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InKnowVision May 2012 HNW Technical Webinar - Note to Charity

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Over the last several years we’ve developed an interesting strategy that involves making a significantly impactful gift to charity as well as helping our wealthy families reduce taxes to the lowest amount possible.

This alternative to a TCLAT can be very attractive in the right situation. Join us to see how the idea might be useful for your high net worth clients

Learn more at www.inknowvision.com

Published in: Economy & Finance, Business
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InKnowVision May 2012 HNW Technical Webinar - Note to Charity

  1. 1. Technical Webinar©2012. InKnowVision LLC. All rights reserved. www.inknowvision.com
  2. 2. Upcoming Webcasts:• Marketing Webinar • May 23rd• Next Case Study • June 6th• Technical • June 20th www.InKnowVision.com © 2012
  3. 3.  October Survey being sent InKnowVision 3
  4. 4. Note to CharityInKnowVision® May, 2012
  5. 5.  Zero estate tax Money to charity Delayed inheritance to kids Unknown exemption amount Reference session on our web site InKnowVision 5
  6. 6. Transfer$5M Residual $5MEstate Above TCLAT Exemption $334k for 25 Years AssumptionsTerm 25 YearsRate 6.69%AFR 4.2% Charity
  7. 7. TCLAT25 years of AssumedGrowth at 7% $5.9M Heirs
  8. 8.  Reduce estate tax Solution for Illiquidity Solution for uninsurable clients Increase assets to heirs Accelerate assets to heirs Gifts to charity InKnowVision 8
  9. 9. Sale of assetsParent(s) Trust for Heirs Promissory Note to Parents Not Note e InKnowVision 9
  10. 10. Parent(s) Trust for Heirs Not Buys Insurance e Who can be insured? Life Insurance Co InKnowVision 10
  11. 11. Parent(s) Trust for Heirs Note100% Charitable Deduction •Reduce estate tax Charity •Use disclaimer •Use TCLAT InKnowVision 11
  12. 12. Parent(s) Trust for Heirs Promissory Note Paid with Life Insurance CoCharity Insurance Proceeds Note InKnowVision 12
  13. 13.  $40M estate $36.5M is illiquid commercial real estate Real estate is: ◦ Devalued ◦ Distressed ◦ Needs updating ◦ Needs rent increases ◦ Liability issues everywhere Clients are 88 (and dying) and 85 and uninsurable If they die, estate tax of $9M-$16M What should they do? InKnowVision 13
  14. 14. Sale of RE assetsParent(s) Trust for Heirs $27M NoteNotNotee Assets were owned in a holding company Recapitalized and sold at a 25% discount. InKnowVision 14
  15. 15. Parent(s) Trust for Heirs Buys Insurance Not on e child/children Cash flow pays note payment and insurance premium Life Insurance Co InKnowVision 15
  16. 16. Parent(s) Trust for Heirs Owns Real Estate Pays Premium Note100% Charitable Deduction •Reduce estate tax Charity •Use disclaimer •Use TCLAT InKnowVision 16
  17. 17. Parent(s) Trust for Heirs Owns all assets less cost of insurance Promissory Note Paid with Life Insurance CoCharity Insurance Proceeds Note InKnowVision 17
  18. 18.  Charity holds note from estate Long term Interest accrues Low interest rate Collateralized? What is value of note How much would charity take for cash today? InKnowVision 18
  19. 19.  Design Illustrations Insurance Documents Know how InKnowVision 19

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