Estate Planning
Estate planning is essentially arranging for an orderly transfer of someone’s estate to the next generation. Tools typically used are wills, trusts, insurance policies and other options, and they can change from one person to the next. While reduction of estate taxes is usually the most important goal, there are other goals involved, the protection of your loved ones being the most important. There should be certain members of the estate planning team to include but are not limited to an attorney, preferably one that specializes in trusts and succession work, an accountant, trust officer and a life insurance agent.
Estate Taxes, Reduction strategies
Estate and inheritance taxes are associated with the transfer of property at death. While estate taxes apply to the estate of the deceased, inheritance taxes apply to the heirs of a deceased’s estate. In 2023, there’s a federal estate tax exemption of $12.92 million dollars, $25.84 million for couples. So if your estate is less than those figures at your death, you shouldn’t owe any federal estate taxes. However, as of January 1, 2026, after the sunset provision has kicked in, the exclusions are projected to be $5- 7 million depending on inflation. There are several reduction strategies available to include life insurance , trusts, annual gifting arrangements, and others.
Business planning
Business planning can mean several different things. It can deal with what type of business entity that is set up, whether a sole proprietor, partnership, S corporation, C corporation, and/or an LLC. There are different rules that govern the operating agreement with these organizations. A business owner can have several different challenges at one time or another, like the implementation of a proper employee benefit plan, what coverages to include, finding a way to attract and retain key employees, and putting a plan in place for the continuation of a business should that business owner be permanently disabled, dies, or retires.
Succession Plans
Business continuation planning needs to be set up in advance so that in case that business owner is no longer able to operate the business due to death, disability, or retirement, then he or his family will receive the proper value of the business and the surviving owner(s) will be able to take over the business with as little friction as possible.
Buy-Sell Agreements
A buy-sell agreement is a legal agreement that defines how a business owner’s share of the business would be purchased by the other owners in case of termination, divorce, death, disability or retirement. While there are other types of agreements, the three main types of buy sell agreements are 1. Cross purchase agreements, usually between two owners of a business 2. Entity purchase agreements, many times when there are more than two owners and 3. Wait and See approach, which is a combination of the first two methods. There are pros and cons of each strategy and each business owner(s) needs to examine what makes best sense to them.
Executive Fringe Benefits/Key Employee Insurance
In many successful businesses, many times there may be one or a few employees that are largely responsible for that business’s success. A business owner can have many sleepless nights worrying about what happens if that employee leaves to work for a competitor or starts his/her own competing business. So a business owner needs to have a way to attract, reward and retain those employees. An employer can establish a plan for those employees and can be offered on a discriminatory basis. An employer may offer to set up a split dollar life insurance plan, a Section 162 employee bonus plan, a salary continuation plan, and/or a non qualified deferred compensation plan among other strategies.
Retirement Planning – Qualified vs. Non-Qualified Plans
Retirement planning can take on two main forms: qualified and non qualified plans. Qualified plans are either defined contribution, where the employee selects the investments, and their retirement amount will depend on the choices they make. With a defined-benefit plan, there is a guaranteed payment benefit and the employer bears the investment risk. Qualified plans are plans like pension plans (although there aren’t as many of those now than there used to be), Simplified Employee Pension Plans, 401k plans, 403 B plans, and others. The contributions are deductible by the employer and the values grow tax deferred until the employee takes distributions from the plan. Depending on the plan and its structure, employees can make tax deductible contributions too. If there’s a Roth feature in the plan, an employee can also make a non deductible after tax contribution. Those dollars are received tax free upon distribution. But in a qualified plan, all eligible employees must be allowed to participate. Non-qualified plans are funded with after tax dollars, and usually employers cannot claim their contributions as a tax deduction. Employees that participate in this plan can also make after tax deductions to the plan if offered the opportunity by the employer. But a non-qualified plan can be discriminatory, meaning the employer can pick whoever he wants to offer the plan to. There are additional aspects to cover with both qualified and non qualified plans, and it takes careful and detailed thought planning in order to implement the right plan for the employer.
Charitable Gift Planning
Planned giving, also referred to as gift planning, is a way to support nonprofit and charitable organizations. This is a strategy where philanthropic and wealthy individuals can make larger gifts than they could from their own income. There are attractive tax benefits for these individuals as well. They can donate appreciated property, like low basis stock or real estate to a charitable trust, receive a charitable deduction for the full market value of the donated property, and pay no capital gains on the transfer. Donor-advised funds are another tool that organizations can use in charitable planning.
Long Term Care Planning
Long term care, or custodial care, offers various support services to meet someone’s health or personal care needs when they’re no longer able to care for themselves over an extended period of time. I don’t know anyone who hasn’t been affected by a parent or relative who needed some type of long term care during their life. Some individuals will try to qualify for Medicaid where the government will provide that care, but your assets and income must be below a very low minimum level. Many people will consider purchasing private long term care insurance in order to protect their assets and to give their children peace of mind should that care become necessary. You generally qualify for care when you cannot perform 2 out of 6 Activities of Daily Living, which are bathing, continence, dressing, eating, toileting and transferring (getting in and out of bed or a chair), or you’re cognitively impaired to the point you need significant assistance performing these duties. Most policy benefits are paid either on a reimbursement basis or an indemnity basis. Most of these policies will pay whether you need care in your own home (which is the majority of most claims), an assisted living facility, or a nursing home. While the average claim can go 2 to 3 years, there are many others where the claim can go significantly longer.
Employee Benefit Consulting
An employee benefits consultant advises a company in areas pertaining to health plans, retirement planning and insurance products that may be installed for that company.
Core Group Insurance Benefits
These are usually pure group insurance plans offered by insurance companies, but more and more companies are offering self insured plans, where benefits can be customized. Typical plan examples are health insurance, short and long term disability, dental insurance, group term life insurance, Paid Time Off, and vision insurance.
Voluntary Employee Benefits
These are purely voluntary benefit coverages offered by the employer but usually paid for by the employee. These plans are payroll deducted from the employee’s wages, mostly on a pre-tax basis. These benefits do not coordinate with group insurance benefits, so it’s possible an employee can be paid from both policies. These voluntary benefits can also be used to pay deductibles and/or co-pays on health insurance Examples of this type of coverage are medical supplements, life insurance, cancer coverage, critical illness, dental and short term disability coverage..
Non-Resident Licenses in these states: Mississippi, Texas, Tennessee, Georgia, Utah
