TU Section1

Section 1 – The System (The Road to Tax Heaven)

3. Lose it to the IRS

Actually, the IRS should always be last. The IRS does not have all or the best choices. You do. You are about to learn what your choices are and how to always make the right choices.

For the first time, The System, which reveals powerful insider’s secrets for eliminating the estate tax, is being made available on the Internet

The System is not new; it has been and is being successfully used by a close-knit Network of professional advisors.

The uphill battle to accumulate and transfer wealth

First, let’s examine how the IRS can and does confiscate more than half of your wealth… legally. Then, let’s see how we can turn the tables on the IRS… legally.

Do you really know the true tax cost of every dollar you earn? Most people don’t. Not even wealthy people.

Let’s start by crunching the numbers. To make it easy, assume you’re in a 40 percent income tax bracket (Federal and State)… a 55 percent estate tax bracket.

A Basic Example:

Suppose you make $1. First 40 cents goes for income tax. You’ve still got 60 cents, which you save… and someday die with it. Now the confiscatory estate tax goes to work: 33 cents to the IRS, 27 cents to your family. The tax collector takes 73 cents (usually more) of every dollar you earn and save. Your family gets 27 cents (usually less). Sad, but true!

Let’s apply this basic example to the two kinds of assets you can own: tax-paid and tax-deferred. Tax-paid assets (like cash, stocks, bonds, real estate, etc. that you own or bought with after-tax dollars) will be clobbered by a 55 percent estate tax when you pass on. Or put another way, each additional $1 million you accumulate in your estate is only worth $450,000 to your family.

Now, what about tax-deferred assets [like the funds you have in a Pension Plan, Profit-sharing Plan, 401 (k), or an IRA]? Better sit down. Ready? Take $1 out of your Plan. Just like the basic example: The final result is still 73 cents (after income and estate taxes) to the IRS. Only 27 cents to your family. Or put another way, each additional $100,000 you take out of your tax-deferred asset account during your life is ultimately worth only $27,000 to your family.

What happens if you die with the funds still in the tax-deferred Plan? Same thing. Only 27 cents (usually much less because of state inheritance taxes) out of every dollar goes to your family.

If your estate exceeds $2 million, you owe it to yourself and your family to read every word of this tutorial. Say you are worth $10 million, chances are you will learn how to save about $4 million. The more you are worth the more you will save. (If you are worth less, but logic tells you that your estate will grow into the $2 million range before you go to meet you maker, keep reading).

This tutorial tells you how The System is being used to finesse the estate tax and create additional tax-free wealth… legally. And easily.

I’ve Got To Get Something Off My Chest Before I Explode

In the book, “Good to Great: Why Some Companies Make the Leap… and Others Don’t,” author Jim Collins writes, “Good is the enemy of great.” He goes on to say, “We don’t have great schools, principally because we have good schools. We don’t have great government, principally because we have good government.” And I love this one: “The vast majority of companies never become great, precisely because the vast majority become quite good – and that is their main problem.”

For over 35 years, I have been giving seminars and writing that traditional estate planning (it’s good) does not get the job done. And I must confess every time I review a traditional estate plan, my professional dander explodes. Thank you Jim Collins for bringing the point home. The answer to stop good estate planning is to shift to great estate planning. When you learn The System, you will join the wonderful group of people who know how to do great estate planning.

Then you can help pass on your new found knowledge. And, I can stop exploding.

A Common Problem

Every successful business owner I have ever met has a common problem. It took you a lifetime to accumulate your wealth. Yet, in a heartbeat you can lose over one-half of it to the IRS. What’s wrong with this picture?

The problem becomes severe when you make the mistake of becoming rich. What’s rich? Here’s my definition: You are rich when you are and will forever remain in the highest income tax bracket and highest estate tax bracket.

How The Estate Tax Robs Your Wealth

Suppose you are rich and burn a $100 bill. You just burned $55 of the government’s money. (Assumes a 55% estate tax bracket).

Of course, you are not going to burn that $100 bill. You are going to keep it. And die with it. Then, you’ll lose $55 to the IRS while your family gets only $45.

The System teaches you how to:

  1. Keep every penny of the $100 in your family,
  2. Make it grow tax-free, yet you
  3. Control it for as long as you live.

Now, let’s expand the simple concept illustrated by the $100 bill example and apply it to your personal wealth.

Yes, You Can Pass All Your Wealth — INTACT AND TAX-FREE — to Your Family

How much are you worth? Better yet, how much do you think you will be worth on the day you go to the big business in the sky? … $4 million… $40 million? … More?

Stop for a moment. Jot down the numbers that apply to you. Now are you ready for the shock? Chances are — unless you learn how to use The System — the IRS will get more of your wealth (the numbers you just wrote down) than your family. Your death will bring a big payday for the IRS.

Why is this true? The short answer is the conventional wisdom. Over the years Blackman Kallick Bartelstein, LLP (the CPA firm where I was a founding partner) has reviewed thousands of estate plans. Most were done according to the client, by the “best advisors in our town” (or county or state). All, were done using the conventional wisdom.

What is the conventional wisdom?…

It is the way estate planning is done in every state in the United States. It tells you that estate planning can reduce your tax burden. We think the conventional wisdom forces you to watch the wrong ball: the estate tax ball. We have a different idea.

Instead of trying to hit the let’s-cut-my-estate-tax ball, let’s try another approach. What if we were to look at your wealth today or what it might be when you die ($5 million, $50 million, whatever) and decide that your goal is to pass that amount of wealth (undiminished by taxes) to your heirs. Nuts to taxes. You’ll pay ‘em if you must, but getting ALL your wealth to your family — intact — is the ball you want to hit.

This goal gives you an entirely new target — a bigger and much easier one — to hit: All my specific assets (wealth) to my family and all taxes, if any, paid in full is your new target.

Old paradigms are hard to kill.

Through the ages, there have been accepted paradigms (conventional current wisdom) that time has proven wrong: for example, man cannot fly or go to the moon. Or what about this oldie from centuries ago: The world is flat. To even question the belief that the world could be anything other than flat would evoke disbelief from others. Today, we all know the true fact… our planet indeed is round.

The tax relief that The System achieves may seem revolutionary… which until you know the true facts may seem just as unbelievable as the first round-world theory. But in our case the results produced by The System go beyond theory. As you will soon discover, you can in all cases — no matter how large your wealth might be — transfer ALL your wealth intact to your family.

And The System always works no matter… How old you are. Married or single. Insurable or uninsurable.

The System you are reading about is totally different than the conventional wisdom. Because what you are reading is new to you, please approach it as new. Try to avoid factoring in what you know or have heard about the conventional wisdom in estate planning. Do not base your assumption on past theories just because those theories were and are still generally accepted.

Read this tutorial as though you know nothing about estate planning. Read with an open mind. I promise you will be rewarded many times beyond your wildest dreams. Not only by legally avoiding the tax collector, but for most of you — of even greater importance — being able to accomplish your financial goals for yourself, your family and your business.

Let me sum up by simply saying the paradigm of estate planning that uses the conventional wisdom is a Model-T Ford.

Something You Should Know

Except in a few necessary instances, this tutorial (like my other tax writings: 21 books, 43 special reports, and over 1,000 articles for my tax column) is not technical.

My writings and seminars serve three major groups:

  1. People who are fortunate enough to have accumulated wealth (the wealthy).
  2. People who dream of becoming wealthy and need a tax road-map to help guide them.
  3. The small army of professionals (accountants, lawyers, insurance consultants, bankers, financial planners, and others) who counsel and advise the wealthy.

I was, and still am, fascinated by an article in the July 5, 1999 issue of “Forbes,” titled “Who’s got the bucks.” The article said, “One percent of U.S. households have a net worth above $2.7 million, amounting to 35% of total net worth [in the United States].”

Simply put, this tutorial is written to that “One percent,” those who want to join the one percent, and those who advise them.

Want to learn what The System can do for you, your family and your business? read more here…