Asking the Right Questions

The right plan for your estate will be tailored specifically to your goals and your assets, and other facts and circumstances that are unique to you.


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Over the years, we have talked to and consulted with hundreds of clients interested in making plans for their finances. Hands down, the two most common questions we are asked are:

1. Is it possible to pass all of my wealth to my family, instead of losing any of it to the IRS?

2. Can I maintain control of all my assets, including my business, for as long as I live?

Burn the answer to both questions into your mind: a very loud “Yes!”

And we mean yes all the time, no matter what kind of assets you own, no matter how much you are worth and no matter how old you are. 

But in order to make these two things happen, you need the right plan. Forget about what your friends or neighbors have done; your plan must be tailored to your specific goals, the assets you own, and other facts and circumstances that are unique to you.

Don’t wait. Your plan should be put into action now, whether you are 50 years old or 80. The sooner the better. Procrastination favors the IRS.

Be forewarned, however: If your plan includes only a will and trust, it will almost certainly become an expensive tax trap. The sad fact is that most estate plans do only contain a will and a trust, and when the owner of that plan and his or her spouse pass on, the IRS is guaranteed a big payday. In your case, you and your family lose.

For more than 40 years, this is the short sermon we have been preaching to our clients: Making money and trying to build after-tax wealth has always been the first challenge for the owner of a family business; legally keeping that wealth away from the IRS is an even bigger challenge. In a heart beat, almost half the wealth it took you a lifetime to accumulate can be taken from you by the tax collector.

When you and your spouse are no longer living, there are only three entities to which your wealth can go: your heirs, charity or the IRS. The simple fact is that a well-conceived estate plan can both enrich your heirs and, if you so desire, help out a charity without any cost to you or your heirs, while at the same time eliminating the IRS’ cut. Also, if you own a business, your estate plan should include a plan for transfer of that business as well as a retirement plan that will provide the after-tax cash flow needed for you and your spouse to maintain your lifestyle.

The right plan for you can only be achieved if you and the professionals you employ ask the right questions: What are your objectives for your family, your business and your retirement? What would be enough after-tax income for you and your spouse to maintain your lifestyle for as long as you live? Do you want to maintain control of your business? Financially, do you want to treat your children equally?

The type and number of questions will vary depending on the type of business you own, the make-up of your family, your goals (particularly your long-term goals), the type of assets you own, your overall wealth and other factors.

Why the need to consider so many questions? Because your answers will help dictate which tax strategies and techniques will be the most effective in helping you beat the IRS. Some of the strategies and techniques we commonly use with our clients include:

Intentionally defective trust (IDT) to transfer a business to an owner’s children, tax-free—no income tax, no gift tax and no estate tax.

Spousal access trust (SAT) to help a married couple get a business out of their estate but then still draw income from that business for the rest of their lives.

Family limited partnership (FLIP) to protect investments such as stocks, bonds and real estate and provide a 35-percent discount one their value for estate-tax purposes. For example, $1 million of assets in a FLIP would be valued at $650,000 for tax purposes, yielding estate-tax savings of about $140,000. 

Irrevocable life insurance trust (ILIT) to support life insurance policies.

Nonvoting/voting stock to allow a business owner to maintain control of the business. 

Retirement Plan Rescue (RPR), our strategy to create tax-free wealth with a 401(k), IRA or other qualified plans. 

Charitable-giving plan that enables clients to donate money to charity without reducing the family’s inheritance. 

The list goes on and on. If you use the right tax strategies and techniques, and the right professionals (typically a lawyer, insurance consultant and CPA), you can develop a plan to beat the IRS. And you you’ll be able to do so the right way: legally.

Remember, the goal of almost every estate plan is to merely reduce estate taxes—an unacceptable goal. Our goal is to transfer all of a client’s wealth, every dime of it, to his or her family.