STORY TOOLS

• E-mail story
• Comments
• iPod friendly
• Printer friendly

More Business

• Marco Community Bank sues mortgage lenders
• Business Buzz: September 1, 2008
• Women, Wisdom & Wealth: Going for the gold

Share and Enjoy [?]

A dreaded disease is spreading — like wildfire — in the United States. It debilitates most successful business owners… then, ravages some or all of their kids and eventually hurts the grandkids. Known by various names, the most common name is “estate-tax-itus”: It drains family wealth.

Some people don’t even know they have the disease. Most know because they have the painful symptoms, and search in vain for a cure. They attend seminars, read articles, special reports and books. Go from advisor to advisor looking for relief.

The key question is… is there a cure? The answer… a resounding ‘YES’. This article shows you how to start the process to totally cure estate-tax-itus for yourself, your family and your business. Every time. No matter how young or old you are. Whether you are worth $1 million, $10 million (or much more). There are many ways to fight the disease, but the best way is to build an “asset-immune system.” For best results, start today.

Here’s what you do.

Step 1: Prepare a personal financial statement for you and your spouse. Divide your assets into the following five categories.

1. Residence

2. Business

3. Qualified plans (pension, profit-sharing, 401(k), rollover IRA or other qualified plans)

4. All other assets

5. Life insurance

Step 2: Make a list of your objectives. Actually three lists: (1) for you and your spouse; (2) for your family (typically children and grandchildren); and (3) your business.

Step 3: Find an advisor who knows the exact tax strategies to use to accomplish your goals using the specific assets on your financial statement.

Here are some typical core goals we see in practice: For list (1) maintain your lifestyle for as long as you (husband and wife) live and allow you to control your assets for as long as you live; for list (2) transfer your assets to the children and grandchildren intact — free of the estate tax — and educate your grandchildren; for list (3) transfer your business to the business child (or children) tax-free and treat the non business children fairly.

Following are the most common (strategies) we use in our practice to accomplish your goals, based on the assets you own.

-- Your Residence. Use a qualified personal residence trust to remove the residence from your estate, yet live in it for as long as you live.

-- Your Business. Transfer your business to the business children using an Intentionally Defective Trust. And here’s a special bonus: The business is out of your estate, but you keep control for as long as you live.

-- Qualified Plans. The funds in these plans (for example, a 401(k), IRA or profit-sharing plan) are double taxed, robbing your family of about 75 percent of the plan funds (i.e. the tax collector gets $75,000 for every $100,000 you have in the plans… your family receives only $25,000). Use a Retirement Plan Rescue to buy life insurance. Usually triples (or more) the amount you have in the plan and your heirs get it all tax-free. For example, $1 million in the plan (worth only $250,000 to your family) will turn into $3 million or more for your family with a RPR. And the entire $3 million is tax-free.

-- All other assets. Transfer these assets (all your assets, except those in the first three categories; for example, publicly traded stocks, bonds, real estate and other investments) to a Family Limited Partnership (FLIP). You get a huge discount for estate tax purposes: for example, $1 million of assets transferred to your FLIP are only worth $650,000 for estate tax purpose. A huge estate tax saving (in the $180,000 range). And yes, you keep control of all of the assets for life.

-- Insurance. Get all policies out of your corporation. Transfer all policies you or your spouse own to an irrevocable life insurance trust.

Finally, Step 4: If you are about to start your estate planning process, find an advisor who knows how to implement the first three steps. If your plan is already done, and it does not effectively eliminate the estate tax, call us for a second opinion.

---

Irv Blackman is a certified public accountant and lawyer who specializes in estate planning, business succession and asset protection. For professional advice or for how to purchase his books, contact him at Blackman@EstateTaxSecrets.com or call 417-9732. His Web site is www.taxsecretsofthewealthy.com.