There is More to Winning the Tax Game than Legally Beating Up the IRS

Recently, I read an article titled, “What Makes for Success?” by Kemmons Wilson, the founder of Holiday Inn. He said, “It is great to attain wealth, but money is really just one —and hardly the best —to keep score.” 

Interesting quote, huh? Most readers call me with tax problems because they have attained wealth and they don’t want to share that wealth with the IRS. Perfectly normal. Yet, it’s amazing. Once the reader realizes that we can show him how to pass his wealth to his family (really eliminate the estate tax), the conversation turns to other s that he might keep score. Sure, he is delighted to find there are legal s to win the estate tax game, but he readily admits that he does not know how to deal with other problems (really other s to keep score).

The other problems fall into the general category of: little kids, little problems; big kids, big problems. Stuff like, which of my kids should run the business? How do I treat the kids fairly? What about the nonbusiness kids? What happens if one (or more) of my kids get divorced? How do I take care of my wife? Callers tell me about family problems, business problems and/or assorted personal problems. To me every word is important, even though I’ve listened to so many tales of woe and, although similar, each problem, as explained by each client, has its own peculiar twists and turns.

Let’s face it, stuff happens. After years of solving wealth-transfer, business-succession (usually the business is at center stage) and estate-planning problems, experience has taught me that solving only the money problems will never yield a perfect (economic and tax) plan.

The human stuff—your spouse and kids support your plan—must be solved too. What about your son-in-law or daughter-in-law? I know it sounds like cornball, but if you really want to win the game of life after you have won the money game (often the easy part), you must attempt to solve the human part—the emotional stuff.

Here’s my suggestion to start the process. Make two lists: the money-problem list/the human-problem list. Solve the money-problem list first. Usually you are home free if you solve these three money problems: 1) maintain your lifestyle for as long as you live; 2) transfer your business to the business kids tax-free; and 3) kill the estate tax.

An important note: Unless the client tells us otherwise, we als assume you want to control all of your assets, especially your business, for as long as you live.

Once the money-problem list is complete, then it’s easier to tackle the human-problem list. Interesting, many times solving the money problems solves some (often all) of the human problems.