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  • Kim Hamilton

Construction Companies Manage Risk While Building Wealth

Posted on November 14, 2012 by thecomplexestate

Purchasing insurance continues to be difficult and extremely expensive for construction firms. With the expected boom of construction on the horizon now is the time to plan ahead for risk mitigation and wealth creation. 

Captive insurance has become an excellent risk management and wealth building solution for many construction company owners. A captive insurance company can finance the risk of its owners or participants.  There are over 90% of the fortune 500 companies that use one or more captives to manage risk and increase their bottom line. The expansive growth of captives in the private business market is a key indicator that the use of captives is a good business tool.

Benefits

Captive insurance is designed to save money on insurance premiums over time.  It is appealing to construction companies in that the company maintains control over

  • Costs
  • Services being provided from claims management to reinsurance
  • Choices for shareholder in the captive
  • How much risk and what type of risk the group wants to assume
  • Captive profitability

Today with razor-thin margins companies need captives to remain competitive in the marketplace.

Wealth Building

Aside from risk management the wealth building aspect of captives makes this business-planning tool very appealing.  InKnowVision works with many business owners whose main asset is their business. While the business has a lot of value and is employing many people, there is usually not a lot of disposable money and cash around.

They have come to learn that a successfully managed captive can be a great wealth accumulation strategy in terms of delivering value. Construction companies in down markets often face difficult financial struggles. Some end up going out of business with nothing to start over with. Building wealth outside of the company can help to alleviate this pain point. The use of captives provides an opportunity to grow wealth away from the business while maintaining thoughtful and well-planned risk management.

Favorable Tax Treatment

One of the key drivers in any captive is that the business owner is looking for ways to defer income taxes. Everybody knows by now there’s going to be future increased tax rates and here is where a captive looks even more attractive. Construction companies can save hundreds of thousands of dollars in annual taxes and enjoy the benefits of these compounded savings for years to come.

Increased cash flow will help a company owner decide where and when to spend or reinvest the savings.

Moving More Out Of Your Estate

Business clients also can use ownership choices for the captive to transfer significant amounts of money to children and grandchildren (and in some cases, to key employees). For business clients who have already used their $5 million exemptions, a captive can be a really good way of continuing to move money outside the taxable estate.

Asset Protection

A captive insurance company can also provide asset protection and it is one of the few things you can do that can minimize fraudulent conveyance claims while building wealth outside of your company. If someone gives their assets away and then goes bankrupt, creditors can come after the assets that were given away. However, one of the nice things about captives is that it fits into the exception of the general rule on fraudulent conveyance. The exception is that if someone pays for something and they get fair value for it, then it is not a gift so the creditors in all likelihood are not able to go after those transfers. When a business owner uses a captive, they are buying insurance coverage and are paying a fair value for it so it should be protected in an asset protection case from a fraudulent conveyance type of attack.

InKnowVision has a good understanding of the construction industry having served construction firms in the area of captive insurance planning and overall business planning. Our core focus is helping you, the construction company and its owner, capture increased cash flow, build wealth outside of your company, manage risk and protect what you’ve built. Learn what captive insurance can do for your construction company today.

View our Captive Insurance Channel to learn more.

Scott Hamilton is the CEO of InKnowVision. InKnowVision is a national advanced estate and income tax planning design firm serving high net worth individuals, families and business owners.

InKnowVision delivers superior plan designs to mitigate risk and leverage opportunity while first securing cash flow and lifestyle needs.

InKnowVision does this in collaboration with the client’s team of professional advisors including estate and business attorneys, financial planners, and accounting firms to ensure that the client’s planning goals are met.

Filed under: Advanced Estate Planning, advanced tax planning, asset protection, Business Succession Planning, Business Transition Planning, Captive Insurance | Tagged: , , , , , | Leave a Comment »

Why Business Owners Don’t Plan- A Lesson In Terminology

Posted on October 1, 2012 by thecomplexestate

 

My good friend Rob Slee, author and founder of Midas Nation, writes weekly on topics about business owners. This week’s article got my attention.

Rob is one of the smartest people I know. He is also one of the most direct people I know. He tells it like it is. Unfortunately, planning professionals still haven’t learned a thing or two about their profession’s terminology and he had something to say about it.

“Have you ever spent time with an estate planner, as they paint their sentences with one acronym after another? It sounds something like this: “We feel that you should first form an LP that supports a GRAT. Once this is done, and depending on the CPI, you’ll create a CRAT or a CRUT. All within an IDGT wrapper, of course. As a result of this planning, you’ll need a $4 billion whole life insurance policy to fully protect your assets.”

Just think about how some of your prospects or clients feel. They have been tortured with your flower full terminology for years. They can’t measure what you’ve done for them and they are worn out from meeting with you.

If you can’t understand it then you shouldn’t be implementing it. If you can’t measure it than you’re wasting time and resources. If you are not seeing the results then you’ve over paid for the service.

What’s an advisor to do? Turn the ship around and head in a new direction.

Let’s start anew. Suppose you began a client engagement with the focus on the client and not your services, tactics or strategies. Out of that conversation you found out what really matters to your client and maybe it has nothing to do with your products and services or maybe it does.

You begin by introducing a process that can help this client move in a direction that is focused on solely what “matters” to them.

Next you provide a plan or a road map of how you will help this client protect what matters to them by leveraging opportunities and mitigating risks that could impede the process. They can begin to see the reality of it all. All the while, you mention nothing about your technical aptitude or its metaphors.

You assure them that a competent team of professionals can support this plan and help to maintain it from year to year, measuring its success through efficient implementation.

When Rob stated at the end of his message, “All of this has me thinking that I’ve been planning too much in my businesses. Planning has been expensive, time-consuming, and has yet to guarantee a result.  Alas, the planning-business-owner species is now officially extinct. ”, I felt a pit in my stomach.  I felt sorry for the thousands of professionals who still don’t get it and are missing tremendous opportunity.

During a recent call with an attorney, she stated that when she asked a room full of peers about how many clients have taken their advice and did planning to use their exemptions due to expire this year, they responded with a chuckle and said none. They could not get anyone to plan. She on the other hand was having a banner year.

Our business owner clients and advisors will tell you that the only species that are extinct are the ones that never changed.

Rob, You need  a new set of advisors.

 

Kim Hamilton

InKnowVision, LLC

 

Filed under: Advanced Estate Planning, Business Succession Planning, Business Transition Planning, GRAT | Tagged: , , , , , , | Leave a Comment »

Clarity brings the best result | Selling a Business

Posted on August 29, 2012 by thecomplexestate

by guest blogger -Paul Cronin – partner, STPI

A few months ago, I wrote about a business broker who called me in a panic on a Friday evening, saying his selling client just called off the sale, for no good reason.  The initial thought was that the owner was not emotionally prepared to leave, so he froze things.  (to read Part One of this blog, click here)

The broker asked the owner to take a questionnaire (The OCR) prepared by STPI and speak by phone with Jack Beauregard (author, founder and CEO of STPI).  The owner did so and spoke with Jack.  There followed radio silence for a few weeks.

I thought that the deal may be dead, but I was puzzled, so I asked the broker if anything had happened, and if he could give us some feedback on his use of STPI’s The Owner’s Clarification System©.  I was expecting a simple note, explaining that the owner needed time to do some personal transition planning, and maybe a nice blurb for our site.

We got much better than that.  Here is a quote from the broker:

“I brought an “above asking price” deal to husband and wife team.  In spite of this, they were doing everything possible to kill the deal.  Feeling like there was something deeper, I reached out to Paul at Successful Transition and we ran the husband went thru the OCR.  Interestingly, by going thru the process the husband uncovered that his wife that was not emotionally ready for him to retire.  She was worried about being left all alone as he went golfing.  The program opened the husband’s eyes to what was emotionally blocking his wife.  Armed with the power of this knowledge they mutually came up with a plan for their future lives.  FYI – I just left the sellers office a few hours ago with a signed P&S and hugs from the wife.   The OCR will become a key step to my process from now on” - Douglas Pendleton/ George & Company whose client recently took the OCR.

It gets better.  I met with the owner of the business brokerage, who was not sure that STPI’s system might work there.  Once he heard about the story, he decided to re-think the whole matter, recognizing that without the questionnaire, he would never have uncovered the real objection:  the spouse’s concern.

Our program is one example of how getting the selling business owner to gain clarity in his objectives as well as possible objections from family members, can be make-or-break in selling a business.

To learn more about the Owner’s Clarification System©, you can request download a free brochure and request a demo at this link.

About our Guest Blogger:

Paul Cronin is partner and Director of Business Development at STPI, the Successful Transition Planning Institute of Cambridge, MA.  STPI provides tools and training to advisors so they may help successful business owners, executives and professionals learn how to “Think”, “Live” and “Decide” what to do with their companies and careers, in order to plan for a dynamic, new life.  Paul can be reached at 978-749-9546,

Filed under: Business Succession Planning | Tagged: , , , , | Leave a Comment »

Advanced Estate Planning and ESOPs

Posted on August 16, 2012 by thecomplexestate

 

In the event that you missed our InKnowVision advanced planning monthly technical webinar you can now view it below.

Brian’s great presentation on Employee Stock Ownership Plans covered some very valuable information for business owner clients including:

  •  What is an ESOP
  •  Who is an ideal ESOP candidate
  •  How an ESOP can create a win, win, win for the owners, the families, and the employees of a privately held business
  •  How an ESOP transaction works and when it might create discounts for non-ESOP transfers to family members
  •  When an ESOP can be a valuable strategy as part of a wealth design
  •  The process for implementing an ESOP
  • Fees associated in creating an ESOP

Business Succession Planning with ESOPs

Kim Hamilton

InKnowVision LLC

Join us in October for our InKnowVision Institute or register here:
Eventbrite - The InKnowVision Institute - Advanced Estate Planning Conference

 

Filed under: Advanced Estate Planning, Business Succession Planning, Business Transition Planning | Tagged: , , , , , , , , | Leave a Comment »

Survey Suggests People Are Not Planning For Tax Reasons

Posted on February 27, 2012 by thecomplexestate

During last week’s HNW marketing series, we ran several polls to get a read on the market in comparison to the Wealthcounsel and Trust and Estates Annual Trends Survey.

In the Trends survey, it was noted that 57% percent of the respondents stated that clients were not planning for tax reasons. During our live webinar we polled our audience and it appears the over 67% stated the same. Planning for estate taxes fell to 4th on the list.

This was not surprising given that there are more pressing current issues facing families today such as cash flow, business planning, asset protection and family dynamics.

Given the number of alerts I received on a daily basis from Google in the area of estate planning, I see professionals talking and writing about estate taxes and unfortunately their message is falling on deaf ears. It is important to know your audience. Do you?

Enjoy the recording!

Kim Hamilton

Filed under: Advanced Estate Planning, Business Succession Planning | Tagged: , , , , , | Leave a Comment »

Why Cash Flow Matters

Posted on February 15, 2012 by thecomplexestate

After completing over 900 integrated plans ($10- $100M in net worth) during the past nine years, we can confirm that cash flow and meeting lifestyle needs matter.

There is a gaping hole in integrated planning that exists between the financial and legal world.  You can’t have one without the other.  Clients fear that you will disrupt their cash flow, impede their lifestyle and make them give up control and that’s just the beginning.  These are by far the most common reasons clients do not embrace integrated planning.  If I was approached by an advisor whether it be an attorney, financial advisor or CPA, trying to sell me a strategy or plan and charging a large fee without understanding my lifestyle and cash flow needs first, I would run the other way.  Wouldn’t you?

Advanced estate planning or business transition planning, for example, can’t be done in a vacuum.  Over the years we have seen many plans put in place only to see them fall apart because clients didn’t really know what they had and how it affected their cash flow. Finding out the client’s goal and objectives is the first step. Securing their cash flow and lifestyle needs should be second.

Once you’ve come to terms with knowing their cash flow and having them confirm it with you and the rest of the advising team, then you can move into the planning options that will achieve the greatest results.

Take a lesson from us.  Cash is king. That is why we start at the top of the wheel, where the cash is.

Kim Hamilton

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, Business Transition Planning, Estate Planinng, High Net Worth, high net worth tax planning, Uncategorized | Tagged: , , , , , | Leave a Comment »

5 Ways to Assure Your Clients Plans Are Reviewed Annually

Posted on February 7, 2012 by thecomplexestate
Advanced estate planning can be complex. It can also fall apart when you least expect it. Here are a few tips to help keep clients in tune with their planning.
  1. Tell them.  Clients will pretty much do what you ask so long as they trust you.  If you tell them that their plan will be reviewed at least annually then they will expect it.
  2. It’s Part of My Service.  Make it part of your process and assure clients that this benefit will far out weigh the risk.
  3. Share a Story. Most planning mistakes are made because plans are not updated, implemented or executed.  Sharing a story about anyone of these unfortunate events could help clients see why they should get a periodic review.
  4. Benefit vs. Cost. The value of keeping on top of one’s plan is priceless.  Would any of your clients want an outcome that was different from their stated goals? I know no one who wants to pay more for planning than is necessary. I guess we could say the same about taxes!
  5. Family Matters. Reminding clients why they choose to plan in the first place assures that their cash flow, lifestyle needs and family protection goals will be met and are often subject to change.

During this tax season, the opportunities to talk with clients and their other trusted advisors are numerous. Be sure that CPAs have copies of your clients most updated plan or at least a summary. Include the financial advisor as well. Plan to meet with all team members face to face to be sure that everyone is on the same page and clients are not at risk and they are not missing opportunities.

 

Kim Hamilton

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, Business Transition Planning, Estate Planinng, Legacy Planning | Tagged: , , , | Leave a Comment »

Key to Overcoming Uncertainty

Posted on January 2, 2012 by thecomplexestate

Every year about this time I look forward to the WealthCounsel and Trust and Estates Industry Trends survey. It paints a picture of what is happening across the estate planning landscape.

Some might say InKnowVision only represents the 1% and they are probably right. Although we did not participate in the survey we can share some pretty interesting statics of our own.

100% of our business owner clients, along with help of their advisors, successfully planned their estates and prepared their businesses for the years ahead.

100% of our business owner clients saved at least $200,000 or more in income tax savings.

100% of our business owners instituted an annual maintenance agreement for the up keep of their plans.

Our advisors earned $50,000 or more in additional revenue with several earning over $100,000 per client engagement.

We successfully shifted the conversation away from the political arena and  expiring tax cuts of 2012 to a more certain conversation on what can we do now to increase cash flow, meet lifestyle needs and grow our client’s businesses.

We enjoyed a 100% closing ratio.

We experienced on average 7 new leads a week.

Not to mention that we helped several business owners keep thousands of people employed and gifted more to charity.

So were does all this leave us? Ready to tackle the busiest planning year yet.

Where does it leave you…uncertain?

Good riddance to 2011 and buckle in for busy and profitable 2012. 

Kim Hamilton
Related articles

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, charitable planning | Tagged: , , , , , , | Leave a Comment »

All it takes is a deadline to motivate planning

Posted on December 5, 2011 by thecomplexestate

Whether a loved one is at death’s door or the tax law is about to change, there is an inevitable deadline looming for both.

Last week I received five phone calls, Facebook notifications and emails from friends and extended family that a parent  had passed away during the Thanksgiving holiday. It was a shock to have them happen all at once.  But then again who plans on dying.

In between attending wakes, funerals and sending sympathy cards, Scott and I had a chance to see the movie The Descendants, which by the way I urge every planner to see along with their clients.  It is reflective of the state in which we plan as well as for those who planned for us.  Both death and estate planning have something in common, finality.

The tax law will change at the end of 2012 if not before. And it will have finality.  This is why the current call to action for so many advisors and their clients is to move the planning process forward.  The deadline is fast approaching.

When my dear friend told me about her father’s recent passing she said, “ He stopped at the lawyer’s office to sign his will on the way to the hospital and he left me with the mess.  Thanks Dad.” I could say nothing but only hope that we can encourage clients to be more purposeful than this in their planning, deadline or no deadline.

Kim Hamilton

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, charitable planning, Estate Planinng, High Net Worth, high net worth tax planning, Legacy Planning, philanthropy | Tagged: , , , , , , | Leave a Comment »

Entitlement- Defined by a Parent

Posted on November 30, 2011 by thecomplexestate

Here is the definition by Merriam-Webster’s;

1. A : the state or condition of being entitled : right

B : a right to benefits specified especially by law or contract

2. : a government program providing benefits to members of a specified group; also : funds supporting or distributed by such a program

3: belief that one is deserving of or entitled to certain privileges

Here is the definition provided by a client shared by one of our advisors,

“Whatever I made during my lifetime, my children told me that they are entitled to it when I die.”

And that’s the truth.

Sad to say but we have created a sense of entitlement for our heirs and we have not heard the last of it.  Advanced estate planning and business succession planning bring out the best and the worst in families.  Divisions amongst family members can come at a time when planning needs are at their greatest. Overcoming this obstacle is a grand feat for anyone but there is hope.

Helping clients recognize early on that they can do something productive to ward off the entitlement issue can enhance and strengthen the client advisor relationship.  It can also give clients a peace of mind knowing that there is a process that can help them navigate through difficult conversations.

A word of warning; the entitlement generation is not limited to the “Y”s.  The economy has expanded it to the early age boomers and “X”ers as well.

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, Business Transition Planning, Estate Planinng, High Net Worth | Tagged: , , , , , , | Leave a Comment »

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