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This column is almost eight years old. Reader response has always been good. But recently, we received an avalanche of faxes and phone calls when the subject matter involved how to rescue (and then multiply) dollars trapped in your qualified plans: like a pension, profit-sharing, 401(k) or IRA.

Okay, we can take a hint. So here’s more information and a variation on the same theme.

Once again, let’s set the scene by crunching the numbers. You are in the highest tax brackets: 40 percent (state and federal) for income tax and 55 percent (using 2011 tax rates) for estate tax. So, for example, you take a $1 out of your plan. First, 40 cents goes for income tax (your lucky Florida residents don’t pay any state income tax, so your income tax rate is only 35 percent). You’ve still got 60 cents, which you save and someday die with it. Now the estate tax robs another 55 percent; 33 cents to the IRS, 27 cents to your family. Yep! The tax collector gets 73 cents (usually more) of every dollar in your qualified plan. Your family gets 27 cents (usually less). In real money, a $1 million IRA or profit-sharing plan account balance will net your family in the paltry $270,000 range. Unbelievable!

Can this tax tragedy be changed in real life?

Yes. Here’s a real-life story you’ll relish. One reader of this column, let’s call him Joe, sent us a rather large pile of papers that made up his estate plan. Here’s a summary of Joe’s assets (all numbers rounded):

• Success Co. (family business started by Joe): $5,500,000

• Residence: $400,000

• Profit-sharing plan: $800,000

• Real estate leased to Success Co.: $1,200,000

• Other assets (mostly investments):$ 2,100,000

• Total: $10,000,000

The planner who put together Joe’s estate package had given him some schedules that showed the original estate tax burden — after Joe and his wife Marry passed on — was reduced from about $4.9 million to about $4 million according to his plan. Put another way, their children would only net $6 million after taxes. Joe wanted a second opinion from our Wealth-Transfer Network ( a network of tax professionals — lawyers, tax planners, insurance consultants and others — who work together to help people like Joe).

Actually we were lucky. Joe and Mary have the type of assets that lend themselves to four specific tax-saving strategies and one strategy that builds wealth.

Here are the first four tax-saving strategies we used:

(1) An intentionally defective trust to transfer Joe’s business to his business kids;

(2) A qualified personal residence trust to transfer their home to the non-business kids;

(3) A family limited partnership to hold the real estate and other assets;

(4) A gift-giving program to the children and grandchildren. Even though all of these assets were transferred to various trusts and a partnership, Joe will retain absolute control of each asset for as long as he lives.

Here comes the wealth-building strategy: A Retirement Plan Rescue (RPR), using only the funds in Joe’s profit sharing plan, was used to purchase $4 million of life insurance (second-to-die) on Joe and Mary. This $4 million will go to the kids, free of income and estate taxes, and help treat the business and non-business kids fairly (to Joe and Mary this meant equally). The profit-sharing plan had only $800,000 in it at the time the RPR was started and was earning only about seven percent per year. To help the profit-sharing plan boost its earnings, a portion of the plan funds were invested in life settlements (LS). A public company that sells on the NASDAQ started a program so the little guy can invest in LS, that historically have earned an average of 15.83 percent per year (without market risk).

Once the new second opinion plan is fully implemented, it’s estimated that the kids will get over $12 million (twice the amount of the original plan) in wealth, plus appreciation, (all taxes paid) after Joe and Mary are gone.

Do you have assets similar to Joe’s? Do you want to learn more about the strategies that helped Joe and Mary? Send me a fax to 847-674-5299. Include your name, address, all phone numbers (business, home and cell), your area of interest, tax problem or concern. If you own all or part of a business, please send fax on your business letterhead.

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Irv Blackman is a certified public accountant who lives part-time on Marco Island and specializes in estate planning, business succession and asset protection. E-mail him at wealthy@blackmankallick.com or call 417-9732. His Web site is http://www.taxsecretsofthewealthy.com.