Page 34 - MetalForming June 2010

Irv Blackman, CPA and lawyer, is a retired founding partner of Blackman Kallick Bartelstein, LLP and chairman emeritus of the New Century Bank (both in Chicago). Want to consult? Need a second opinion? Contact Irv:
Blackman, Kallick, Bartelstein 10 S. Riverside Plaza, Ste. 900 Chicago, IL 60606
phone: 847/674-5295
e-mail:
Blackman@EstateTaxSecrets.com www.taxsecretsofthewealthy.com
Over the years I have asked the above question hundreds of times, when giving one of my many tax-saving seminars, or over the phone when a reader of this column calls me. The response is almost always the same: an enthusiastic “Yes,” followed by some- thing like, “Irv, how do you do that?”
The answer is with a system, to be exact, with a comprehensive system. Let’s start by getting an overview of the system. Forty years ago the system was designed to reduce estate tax. But over the years it has evolved to focus on keeping all of a client’s wealth. Because the system does keep all of your wealth in your family, it automatically elimi- nates the impact of the estate tax.
For example, if you are worth $6 million, the entire $6 million goes to your family—all taxes paid in full; if $66 million (it can be more or less), the entire $66 million to your family. Jot down the amount you think you might be worth when you die. That’s the amount the IRS wants to get at. The system will guide you step-by-step to keep every dollar of your wealth in your family.
But a properly designed estate plan must do more. It must be comprehen- sive, which required us to develop a comprehensive system. Just what does “comprehensive” mean in this context? Well, experience has taught us that the typical client wants not only an estate plan (really a death plan), but also a life- time plan that accomplishes at a mini- mum the following:
1) Control his wealth, particularly his business, for as long as he lives.
2) Have strategies in place that help him save income, payroll, capital gains and gift taxes.
3) Find the best way to transfer his
business to the business children (it can actually be done tax-free).
4) Treat the nonbusiness children fairly.
5) Make sure he and his wife can maintain their lifestyle for as long as they live.
Note: Generally does not apply to the mega-wealthy—worth about $25 mil- lion or more.
6) Keep the stock of the family busi- ness in the family if one or more of the business children (who owns stock) gets divorced.
A comprehensive plan created using the system handles not only the six “wants” listed above, but almost any tax or economic want of the business owner for himself, his business or his family. The technical aspects of the sys- tem are changed or modified as required to deal with changes in the law, eco- nomic conditions and other factors over the course of the client’s lifetime.
Now, let’s follow how the system was implemented by a real-life reader (Joe). The system is organized into eight spe- cific steps, described as follows (using Joe as an example):
Step 1—Joe (married with three kids, two in his business) sent me, as I requested, an information package con- sisting of: a) two financial statements— personal and the last year-end for his business; b) a family tree (name and birthday for all of his potential heirs) and c) a list of the documents com- prising his current estate plan (will get the actual documents later).
Step 2—After a thorough review of the package, Joe and I had a short phone conversation to answer my questions and make sure I understood Joe’s goals —short- and long-term—for him, his family and his business.
32 METALFORMING / JUNE 2010
www.metalformingmagazine.com
BLACKMAN ON TAXES IRVING BLACKMAN
Would You Invest Four Hours to Stop the IRS from Taking One-Half of Your Wealth?