Page 45 - MetalForming July/August 2009

Part of every estate plan we do is to have an insurance expert analyze all existing life insurance policies on you, your spouse and fellow business owners (stockholders or partners). Let’s start with the three critical issues concerning life insurance:
1) Premium cost
2) Death benefit
3) Tax (usually the estate tax) due at
death on the benefit.
Over the 45-plus years that I have
dedicated my practice to estate plan- ning, we (an insurance expert, myself and, when necessary, a lawyer with insurance expertise) have looked at more than 1000 insurance portfolios. Only four times did we find everything perfect. Otherwise, (except when the insured was no longer insurable because of health issues), we were able to mod- ify the insurance plans and reduce pre- miums (on average about $30,000 per year) or increase the death benefit (from $500,000 to as high as $11 million) without additional premium costs.
1) Fact: A cash-surrender value over $200,000 on a policy that is nine years old or older can be single life or second- to-die.
Result: Significantly more death ben- efit for same premium cost, or signifi- cantly reduced premium cost for same death benefit.
2) Fact: You (the owner) are 55 years old (or older), worth $5 million (or more), and have insurance on your life only.
Result: You are wasting premium dollars...second-to-die coverage with your spouse will typically give you the same death benefit for about 35 percent less premium cost.
3) Fact: You have $400,000 (or more) in a qualified plan (probably a 401(k) or IRA), which is subject to a double tax (income and estate) of up to 73 percent to the IRS.
Result: On average, you can turn every $270,000 of after-tax dollars into $3 million to $5 million (tax-free),
depending on your age and health— works for second-to-die or single life.
4) Fact: You are worth $10 million to $40 million (or more).
Result: You can buy $10 to $40 mil- lion of single life or second-to-die cov- erage with no out-of-pocket premium cost.
A simple fact: More than 99 percent of the time a second opinion of your insurance situation, followed by prop- er planning, will save you significant premium dollars, increase the death benefit and/or make the insurance pro- ceeds tax free. Be smart and get a second opinion.
Your Business and Business Kids (Essentially Business Succession)
Here are the goals the typical busi- ness owner with kids in the business gives me:
1) Transfer the business to my kid(s) so my kid(s) and I don’t get killed by taxes. 2) Show me how to treat my non-
business kids fairly.
3) Make sure I stay in control of my
business for as long as I live.
4) Make sure the company stock
stays in the family (never goes to a kid’s ex-spouse).
Estate Plan
A proper estate plan is actually two plans: a lifetime plan and a death plan. The plans are designed to cover every significant tax-saving possibility (many more than 227 ways) from the minute the lifetime plan is created until you die (covered by the death plan) and even after you’re gone.
Want to learn more? Browse
www.taxsecretsofthewealthy.com. Or in a hurry, call Irv at 847/674-5295. MF
www.metalformingmagazine.com
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