnowVision’s Buy-Sell Problem Solver™ led to a comprehensive planning engagement with a family business worth over $100M.

The owners of this successful family business thought they were doing everything right:
- They had a buy-sell agreement in place
- Their agreement was fully funded with insurance
- They continually updated their insurance to keep pace with the growing company value

Unfortunately, the agreement they had in place was going to cost the family millions of dollars in unnecessary taxes when it was triggered. Join us to learn how we helped this family solve a significant problem they didn’t know they had.

Who should attend:
- Investment Advisors
- CPAs
- Attorneys
- Insurance Professionals

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InKnowVision March 2014 Buy-Sell Problem Solver Case Study

  1. 1. (630) 596-5090 www.InKnowVision.com All Content Copyright © 2014 @InKnowVision InKnowVision, LLC InKnowVision The Business Owner Protection Program The Buy‐Sell Problem Solver Case Study How a Routine Buy‐Sell Review Created a Large Planning Engagement
  2. 2. www.InKnowVision.com All Content Copyright © 2014 The Advisor’s Pain Are you finding: • Hard to differentiate • Competition  harder to develop new business • Business owners are very hard to engage • Comprehensive planning scares clients • Need to systematically increase revenues fast
  3. 3. www.InKnowVision.com All Content Copyright © 2014 The Owner’s Pain Their reality: • The business owns them • If they lost their stake in the business, they’d lose everything • Upset about paying too much in taxes • Their wealth is locked up inside of business • Worried about how to motivate key EE’s without giving away the business • They get bombarded with sales approaches daily • Too focused on growing their business to meet with you
  4. 4. www.InKnowVision.com All Content Copyright © 2014 The Opportunity • 12M Baby Boomers own businesses • 70% expected to change hands between 2020‐2025 • With NON‐Boomers, 14M owners need help getting themselves and their $ out of the business in next decade • 69% of small biz owners expect that their company value will be a source of retirement income* *July 2010 Gallup pole of 604 small business owners with annual revenue<$20M Robert Avery of Cornell University, 2006
  5. 5. www.InKnowVision.com All Content Copyright © 2014 Powerful Client Engagement System 2‐part System that Creates Leverage 1. 4‐part Analysis & Deliverable 2. Turnkey Client Engagement System
  6. 6. www.InKnowVision.com All Content Copyright © 2014 4-part Analysis & Deliverable • The Legal Audit  To protect the business from creditors and lawsuits • The Tax Minimizer  To reduce taxes on business interest transfers and current income • The Value Identifier  To understand and leverage the financial value of the business • The Funding Review  To make sure the money is there when they need it
  7. 7. www.InKnowVision.com All Content Copyright © 2014 Turnkey Client Engagement System • Client engagement brochure • Client focused process diagram • Drip marketing content • Case studies • A sample review • Data gathering forms All tools can be co‐branded
  8. 8. www.InKnowVision.com All Content Copyright © 2014 Client Brochure
  9. 9. www.InKnowVision.com All Content Copyright © 2014 Client Brochure
  10. 10. www.InKnowVision.com All Content Copyright © 2014 Client Process Diagram
  11. 11. www.InKnowVision.com All Content Copyright © 2014 Data Gather Form
  12. 12. www.InKnowVision.com All Content Copyright © 2014 6 Case Studies & Drip Marketing Content 1. Buy‐Sell Value Costs Owner $15M 2. Buyout Proceeds Withheld From Heirs 3. Buy‐Sell Agreement Creates Tax Hit – For No Reason 4. Surviving Owner Forced to Overpay to Keep Business 5. Buyout Triggers Loan Acceleration 6. The Golden Goose Leaves and Takes The Eggs
  13. 13. www.InKnowVision.com All Content Copyright © 2014 The Buy-Sell Problem Solver Helps Owners • Protect their largest asset from creditors and lawsuits • Reduce taxes on business interest transfers and current income • Understand and leverage the financial value of their business under a variety of circumstances • Make sure the money is there when they need it
  14. 14. www.InKnowVision.com All Content Copyright © 2014 Helps Advisors • Get more referrals • Engage more business owner clients • Predictably increase revenues • Create more value and follow‐on work The Buy-Sell Problem Solver
  15. 15. www.InKnowVision.com All Content Copyright © 2014 Company Ownership Duncan’s, Inc. – $100 Million Tad – Brother – 65% Jeremy – Son** Tina – Sister – 15% Duncan – Husband – 15% Jason – Son – 5% ** No current or future interest in the business Our clients:
  16. 16. www.InKnowVision.com All Content Copyright © 2014 Stock Redemption • Traditional plan in place • Buy out is properly funded! • $105M term insurance • Everything seems to be in place, where did the family go wrong?
  17. 17. www.InKnowVision.com All Content Copyright © 2014 Stock Redemption Agreement - Current Duncan’s, Inc. – $100 Million Tad ‐ 65% Tina – 15% Duncan – 15% Jason – 5% At death, Duncan’s, Inc. redeems interests with life insurance proceeds.  Business currently owns $105M of term insurance.
  18. 18. www.InKnowVision.com All Content Copyright © 2014 Duncan & Tina • $60M estate • $30M in Duncan’s, Inc. interests • $10M in other illiquid assets • Estate taxes: $21M today ‐ $52M life expectancy • Equal inheritances for Jason and Jeremy • Jason gets Duncan’s, Inc. interests • What’s left for Jeremy? • 75% of their estate to heirs • Very charitable family – Duncan Family Foundation
  19. 19. www.InKnowVision.com All Content Copyright © 2014 What if Tad Dies? • $60M estate becomes $125M estate • $46M of estate taxes • Unequal inheritances for Jason and Jeremy • Jason may have to distribute company profits to Jeremy to equalize • Large taxable estates created for Jason and Jeremy • Charitable gift at death greatly decreases their family’s inheritance
  20. 20. www.InKnowVision.com All Content Copyright © 2014 Irrevocable Dynasty Trusts Duncan & Tina Dynasty Trust Jason, Jeremy &  Grandchildren Transfer Duncan’s,  Inc. Interests – Gift  and Sale • Appreciation is free of estate taxes • At Tad’s death, $65M of Duncan’s,  Inc. interests outside of Duncan &  Tina’s estate
  21. 21. www.InKnowVision.com All Content Copyright © 2014 Purchase Life Insurance Dynasty Trust Life Insurance • Income & estate tax free • Equalize Jeremy’s non‐business inheritance • Wealth replacement • Purchase any remaining Duncan’s, Inc. interests in Duncan & Tina’s estate
  22. 22. www.InKnowVision.com All Content Copyright © 2014 New Buy-Sell Agreement Duncan’s, Inc. Tad/Heirs Dynasty Trust 1 2 Duncan Tina 4 5 4 5 3
  23. 23. www.InKnowVision.com All Content Copyright © 2014 New Buy-Sell Agreement Duncan’s, Inc. Tad/Heirs – $65M of Life  Insurance Proceeds Tad’s Death: 1) Tad’s estate transfers Duncan’s, Inc. interests to  Dynasty Trust 2) Dynasty Trust purchases interests with life  insurance proceeds Advantage: Duncan & Tina’s estate does not  increase in value by $65M Dynasty Trust – $65M   Duncan’s, Inc. Interests ‐ $100M Total 1 2
  24. 24. www.InKnowVision.com All Content Copyright © 2014 New Buy-Sell Agreement Duncan’s, Inc. Duncan Tina3 Duncan or Tina’s Death: 3) Remaining interests pass to surviving  spouse (marital deduction)
  25. 25. www.InKnowVision.com All Content Copyright © 2014 New Buy-Sell Agreement Duncan’s, Inc. Dynasty Trust Duncan Tina 4 5 3 4 5 Duncan & Tina’s 2nd Death: 4) Remaining interests pass to Dynasty Trust 5) Dynasty Trust purchases interests with life  insurance proceeds Advantage: Duncan & Tina’s estate has  liquidity to pay estate taxes/make gifts to  charity
  26. 26. www.InKnowVision.com All Content Copyright © 2014 Overview • Two Irrevocable Dynasty Trusts • Estate tax savings exceeding $25M • New Permanent Life Insurance in Trust • $43M • Two Qualified Personal Residence Trusts (QPRTs) • Estate tax savings of approx. $5M • Testamentary Charitable Lead Annuity Trust (TCLAT) • Charitable gifts exceeding $50M • Eliminates estate taxes
  27. 27. (630) 596-5090 715 Enterprise Drive Oak Brook, IL 60523 All Content Copyright © 2014 www.InKnowVision.com @InKnowVision InKnowVision, LLC InKnowVision Google+ Q&A For more information contact Greg Maddox Greg@ikvllc.com 847.269.4624 Thank You!

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