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To make the right decision, you need to have all the facts. In this section, we provide some tools and other supplemental information to help individuals better understand their needs and options.
Give your clients an in-depth perspective on the differences between these two products in this printable PDF comparison. Click here to download.
Click here to download this at-a-glance reference to give clients for helping them understand their options and your recommendations.
Help clients determine whether or not they have sufficient coverage. Click here to access our coverage calculator.
IRS Publication 537: Overview of installment sales
Form 6252: IRS Filing for installment sale transactions
IRS Publication 544: Overview of sales and other disposition of assets
Form 8824: IRS Filing for 1031 Exchanges
You may also get more tax forms and information at www.irs.gov
In addition, below is some brief informationare on several solutions pertaining to common needs that individuals and business owners have. Please click on the topics to read more.
Charitable Remainder Trust
Wealth Replacement Trust
Irrevocable Life Insurance Trust
Grantor Trusts
Retirement Programs
Bussiness Continuation Planning
A Charitable Remainder Trust (CRT) can be used as an excellent tax management tool for the right individual and situation. It enables individuals to make a significant deferred gift to a charitable organization and retain the right to payments from the trust, providing a current cash flow back to the individual (grantor).
Once the CRT is established the grantor gives the property to the trust resulting in a charitable deduction that helps to reduce taxes. Plus, there is the altruistic motive of leaving a substantial gift to a favorite charity.
A Wealth Replacement Trust is usually used in conjunction with a CRT to replace or preserve the full value of the estate for ones heirs. Essentially, it fills the gap that will exist from the amount gifted to the charity. This can be funded in part with a portion of the cash flow from the CRT. A life insurance policy is the vehicle of choice to ensure the replacement trust is completely funded upon the grantor's eventual death.
An Irrevocable Life Insurance Trust (ILIT) is a great solution and a necessity for many estate plans. The life insurance is used to cover the estimated estate taxes and costs, or essentially replace wealth, as it is an instant asset upon death that also receives a step up in basis, exempting the proceeds from income tax. However, life insurance proceeds, like any asset, can still be included in the taxable estate which is why the irrevocable trust is created and used to transfer/keep the asset (life insurance) out of the owner's estate, relieving it from any tax.
Grantor Trusts are used to leverage gifts between generations. Similar to the CRT, the grantor will receive fixed income payments for life or for a specified period of time.
GRAT: Grantor retains right to receive fixed payments
GRUT: Grantor retains right to receive a fixed percentage of the trust's assets
The goal of these trusts is to pass property on a more favorable basis, effectively reducing an individual's estate, and thus lowering the ultimate estate tax liability. This is not designed to avoid estate taxes, but rather to better manage the outcome.
Information contained herein is not intended to be used to avoid taxes. It is important to consult a qualified estate planning attorney and tax advisor.
There are several types of retirement programs available for businesses that can benefit both the employees and the business owner.
For business owners in particular, there is a growing need to find retirement solutions that allow for increased contribution limits in order to maximize future benefits and effectively supplement an approaching retirement.
By working with one of our representatives, you can implement a solution for your specific retirement need.
This is a special financing program that provides a means to fund a supplemental retirement plan for the business owner or key employees by leveraging a business’s accounts receivable without factoring, operational interference or any personal guarantees.
The economic benefit is the result of an interest arbitrage between simple interest only finance payments and compound tax deferred interest earning. Plus, there are no contribution limits.
Anyone whose business produces accounts receivable can benefit from this program.
Click on the following for more information:
There are programs that facilitate the disposition of a business interest or ownership transfer in the event of disability, death or retirement. In other words, these programs are designed to ensure that the business continues according to the owner's wishes, including appropriate compensation to specific heirs and beneficiaries.
These types of plans are commonly referred to as Buy/Sell Agreements. However, there is not a "one size fits all" plan that's available. There are several ways to configure these plans depending on the type of business entity and particular ownership interest.
Some examples are:
- Cross Purchase Agreement: The contract consists of each Owner agreeing to buy and sell their respective ownership interest. Each owner purchases an insurance policy on the other.
- Entity Purchase Agreement: The business holds the contract and purchases life insurance on the owner(s) and is named the beneficiary.
- Trusted Cross Purchase Agreement: A third party is used to execute the agreement. Typically, an escrow agent will act as the entity that purchases insurance on each owner/stockholder. Note: This agreement works very well with multiple owners, as it reduces the number of insurance policies required to fund the agreement.
- Key Person Buy-Out: Current Owner(s) agree to sell interest(s) to a key person.
These are just some common agreements used; other plans may be more suitable depending on the situation. We can assist in designing a plan, but it is also very important to consult your own legal and tax counsel for advice.
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Join the conversation as we discuss creative disposition strategies and related tax and estate planning solutions.
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Asset Preserver® - A Single Premium Long-Term Care & Life Insurance Combination
This is one product designed to help protect your assets from the costs of long-term care, and provide a cash legacy to your beneficiaries. Contact us for details.
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