Asset Control – Including Your Business
If you are typical, you spend a lifetime accumulating your wealth. If should belong to you and your family. Right?
But it doesn’t. Like it or not, you have a partner—the IRS.
The real horror story is that your family may have to sell off assets, which you would like to keep in the family, to pay estate taxes.
But it doesn’t have to be that way. You can have the power to painlessly neutralize the estate tax.
Unquestionably, when you are wealthy, saving estate taxes—or better yet, eliminating them—is a worthy target. Yet, unless you decide to give all or a portion of your wealth to charity, eliminating the estate tax is a target that few people know how to hit.
Let’s define “wealthy:” you are irrevocably in the highest income and estate tax brackets.
Think about it. With the top estate tax bracket at 40 percent, each additional $1 million of wealth you accumulate, moves the no-estate-tax target $400,000 further away.
What is our focus? Wealth. Your Wealth. Whether you are worth $15 million. $50 million. $500 million. Or much more.
Remember, the estate tax is a death tax. Because of this, the best way to pinpoint our focus is to “guesstimate” the amount of your wealth on the day you get hit by the final bus. Why? That wealth number—though still unknown—will be the number on which your estate tax liability will be determined (i.e., what your family will have to pay).
Challenging isn’t it? You must plan to hit a target that can’t be seen nor even exists.
The three basic truths
For years this website has been preaching three basic truths:
- You can pass all your wealth (every dime of it) to your family intact, with all taxes paid in full.
- You can control your assets—including your business—for as long as you live.
- You can use a tax-free environment to create wealth, so you can increase the amount of wealth your family (typically your children and grandchildren) gets after you are gone, instead of losing any of your increased wealth to the IRS. A properly designed Wealth Transfer Plan takes advantage of all three of the basic truths.
Stop for a moment and write down two numbers.
First, the amount of your wealth today. Don’t worry about being precise; the number will change anyway.
Second, take a stab at what the number might be on the day you will go to the big business in the sky. That’s the number on which your estate tax will be determined.
Without a proper plan about 60 percent of your wealth will go to your family. The balance will be lost to the IRS.
Using the proprietary System I’ve created, your family will get every dollar of your final wealth. ALL of it. Legally.
Let’s be specific. If you are worth:
- $7 million – $7 million to your family.
- $77 million – $77 million to your family.
- $777 million – $777 million to your family.
Note: the first $5.34 million (starting January 1, 2014) is tax free or $10.68 million if you are married.
Go ahead. Fill in your number. I know it’s a guess. But as you will see, you can deliver ALL your wealth to your family.
Yes, including your business, real estate, other investments, and all other asset—whatever they might be. And whether you are young or old. Single or married. Insurable or not.
How do we do it?
Maybe a better question is how can there be such a big different between a traditional estate plan—what you probably have now—and the plan you can create with my System? In one case the IRS gets near 40%. Using the System your family keeps ALL the wealth.
Following is an overview of how the System keeps your wealth in the family.
- Freeze estate. We freeze the value of your assets for estate tax purposes. (You always have absolute control of your assets—including your business—for as long as you live.)
- Reduce the value of specific assets for tax purposes. (a) A QPRT (qualified personal residence trust) for your residence; (b) a GRAT (grantor retainer annuity trust) or IDT (intentionally defective trust) for your business; (c) a FLIP (family limited partnership) for other assets—typically real estate, publicly held stock, bonds, and other investments; and (d) proper valuation of your family business (using discounts allowed by the tax law).
- Get into a tax-free environment. There are two basic tax-free environments: life insurance (earnings on the cash surrender value of life insurance are tax-free) and charity (a charitable lead trust or a charitable remainder trust). Get into one or both of these environments as quickly as possible. Then, you can ride the tax-free gravy train for as long as you live. And often, your family will continue the ride even after you pass on.
- Create wealth using the government’s money. For example, burn a $100 bill. It’s gone—out of your estate. In the 40 percent estate tax bracket, you burned $40 of the IRS’s money and $60 of your money. The idea is to buy life insurance (if done right, the IRS pays 40 percent of the premium) and keep the proceeds out of your estate (the policy should be owned by an irrevocable life insurance trust, a family limited partnership, or an intentionally defective trust). If you have money in a qualified plan—401(k), IRA, pension, or profit-sharing plan—use a strategy (retirement plan rescue) where the IRS pays about 64 percent of the premium. Or a new strategy (premium financing) allows you to buy large amounts of insurance (usually, $5 million to $50 million, but could be more) without paying cash premiums.
- Take the final test. Ask this question: Will my family wind up with ALL my wealth? All taxes paid in full? If the answer is not an unequivocal “YES,” your estate planning is not done right.
If you flunked the “final test” (5. above), click here to contact me now for a second opinion on your estate plan or to get one created for you.
Want to learn more?
I’ve written a special report titled, “Insider Secrets of How to Win the Estate Tax/Business Succession Game… Every Time” to supplement what you have learned in this summary. The report continues your education.
President ILB Enterprises, Inc.