Case Studies Discussion of Succession Planning Through the Process Establishing Planning Priorities Getting Money Out of Your Business Choosing a Successor How to Evaluate Business Transfer Building Your Contingency Minimizing the Impact of Taxes

1. FAMILY FIRM INSTITUTE
Northern California Chapter
July 19, 2012
Case Studies:
Internal and External Succession
For Privately-Held Businesses
WWWWhhhhaaaatttt hhhhaaaassss wwwwoooorrrrkkkkeeeedddd
aaaannnndddd
WWWWhhhhaaaatttt hhhhaaaassssnnnn’’’’tttt
Presented by
Derek B. Ferriera, CFP®, CLU®, ChFC®, REBC®
Virg Cristobal, CFP®

2. Derek B. Ferriera, CFP®, CLU®, ChFC®, REBC
C Solutions
2105 S. Bascom Avenue, #300
Campbell, CA 95008
Office phone: (408) 879-4211
California Insurance License 0665169
Virg Cristobal, CFP®
Cristobal Associates
44 Montgomery Street, Suite 2950
San Francisco, CA 94104
Office phone: (415) 229-3329
California Insurance License 0E16522
Derek Ferriera and Virg Cristobal are registered representatives of Lincoln Financial Advisors Corp.
Securities offered through Lincoln Financial Advisors Corp., a broker-dealer (member SIPC).
Investment advisory services offered through Sagemark Consulting, a division of Lincoln Financial
Advisors Corp., a registered investment advisor. Insurance offered through Lincoln Marketing and
Insurance Agency, LLC and Lincoln Associates Insurance Agency, Inc. and other fine companies.
CRN201205-2068227

3. WELCOME
The information contained in this correspondence is not intended to be a
"Covered Opinion" under Treasury Department Circular 230. If the
information is construed to be such an opinion, the opinion was written to
support the promotion or marketing of the transaction(s) or matter(s)
addressed in the opinion and the taxpayer should seek advice based on
the taxpayer's particular circumstances from an independent tax advisor.
Furthermore, the opinion does not reach a conclusion at a confidence
level of at least more likely than not with respect to one or more
significant Federal tax issues addressed by the opinion. In addition, with
respect to those significant Federal tax issues, the opinion was not
written, and cannot be used by the taxpayer, for the purpose of avoiding
penalties that may be imposed on the taxpayer.

4. WHO ARE WE?

5. WHO IS
SAGEMARK?

6. RETIRE
BUSINESS
INVEST
ESTATE
SAVINGS &
INVESTMENTS
PLANNING
PROCESS
BUSINESS INSURANCE
TRANSFER
TAX
REAL PROPERTY
FAMILY
ENTITY
&
EQUITY
FRINGES
&
FIDUCIARY
T
A
X
F
E
N
C
E
ROTH
QSTP
QTIP
ILIT
RQTIP
GST
QPRT
CRT
CLT
GRAT
IDIT
LP/LLC
$$$
Discount
Leverage
GROSS INCOME
(-) TAXES
(-) EXPENSES
NET INCOME
PERSONAL
PROPERTY
QUALIFIED
RETIREMENT PLANS
Terms to the right of the tax fence are; Roth IRA, Qualified State Tuition Plan, Qualified Terminable Interest Property, Irrevocable Life
Insurance Trust, Qualified Personal Residence Trust, Charitable Lead Trust, Intentionally Defective Income Trust, Reverse Qualified
Terminable Interest Property, Generation Skipping Trust, Charitable Remainder Trust, Grantor Retained Annuity Trust, Limited
Partnership/Limited Liability Company, and are hypothetical strategies that may be considered depending upon the ramifications of each
different case situation.

7. AGENDA
• The Big Picture
• Case studies through the process
• Establishing Planning Priorities
• Getting Money Out of Your Business
• Choosing a Successor
• How to Evaluate Business Transfer Options
• Building Your Contingency Plan
• Minimizing the Impact of Taxes

8. INCORPORATE WITH EXIT STRATEGIES
CONTINGENCIES
(Unplanned)
Buy-Sell Agreement
How is value pegged?
What chassis?
Which contingencies?
(refer to matrix)
Sale to
3rd party
Merger
IPO
Private
Retain As
Cash Cow
ESOP
Public Firm
Gift To Family
EXIT STRATEGY
(Planned)
Deferred Consulting
Compensation
Gift To Family

9. TODAY’S OBJECTIVE
Case-based Discussion of
Succession Planning
Through the Process
A dialogue of opportunities and pitfalls

10. THE FATE OF THE FAMILY BUSINESS
2nd Generation
30%
1st Generation
58%
3rd
Generation
12%
With only 3% operating at the 4th Generation and
beyond
Source: Joseph Astrachan, PhD and Editor Family Business Review (2003), as cited on Family Firm Institute web site (www.FFI.org), 2012

11. FAMILY CONFLICT

12. THE PLANNING PROCESS
1. Providing for Your Own Financial Security
2. Setting Exit Objectives
3. Determining Value/Price
4. Preserving, Protecting and Promoting Value
5. Converting Business Value to Cash
6. Selling the Business for a Note
7. Contingency Planning for Business
8. Wealth Preservation Planning

13. PROVIDING FOR YOUR OWN
FINANCIAL WELL BEING
Question:
Can I Afford
To Transfer My Business?

14. DETERMINING YOUR
FINANCIAL WELL BEING
Step 1: Identify Needs
Step 2: Inventory Resources
Step 3: Evaluate Long-Term Situation

15. SOURCES OF INCOME:
SELL BUSINESS
FOR
SALE

16. HOW MUCH INCOME DO I
NEED FROM THE BUSINESS?
NEED MONEY
DON’T NEED
MONEY
Which Way
do we go?
IPO
3rd Party Sale
Sweat Equity
NQDC
Private Annuity
Gifts
Bequest
SCIN’s
GRAT’s
IDIT’s
Terms are as follows; Initial Public Offering, Non-Qualified Deferred Compensation, Self-
Canceling Installment Note, Grantor Retained Annuity Trusts, Intentionally Defective Income
Trusts, and are hypothetical examples of strategies that may be considered in a specific case
depending on the specific ramifications of that particular situation.

17. TRANSFERRING THE BUSINESS
• Letting Go
• Developing A Successor
• Choosing The Appropriate
Transfer Option

18. UNABLE TO LET GO
Lack of a Successor
• None Available
• Not Old Enough
• Not Interested
• Not Capable

19. DEVELOPING A SUCCESSOR
Step 1: Identify Job Requirements
Step 2: Assess Bench Strength
Step 3: Select From Within or Recruit
Step 4: Develop a Crisis Contingency Plan

20. ASSESSING BENCH STRENGTH
President/Sales Mgr VP/Finance Mgr. Production Mgr.
Purch./Materials Mgr.
Outside Sales Finance Asst. Mgr. Production Asst. Mgr
Supervisor Supervisor
Payroll
(outsource)
Engineer
CPA
QA Mgr.
Inside Sales Receptionist
Customer
Service
50 + Workers
Rank and File
CEO

21. TRANSFERRING THE BUSINESS
• Letting Go
• Developing A Successor
• Choosing The Appropriate
Transfer Option

22. TRANSFER OPTIONS
Determine when
to Transfer?
Sell During
Lifetime
Gift During
Lifetime
Sell at Death
When?
Now
Disability
At Retirement
Gift at Death
HOW?
Cash
Installments
Cross Purchase
To Whom?
Family
Partner
Key Person
Competitor
3rd Party HOW?
Stock Redemption
ESOP, MBO/LBO
SCIN, IDIT, GRAT
Annual Gifts
Lifetime Gifts
HOW?
Cash
Installments
To Whom?
Family
Partner
Key Person
Competitor
3rd Party HOW?
Buy/Sell Agreement
B.A.T. Trust
Liquidation*
Lifetime Gifts
Gift to CRT
The abbreviated terms are as follows; Business Acquisition Trust, Employee Stock Bequest
Ownership Plan, Management Buyout/Leveraged Buyout, Self-Cancelling Installment
Note, Intentionally Defective Income Trust, Grantor Retained Annuity Trust and
Charitable Remainder Trust, and are hypothetical examples of strategies that may be
considered depending on the specific circumstances of the particular case.
*Default Plan: LIQUIDATION

23. Transfer
Methods
Transfer
Channels
Transfer Methods
Buy-Sell
Living Buy-out
Sale
Family
Co-Owners
Outsiders Recapitalization
Merger
Public
IPO
Going Private
Objectives:
• Lifestyle Change
• Cash-out, Diversify
• Create Family Legacy
• Give Employees equity
Employees
Gifts, Bequests,
SCINS, Private
Annuities, GRAT’s,
IDIT’s
Default: LIQUIDATION
Channel
MBO/LBO
ESOP
Terms are self
cancelling
installment note,
grantor retained
annuity trusts,
intentionally
defective income
trusts, management
buyouts/leveraged
buyouts, and
employee stock
ownership plans,
and are hypothetical
examples of
strategies that may
be considered
depending on the
circumstances of the
particular case.
TRANSFER OPTIONS

24. QUESTION:
WHAT IF THE PROCESS IMPLIES
INTERNAL SUCCESSION IS NOT
PRACTICAL?

25. ANSWER:
WAIT AND SEE
EXIT PLAN

26. 3rd Party Sale Business Process with
Mergers and Acquisitions Firm
Days: 30 60 120 150
Pre-sale
Planning
Prepare
Offering
Memorandum
Communicate
With
Prospective
Buyers
Obtain
Proposals
180 –
210
Consummate
Transaction
• Gather &
analyze
Client
data
• Reduce
expenses,
increase
profits &
maximize
business
value
• Prepare
document to
justify price
• Business
purpose,
strategy,
products,
services,
competition,
technology,
management
• Historical &
projected
financials
• Private Equity
groups
• Strategies
sources
• High net worth
individuals,
selectively
• Evaluate terms
• Negotiate to
achieve
optimum
terms among
competing
offers
• Finalize terms
• Work with
counsel
to draft
transaction
documentation
• Close
transaction
Exit Planning offered through unaffiliated 3rd parties.

27. ACCEPTING THE FIRST (AND ONLY) OFFER
27
Competition brings out the best offers.
Client Original Offer Expectations Result Improvement
Medical Systems Company $6.0 MM $6.0 MM $18.0 MM 200%
Road Builder (Contractor) $37.5 MM $50.0 MM $83.8 MM 123%
Oil Field Services Company $14.0 MM $20.0 MM $23.0 MM 64%
Erosion Control Company $4.0 MM $4.0 MM $6.3MM 58%
The examples are for illustrative purposes as individual results will vary.

28. PRE-SALE PLANNING
• Owner’s Objectives
• Company History
• Entity Type (s)
• Growth Trends
• Industry Info
• Competition
• Proprietary Products/
Services
• Niche Markets
• History of Acquisitions
• Financial Reporting
• Profitability
• Risks/Liabilities
• Debt
• Customer Concentration
• Geography Served
• Contract/Terms
• Expected Price/Terms
• Post-transfer Involvement
• Deal Structure
• Ideal Buyer
• Next Steps
After above data is completed…proceed to “Marketability Assessment” 28

29. CONTINGENCY PLANNING
BUY-SELL DECISION GRID
Owner #1 Owner #2
Death (Wait & See)
Cross-Purchase 1st
Stock Redemption 2nd
YES/NO YES/NO
Disability
Presumptive 6 mos. Wait
9 Mo’s otherwise, own
occupation
YES/NO YES/NO
Departure:
Friendly – Retirement
Unfriendly – Discord
YES/NO
YES/NO
YES/NO
YES/NO
Divorce:
Pre/post nuptial-
Spouse sign off!!
YES/NO YES/NO
Sell Each Other / Gift YES/NO YES/NO
1st Refusal YES/NO YES/NO
Unfriendly Withdrawal YES/NO YES/NO
Retirement YES/NO YES/NO

30. WEALTH PRESERVATION PLANNING
“Planning by Default”
• Section 303
• Section 6166
• Section 2032A

31. WEALTH PRESERVATION
PLANNING
Lifetime Generation
Skipping Transfer Tax
Generation Skipping
Lifetime Payment of Gift Tax
Lifetime Gift of Credit
Gift Split
Annual Exclusion
Do Nothing During Lifetime
Pyramid of Pain

32. REDUCING TAXES THROUGH
INVESTMENTS AND FRINGE BENEFITS
R.E.
$_____
Income
Expenses
$ Profit
Equipment
“S”/ LLC
EQ #1
EQ #2
EQ #3
“C” Corp
RE #1
RE #2
$ k $ k
Corporate Tax
~ $
$0k
$_____
Dividend Tax
~ $
15% Fed
9.3% CA
W-2
+K-1
+K-1
Gross Taxable Income
(-) Allowable Deductions
Net Taxable Income
Lease Agreements
Alternative
Investments
$_____
+ or (-)
W-2= $_____
QP = $_____
NQDC =$____
IRS $______
Real Estate,
“S”/LLC
$ k
PIGPAL
RE Rescue

33. TAX-DEFERRED
RETIREMENT PLANS*
* Limits for 2012
Lowest to Highest Allowable Contributions
Defined Contribution Plans
*IRA - $5,000 + $1,000 (50+)
*Simple IRA - $11,500 + $2,500 (50+)
*401(k) - $17,000 + $5,500 (50+)
*SEP IRA - $50,000
*Profit Sharing - $50,000
*Personal 401(k) - $50,000 + $5,500
(50+)
Defined Benefit Pension
Plans
*Defined Benefit Pension Plan / (Cash
Balance + Target Benefit / IRC Sec 415/412
Limits)
*Defined Benefit Pension Plan w/ Ins.
(IRC Sec 415/412 Limits)
*Defined Benefit Pension Plan w/ Inv.
Guarantees (IRC Sec 412 Limits)
*Defined Benefit Pension Plan w/ Inv.
& Ins. Guarantees (IRC Sec 412 Limits)

34. SAMPLE CASES

35. SAMPLE CASES
1. S Corp / Sale to Family and Key EE
2. 3RD Party Sale - C Corp
The strategies used in the following cases may not be indicative of solutions that may be useful in all cases.
These are cases that have been worked on within the past two years.

36. CASE STUDY #1
Sell to Child in Business and Key EE
S CORPORATION
Net Worth: $3.5 Million

37. FAMILY TREE
Relationship Age
Mr. Client 64
Mrs. Spouse 60
-----------------------------------------------------------------------------------------
-
Son (in Bus.) 34
----------------------------------------------------------------------------------------
Son (not in Bus.) 32
----------------------------------------------------------------------------------------
Son (not in Bus.) 38

38. GOALS
Retire in 2010 with $113k/year (After tax) + 3% inflation
expenses + mortgage + property taxes until age 100
Develop business succession strategy to Son and Key EE
Increase discretionary income
Reduce income taxes
Update estate planning documents
Reduce estate taxes
Build continuity plan (death and/or disability)

39. BALANCE SHEET
Beginning Debt/ Net
Value Liability Equity
Cash and Equivalents
Bank 3,590 0 3,590
Note Receivable-Son 61,000 0 61,000
Trust bank acct 1 18,741 0 18,741
Trust bank acct 2 30,000 0 30,000
Trust Bank 3 112,327 0 112,327
HELOC 0 (24,759) (24,759)
225,658 (24,759) 200,899
Domestic Equity
stock 78,380 0 78,380
Brokerage Trust Acct 896,090 0 896,090
974,470 0 974,470
Personal Use Assets
Home 1,250,000 (687,309) 562,691
1,250,000 (687,309) 562,691

40. BALANCE SHEET CONTINUED
Beginning Debt/ Net
Value Liability Equity
Business Use Assets
Beach House 915,000 (266,185) 648,815
Condo 1 140,000 (111,138) 28,862
Condo 1 Loan 2 0 (13,995) (13,995)
Business (100%) 1,040,000 0 1,040,000
Lot 36,000 0 36,000
2,131,000 (391,318) 1,739,682
Qualified Plan Assets
Client IRA 32,618 0 32,618
Spouse IRA 10,200 0 10,200
42,818 0 42,818
Grand Totals 4,623,946 (1,103,386) 3,520,560

41. POTENTIAL ISSUES?

42. POTENTIAL SOLUTIONS?

43. Ownership
BUSINESS EXIT STRATEGY
2005
Owner
Key EE
Son
Key EE’s Replacement
Owner
Key EE
Son
Key EE’s Replacement
50%
14%
36%
0%
Phase II Phase III
50%
14%
36%
0%
0%
25%
75%
TBA %
Control
50%
14%
36%
0%
0%*
50%
50%
0%
0%
25%
75%
TBA %
Cash Flow
100 % (Via Note)
0% (Net)
0% (Net)
0%
100% (Via Note)
0% (Net)
0% (Net)
0%
TBA %
TBA %
TBA %
TBA %
Phase I
2010 2015 TBA
Sweat Equity Partial
Sale
Sweat Equity Note
Cont’d + Partial
Control Provision
Full Ownership
Control Transferred
Owner
Key EE
Son
Key EE’s Replacement

44. BUSINESS EXIT
STRATEGY
Corporation
3. Salary Continuation
4. Deferred Compensation
($ at retirement subject to
valuations)
Owner
Spouse
(Buyout f/ remainder
value at death)
7. Collateral Assignment
(accrued loan)
6. Split Dollar (premium)
Gets remaining shares of
company at Owner’s death
Son
Son and Key EE
Corporation indemnifies Son
and Key 1. Installment Notes EE as Key Employees
5. Rabbi Trust
2. Trusteed Cross
Purchase Buy-Sell
Agreement
Policy
Key EE

45. Power Of
Attorney
Healthcare
Power Of
Attorney
Financial
Power Of
Attorney
Financial
Power Of
Attorney
Healthcare
Life Insurance
~ $ 300,000
1st Death
HEIRS
$3,563,015
IRS
~ $38,812
2nd Death
CURRENT SITUATION
Living Trust
~$ 3,489,589
$ 1,744,794 $ 1,744,794
Survivor
~ $ 1,744,794
Bypass
Up to
$2 Million
QTIP
~ $ 0
IRA / 401k
~ $ 67,444
TAX
~ $ 1,857,033
Will
Client
Will
Spouse
IRA / 401k
~ $ 67,444
Life Insurance
~ $ 300,000

46. Power Of
Attorney
Healthcare
Power Of
Attorney
Financial
Power Of
Attorney
Financial
Power Of
Attorney
Healthcare
1st Death
HEIRS
$3,737,780
IRS
~ $24,984
2nd Death
REVISED SITUATION
Living Trust
~$ 3,489,589
$ 1,744,794 $ 1,744,794
Survivor
~ $ 1,744,794
Bypass
Up to
$2 Million
QTIP
~ $ 0
IRA / 401k
~ $ 67,444
TAX
~ $ 1,857,033
Will
Client
Will
Spouse
IRA / 401k
~ $ 67,444
LIFE
INSURANCE
$300,000
LIFE
INSURANCE
$300,000

47. BEFORE AND AFTER SNAPSHOT
Current Revised
Income (W-2/Bonus) $241,696 $191,696
Investment Income $28,607 $16,300
RE Income (Passive) $16,800 $47,298
S Distributions $100,000 $50,000
Installment Note $47,557
Income Taxes (Fed+State) ($72,694) ($85,702)
Expenses ($145,650) ($113,283)
Net Income $51,665 $161,084
Cash and equiv $200,899 $111,122
Investments $974,470 (90/10) $974,470 (60/40)
Alt. Investments $100,000
Real Estate $699,682 $699,682 (Commercial)
Business S Corp $1,040,000 $520,000
Business C Corp $100,000
Qualified Plan $42,818 $42,818
NQDC $50,000
Personal Residence $562,691 $562,691
Net Assets $3,520,560 $3,681,644
Estate Taxes $38,812 $24,984
Net to Heirs $3,563,015 $3,737,780

48. RECOMMENDATIONS
Update living trust, wills, and powers of attorney
Create successor management team
3rd party business valuation
Phase I sale of 50% voting stock to Key EE and Son.
Split-Dollar agreements for all parties
Trusteed Cross Purchase Buy Sell Agreement
Salary Continuation Agreements
Key Man life insurance of 2x salary for Owner, Key EE, and Son.
Florida C Corporation for additional business to reduce state income taxes
Non-qualified deferred Compensation plan with Rabbi Trust
Long-Term Care Insurance for Owner/spouse, Key EE, and Son
Disability income and Disability Buy Out insurance on Son and Key EE
Group Long-term Disability coverage
Establish pension plan (if cash flow improves)
1031 exchange rental properties and lots to commercial Triple-Net TIC
60% equities, 40% fixed revocable trust investment portfolio
Gift $300k UL insurance to ILIT

49. CASE STUDY #2
Maximize the Sale
of Your Business

50. CASE STUDY
COMPANY BACKGROUND
• 5 yr old medical services company - growing rapidly
• 2008 EBITDA $800K, 2009 Projected EBITDA of $4MM - $5MM
• Company needed an infusion of working capital of $4 MM - $6 MM
• Introduced to us by ESG in June 2008 Engaged in January 2009 for
two-pronged plan:
1. working capital would be sought
2. determine market interest w/ Private Equity Groups (PEGs)
synergistic companies for an outright acquisition or recapitalization.

51. OPTIONS OPPORTUNITIES
• Working capital proposals all required more equity than desired
• As a result an outright sale was emphasized – procured 15-20 interests
• Received multiple offers:
Offer Company Proposal Progression Final
1st
Synergistic
2nd
3rd
PEG
PEG
$25 million
$29 million
$16-$22 million
$50 million $55 million
• Accepted $55MM offer began onsite due diligence
$43 million
Not Enough
-
-

52. THE STORY GETS BETTER –
Final Deal Outcome
• $60MM topping offer received during due diligence from
another synergistic company
• Decided to rescind acceptance of first synergistic company
offer
• Final purchase price ended up at $66.3 MM – Closed
transaction November 2009
• Summary:
– Timeline – 11 months from engagement
– Clients Valuation Expectation - $15MM to $25MM
– Final Purchase Price Achieved - $66.3M
– Final EBITDA Multiple – 83 x 2008 EBITDA 13.2 x 2009 Projected
EBITDA

53. 1999 2000
$2 MM Net Worth
NQSO Option
Exercises
2001 2002
Renewal Fee
Client Leaves W-2 Capacity
2003
Managed Minor
Investment
Portfolio
2004
Renewal Fee
2005 2006
CASE TIMELINE
(Phase One Planting Seeds)
2007
Client Adds:
2 Active Partners
4 Other Passive
Investors
Initial Engagement
for $5K Fee
Renewal Fee
Client Phases into New Co. via
Purchase of Assets from Public Co.

54. 2007
Initial
Business
Planning
Fee
ESG Initial Intro
Videoconference
2008
Group Personal
Planning Meetings
(Goals Financials)
MA, CPA,
2009
MA
Formal
Proposal
Group Personal
Planning Meetings
(Goals Financials)
- Continued -
JD Firms
Engagement
Business Contingency
Life Insurance Implemented
2010
Companies #1 - 4 Talks
Jan to Mar Apr May Jun Jul Aug Sep Oct
Nov
to
Dec
Review
Personal
Planning –
Initial
Retirement,
Estate
Projections
Goals Review
GRATs
Implemented
Personal Planning –
Retirement Estate
Re-Projections
Personal Planning –
Implementation
Year End Tax
Legal Meetings
Personal Planning –
Retirement
Re-Projections Year
End Personal Timelines
MA, CPA
Financial
Legal Prep
Begin
(Daily T-CONs)
Company #5
Talks Begin
SALE CLOSED
CASE TIMELINE

55. MARKETABILITY ASSESSMENT
• Complimentary
• Confidential
• Provides to Advisor/Client:
– Valuation “range” based on various “forward looking” approaches
– Comparable sales in industry
– Recommendations to enhance value
– How the MA process works
– MA Fees
• Takes 7 – 10 days to prepare after we receive data
• Your existing advisor team selects the “best fit” MA firm to represent your
client based on:
– Industry expertise
– Deal size/type
– Chemistry
– Geography

56. APPENDIX

57. The 10 Potential Exit
Planning Mistakes
1. The Do-It-Yourself’er (Don’t try this at home)
2. Holding on too long
3. Failure to plan/Procrastination
4. Too Busy Fighting Alligators
5. Advisors don’t know how to work together, no
coordinator
6. Unaware there is a defined Exit Plan Process
7. Rush to transaction
8. Fear what to do after business is gone
9. Not Assembling a team
10. Failure to make yourself “obsolete”

58. FAMILY CONFLICT
“Your Father’s Been Expecting You!”

59. ONE BROTHER ON SIBLING RIVALRY
“I spend a lot of time figuring
out how I’m going to get my
sister’s half of the business.”

60. TAX EFFICIENCY AUDIT
Estate Taxes 45%
State Estate Inheritance Taxes 10% - 30% (Currently 0% in CA)
Income Taxes - Personal 10% - 35%
__________________________________________________________________________________________________________________________________
90% of time corporation involved:
O - Owner
P - Payor Benefit
B – Beneficiary
Corporate Alternative Minimum Tax 20%
(Income Tax)
Corporate Income Tax 15% - 35%
Federal Gift Tax 45%
(A) / (B) / (C)
Federal Generation Skipping Transfer Tax 45%
i.e. Did you think your $2,000,000 of Life Insurance was tax free?

61. ANNUAL CONTRIBUTION EXAMPLES
USING DIFFERENT FUNDING METHODS
Current
Age
Retirement
Age
Profit
Sharing
Traditional
Defined Benefit
W/O Life Ins
Defined
Benefit
With Life
Insurance
412 (i) Funding
With
Life Ins
30 55 $46,000 $ 31,878 $74,254 $ 99,343
35 55 $46,000 $ 45,617 $97,531 $133,703
40 55 $46,000 $ 68,875 $129,147 $187,110
45 55 $46,000 $114,693 $192,481 $285,841
50 60 $46,000 $145,935 $256,280 $357,458
55 62 $46,000 $191,210 $332,365 $434,778
60 65 $46,000 $187,265 $324,536 $393,182

62. Introduction
Comprehensive
Financial
Planning Process
Engage
Services
Document
Debrief
Present
Feasibility
Study
Build
Feasibility
Study
Create Plan
Data
Plan Meeting
Design and
Research
Referral /
Implementation
Finalization
Implementation
Clarification
Plan
Presentation
Document
pickup
Concept
Testing and
Education
Renewal /
Plan
Review
Implementation
Presentation
Obtain
Valuation
Business
Audit
Business
Sale
Prepare Offering
Memorandum

63. Setting Exit Objectives
“When a man does not know which harbor he is
heading for, no wind is the right wind.”
-Seneca

64. Q A