1. Asset Transfer

In collaboration with leading national law and accounting firms, our team created a financially engineered structure that provided the mechanism to efficiently transfer $50 million worth of private business holdings and low basis real estate. This structure navigated the planning challenges of the business value existing in a QTIP, and the tax challenges of transfer planning for low basis real estate holdings.

2. BUSINESS | SUCCESSION PLANNING: “Equity Access” : Non-Qualified ESOP alternative / Leveraged Buy-Out for Family Business and Closely Held Pass Through Entities

We used a proprietary platform, "Equity Access", to pre-fund the ownership transition of a successful distribution company from the founder to a group of key employees who helped grow the business. We mitigated the inefficiencies of acquiring a business with post tax dollars while reducing the tax impact to the departing shareholder. This included turn-key financing for the new owners without encumbering the business assets. The founder benefited from a favorable tax effect, greater than expected payout, and a high level of security in his exit, while the new owners received better ownership transition financing that had very little cash flow or balance sheet impact on the business. The transition economics and tax savings for both the buyer and seller were far more compelling than an installment sale or similar approach.

3. CREATING SUBSTANTIAL RETIREMENT INCOME & A HEDGE AGAINST FUTURE TAXES

Using a combination of low-cost financing and progressive equity-indexed insurance products, our proprietary LifeX program offers a supplemental, tax-free income stream for younger clients who may have limited windows to generate income, unpredictable future cash flows (eg. athletes, young entrepreneurs, etc.), or those with a long retirement horizon in a rising tax environment WHO ARE concerned with erosion of nearly 50% of their traditional retirement assets to income taxes at distribution. The financial designs in our SIRP use the industry’s most conservative leverage and growth assumptions, assuring that clients can count on the safety-net income stream as well as distributions equal to 2X-3X that of traditional retirement plans for every dollar going in.

4. RESTRUCTURING INSURANCE TO BE AN ATTRACTIVE HIGH IRR ASSET CLASS

Mid 60s couple were owners of a nearly billion dollar business and had acquired a modest portfolio of coverage over the years. They wanted to review their current insurance portfolio to determine how best to terminate it since it seemed irrelevant from the scope of their planning needs. The ongoing administration, annual performance analysis and costs for premiums seemed to be an ongoing nuisance relative to the value. Due to improvements in the government mandated mortality tables used by the insurance companies, a creative design, and by identifying a number of fully guaranteed policies which had a pricing anomaly, we recommended a restructure of the portfolio of policies so as to provide 3X coverage for same outlay. Furthermore, because the IRR was in the double digits at age 90+, the clients felt it prudent to buy $100M+. Their insurance portfolio had less market risk, more guarantees and became more relevant to their planning needs.

5. ECONOMIC ANALYSIS OF MAINTAINING INSURANCE PORTFOLIO FOR HNW ELDER COUPLE

Client had never done a thorough economic and practical analysis of the existing nearly $100M of coverage. Coverage was acquired so that a trust could buy business interest from the estate upon clients’ death. We worked with client, trustee, and attorney to compile hundreds of pages of “in force” documentation from the insurance companies and conduct various life expectancy stress tests. Summarized our findings to a few pages of consumable data for the client so they could make some fact based decisions. The findings revealed that a minority of coverage had minor costs of maintaining and should be retained. The majority of coverage would cost 50%+ premiums vs death benefit through age 95. Asked clients to consider economic analysis of selling the inefficient policies in the secondary market for life insurance, and retain the premium outlay for estate planning. Compared the use of sale proceeds and retained capital by the trust to buy discounted privately held company assets now prior to growth of company value versus waiting for trust to collect life insurance proceeds at an unknown time and hope that the value of the company has not sky rocketed.

6. RESTRUCTURED OUTDATED SPLIT DOLLAR & INEFFICIENT LIFE INSURANCE FOR COMPANY PRINCIPAL

Substantial privately held retail business had an outdated and inadequate split dollar plan that was originally implemented to assist owners to acquire $20M of life insurance to create liquidity for estate taxes on the owner of privately held stock without incurring gift taxes. However, there were plan reporting anomalies due to current split dollar regulations and macroeconomic factors which caused the potential taxes over the ensuing years to be in the millions of dollars. Inefficiency of the existing insurance caused the policies to lapse at age 92 and cause a debt (rather than liquidity) in the estate of over $10M. We worked with corporate executives and the personal estate planning attorney & CPA to restructure to a significantly less expensive solution that performed better and eliminated the gift and other taxes they would have otherwise incurred while creating $25M permanent liquidity. This was a nearly $40M improvement for the family.

7. ESTATE EQUALIZATION

A family patriarch had amassed a $400M fortune in real estate and other diversified assets over a 50 year entrepreneurial career. With some children working in the family business and other children working independently, the patriarch was approaching retirement from his business and had the challenge of equitably dividing his assets amongst all of his children. We recommended a creative estate equalization strategy whereby the business assets would be transferred to those family members that were involved in operating the business, while a portfolio of life insurance was purchased by business controlled entities to create a liquidity pool in order to acquire shares from the non-involved members at a value equitable to all parties. The solution eliminated current tension among family members, laid out a clear financial path for all involved, and prevented the possibility of infighting over the family assets. This facilitated perpetuating the family’s wealth rather than seeing it dissipate in succeeding generations due to either unproductive debt to buy out family members’ intra family litigation – both of which have destroyed family businesses.