Conventions offer a wonderful opportunity for trade association members to work and play (and of course, get a legitimate tax deduction) at the same time. For me, conventions--as a seminar speaker--are a delightful combination of teaching others, while learning first hand about the problems of the business owner attendees (and of course, getting in my share of playtime too).
Recently, a trade association invited me to do my seminar gig at a Caribbean island 5-star resort. Great weather. Breathtaking view. Best of all, a large want-to-learn audience of family business owners (including many wives and kids working in the business). The 1-½ hour seminar covered wealth transfer, estate planning, asset protection, business succession and related subjects. The feedback (each seminar attendee filled out a comprehensive seminar evaluation form) was gratifying. But my learning experience started an hour after the seminar.
Here's why. The association's executive director--bless him--had prearranged five no-charge, half-hour consultations with me. Each consultation started the same way: 1) reviewing a personal financial statement (listing only significant assets and liabilities); 2) listing their goals (particularly any burning issues or concerns involving their spouse, family and business); and 3) asking each one, "What is the one or two subjects you would like to talk about the most?" (Hands down, "Estate Planning" won--all five--and "business succession" a strong second--four out of five).
The remaining time (15 to 20 minutes) was used to explain the various tax strategies each should use to accomplish their specific goals, based on the assets owned.
Let me interrupt the consulting process and what I learned to tell you a bit about my "fabulous five" who consulted with me.
- All males who owned their own business (although one had already transferred all his stock to his two kids who ran the business).
- Ranged in age from 46 to 66.
- Net worth ranged from $2 million to $12 million.
- Profits (after officer salaries and bonuses, ranged from $300,000 to $1.5 million).
- All are smart, educated and well-informed entrepreneurs.
Now, here comes a shocker: What I learned as the common denominator of every one of the "fabulous five". Ready? Not one of them could solve the one burning concern each of them had--"maintaining my lifestyle (and my spouse's) for as long as I live"--with the most perfect estate plan (which is really death documents in the form of a will and a trust). Wait, there's more: Four of them needed a business succession plan (by transferring the business to one or more of their kids or to one or more key employees). Again, this shows that even the best estate plan in the world cannot always finish succession jobs.
Simply put, not even one of these five typical business owners can accomplish their most important goals with an estate plan. What they clearly need is a lifetime tax plan that dovetails with their estate plan (death plan).
In the end, I recommended a plan for each of them using 15 different lifetime strategies in all (three was the smallest number of strategies, while six was the most for any one plan). To spell out each of the five fact situations, (the five plans and the 15 strategies used) would take a small book, or even a website with lots of info.
Every one of the 15 strategies (for example, a qualified personal residence trust, subtrust, family limited partnership and the 12 other strategies) used (how, why and when to use them) and other info in the areas of lifetime planning, estate planning, business succession and related topics are on my Web site.
Each of the "fabulous five" was directed to continue their learning experience by using this Web site, and you can too by browsing www.taxsecretsofthewealthy.com.