Preserve family harmony after you are gone
Beneficiaries almost inevitably fight over inherited assets when the founder is no longer there to intervene. You can avoid this outcome with a written estate plan and life insurance, because:
- Estate planning instructions will dictate “who gets what and when” to eliminate any confusion as to your intent and to discourage protracted disagreements.
- Life insurance leverages the premium dollars paid into an income tax-free cash death benefit that your beneficiaries can use to equalize their inheritances, especially if your estate is illiquid (real estate, family business, etc.).
Treating children fairly while preserving the family business.
Situation: A couple in Chicago was concerned about how to treat their two children fairly while perpetuating their illiquid commercial real estate business after their passing.
RECOMMENDATIONS AND RESULTS
The business had grown over the years to 35 employees, including their son who had worked there for 20 years and was serving as CFO. They also have a daughter who has three kids and is married to a dentist in Maryland.
The client wanted to treat each child equally, but they were concerned about what would happen to the real estate portfolio if it had to be split, and about the potential of it creating disagreements among their two children.
Their estate planning attorney brought in Grant, Hinkle & Jacobs to design a life insurance policy that would provide the immediate cash needed to equalize the heirs’ inheritances without having to sell or encumber the real estate.
It also fit hand-in-glove with the company’s established legal framework and could also be used to help mitigate potential estate tax liability.
The client is thrilled that they will be able to preserve their commercial real estate portfolio for the next generation and use the life insurance to avoid creating a financial situation that could lead to the deterioration of relations between their kids when they are no longer there to intervene.
Minimize taxation of your assets
Death and taxes are two certainties of life. An estate plan that incorporates life insurance can help minimize or eliminate the impact of taxes, increase asset protection, and preserve more of your wealth for your family and charity.
Minimizing taxes on retirement accounts.
Situation: A retired physician in the top tax bracket was concerned about looming income and estate taxes due on her substantial retirement account.
RECOMMENDATIONS AND RESULTS
Her retirement account assets had grown to be quite large over many years of practicing medicine, in addition to other wealth she has accumulated. She was concerned about the taxation of her retirement accounts when they are eventually passed down to her three children and eight grandchildren. Because her IRA would be subject to both income and estate tax at her passing, she was understandably worried that she would be leaving more to the IRS than she would be leaving to her children and grandchildren.
First, our firm worked with her attorney to establish an irrevocable trust for her heirs. She is now funding the trust over time with distributions from her retirement account that she does not require to support her current needs. Funding the trust is accomplished without triggering a gift tax by using a combination of her annual gift exclusions and, in certain years, a portion of her lifetime exclusion.
Next, in anticipation of the taxes due, the trustee of the trust used those gifts to fund a life insurance policy designed by Cory. The policy leverages the premiums into a multi-million dollar death benefit that will be paid completely void of income, capital gains, and estate taxes, no matter when it occurs. The beneficiaries can use these funds to pay income and estate taxes due on the inherited retirement accounts so they can continue to keep them intact for as long as possible.
The trust was drafted so that any assets remaining in the trust after her passing will be protected from creditors, divorcing spouses, and future estate taxes for her children and grandchildren.
The client is now focused on spending more quality time with her grandchildren and living a long, healthy life, rather than worrying about her estate, taxes, and asset protection.
Protect your family by creating liquidity
An unexpected death can financially devastate an entire family, especially if it occurs to the primary breadwinner. Who will pay the mortgage, take care of the medical bills, or send the kids to college? Life insurance provides an income tax-free cash death benefit to your surviving spouse, children, and other named beneficiaries so they can fund these important needs if you are no longer there to provide for them.
Protecting the family while the practice is still growing.
The husband of an accountant who is starting her own practice was concerned that he and their two kids would be financially devastated should something happen to his wife.
RECOMMENDATIONS AND RESULTS
A 42-year old accountant opened an independent practice and was building her book of clients. Income was limited until her practice gained momentum, which put the family in potential financial danger. Her husband was concerned that, if something unexpected happened to her, the business had almost no current value and he was not qualified to take over operations. That would leave him and their two children at substantial financial risk.
Cory’s recommendations included a permanent life insurance policy on her life. The death benefit protects her husband and children, no matter when her death occurs. The cash value will grow and can be used to provide tax-favored income in the future, if needed. Plus, the policy included a long-term care benefit to assist with her potential healthcare needs.
Now that they are protected, the entire family feels much more confident and supportive of the client taking on the risk of starting her own practice.
Special expertise working with:
Families with existing life insurance
Owners of large retirement accounts
Family business owners
Individuals with special needs
“I have worked with Cory Grant for close to 20 years and he has helped my family with a number of estate and wealth transfer planning strategies. The estate transfer techniques, even with two of our children getting divorced in the process, has worked and now the life insurance we invested in for estate liquidity can be used for family investments. As a physician, it’s great to see the blend of competence and bedside manner in an advisor.-Dr. Richard Chistlieb, Sarasota, FL
“I met Cory Grant back in 1998 when my parents were beginning a transition of the family business and associated real estate. He first reviewed our life insurance coverage and found less expensive, more suitable coverage with a high quality carrier and then worked with us to design an overall succession and expansion plan. His firm now works with three generations of our family.”Don McDougal, Owner, Grand Tradition Resort, Fallbrook, CA