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  • Kim Hamilton

New Year’s Resolution – Change Your Message

Posted on January 8, 2013 by thecomplexestate

Coming off of a very busy year and working up to midnight on New Year’s Eve has given us some insight as to what lies ahead.  We assumed that many of our colleagues had a last minute rush from clients to do quick fix year-end planning and perhaps there were many more who did not.  In large part it may have been due to the message planners were sending to their clients as well as the year-long media hype around the expiration of the tax cuts and fiscal cliff saga.  In any event, this insight may help you to choose a different message in 2013.

secret message

secret message (Photo credit: stargardener)

For InKnowVision’s advisors and their clients our message is always to plan for what you can control, leverage or mitigate today.  The crystal ball approach has never worked for us.  There is a level of planning risk from a client’s perspective that they are willing to tolerate and that risk can only be measured and decided on when clients can see the proposed results.  Things like increased current cash flow, income tax planning and asset protection are easily measured and monitored.  Having these in place can help build the bridge to estate, business and charitable planning.

We have found that education is key as are the advisors who serve HNW clients.  Our success has been driven by our message,  “Tell us what you would like to do today and we will do our best to design a plan that meets your goals and expectations. Every year we will measure, monitor and make adjustments, if necessary, to reflect your changing goals and current tax law.”  This message is the difference, in our experience, between success and failure.  Planning is about a client’s goals, not ours or government’s.

This month, take time to reflect on your successes and failures.  Break them down client by client. Be sure to acknowledge why your clients felt success or why they experienced failure and put the reasons on a white board where you and your staff can see them.  You may see a recurring theme evolve right in front of your eyes.

  • What message were you sending?
  • Were you telling them what to do because of the potential expiration of tax laws?
  • Were you asking them if any thing was keeping them awake at night?
  • Were they worried about cash flow or a troubled adult child?
  • Was their business at risk or were they contemplating a sale?

There are many unasked and unanswered questions. This year make it a point to start anew.  Find a message that resonates with your clients and motivates them to do great planning.  Be sure to share that message with your referral sources so they can use it too.  Make it a New Year’s resolution.

Do something unexpected.

View this InKnowVision November 2012 HNW Case Study Webinar from InKnowVision

Wishing you success in 2013,

Kim Hamilton

kim@ikvllc.com

InKnowVision, LLC

Filed under: Advanced Estate Planning, asset protection, high net worth tax planning | Tagged: , , , | Leave a Comment »

Using Marketing Interns to Reach the UHNW

Posted on November 30, 2012 by thecomplexestate

This week’s InKnowVision marketing webinar was directed at successfully finding and serving the fastest growing high net worth market segment,  individuals and families in the $30M to $49M in net worth range.  We delivered some insight, marketing messages and tools to help our advisor community begin the process of reaching this desirable market in 2013.

Chelsea Cagle and Jessy Crawford started as Interns with InKnowVision

Chelsea Cagle and Jessy Crawford started as Interns with InKnowVision

 

 

 

 

 

 

 

One of the suggestions during the 25 minute program was to immediately hire a marketing intern. This post today by KISSmetrics is an excellent read and provides insight on how the right intern can help you scale quality content in reaching this rapidly growing market.

 

We apologize for the small audio problem in the first minute.

Kim Hamilton

InKnowVision

 

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

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 »

A Peace of Mind Coach – Advanced Planning

Posted on October 15, 2012 by thecomplexestate

You can call it coach, professional or whatever you think will appeal to your HNW client or any client.  The truth is that in this day and age it is hard for clients to make difficult decisions without having a peace of mind.  If your client needs a peace of mind, hire someone who will provide it.

I recently posed a question to our audience about what they were doing in this last quarter to educate their client base on the potential tax changes expiring at year-end. I received various replies from different professionals and in almost all of the answers it was noted that they had sent letters outlining broad and generic consequences of ignoring the potential changes.

It would seem to me that unless we know our clients full picture a letter would simply fall into the waste can. Suggesting a client give away half or even a portion of their wealth because of the changes in the tax law is unrealistic. The peace of mind they have currently knowing that they have wealth that they control and want to hold on to it would stand to reason that they could not simply give it away.

Now to the contrary, if peace of mind was gained through educating clients on the benefits and potential risks to their “own” situation then perhaps planning for the transfer of some of their wealth today would make sense.

As Scott Farnsworth of CEO Sunbridge Legacy Advisors recently said to a group of attorneys, “ If you are asking about whether or not the estate tax is going to expire then you are asking the wrong question. We all have a larger wealth that goes beyond money and property. It includes the wisdom we acquired, the insights that have allowed us to make better decisions, as we get older, and our heritage. When you add that in with money and property, then you pass along real wealth.”  As you see Scott’s approach goes beyond the tax planning.

You want may consider removing the exemption conversation from your call to action. Instead take this time to meet with your clients and their advisors, together at the same table, and review their entire picture and include those things that are not on the balance sheet like wisdom and values.  Make sure that you have it drawn out and that they understand it. Once you have uncovered all their current risks and opportunities, they will have a working document to act on. They can then use your wisdom and their own to move forward.

Peace of mind is more than a $5M or $10M exemption. Peace of mind is priceless.

Kim Hamilton

InKnowVision LLC

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

How Annual Reviews Can Keep You Out Of Court- Advance Estate Planning

Posted on October 10, 2012 by thecomplexestate

As luck would have it in a recent court case (Thomas Lane Keller, et al. v. United States, Case No. 10-41311 (5th Cir. Sept. 25, 2012)). coming out of Texas (not ours) the tax payer was victorious even though there were holes in the planning documents.  Victorious was an understatement to the tune of $115,375.59. Now that was some refund! 

I can only imagine the feeling the trustee had when he opened the letter from IRS demanding of $147 million in estate tax, chest tightening and stomach churning. How about the look on the advisory team’s faces when they received the news, pale and stunned?  Did they warn the client and the trustees about a potential audit? Maybe and maybe not.  Were they aware of the possible enormous malpractice claims that could come as result of potential negligence? Who knows.

Not to long ago we left it up to the advisory teams to schedule the annual estate and tax planning review meeting for clients that we created design plans for. That was until we started getting calls from advisors saying that their clients were being audited. It did not take long to realize that the plans we created, which the teams implemented, had no annual oversight.

Two years ago we made a change. We started by telling every new client and their advisory team that there would be a maintenance phase to the plan design and that it would be facilitated annually for a fee. This put us on a path towards much happier clients and very pleased advisory teams.

Clients today need to be prepared for the good, bad and the ugly. They also must know that they have a competent team to support them, one that is diligent about annual meetings, oversight and cares more about their clients than the fee they receive.

Kim Hamilton

InKnowVision LLC

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

Trusts – Who Needs Them?

Posted on October 8, 2012 by thecomplexestate

I love Infographics. They tell a story and drill down to the information that you want to convey in the most simplistic form when done correctly.

Infographic- Millionaire Corner

Last week Millionaire Corner shared their latest Infographic on trusts. This Infographic nicely laid out the who, what, when and why that would demonstrate to a reader some of the benefits of trust planning. It was also apparent that they did their homework on the largest personal trust companies as displayed at the bottom.

As of late, many of our attorney relationships have voiced their concerns that their clients were not taking their advice about preparing for the possible elimination of the current exemptions.  The fear was that clients would wait until the elections were over and then they would get slammed with business that they would have to turn away or that clients would not be planning at all and lose the opportunity.

When asked how they introduced the exemption opportunity to their clients, they overwhelmingly responded that they mailed letters, wrote newsletters and brought it up at annual client meetings, if they had one.  Now if you are a client and receive a letter from an attorney like the one from this firm your eyes would be glazed over in seconds.

Alternatively, you could write or borrow a white paper like this firm did and experience a similar outcome. You could also keep it very simple and hire someone to create an Infographic like the one from Millionaire Corner or simply share this one with your readers.

Clients are more concerned about holding on to what they have today than giving it away. It may be that the wealth threshold for gifting has increased to a much higher net worth or your clients simply do not understand their options. Whatever the reason, make sure your clients understand in the simplest terms possible what it is that you are trying to educate them on. Infographics are a tool that could help.

Kim Hamilton

InKnowVision, LLC

Filed under: Advanced Estate Planning, Estate Planinng, gifting | 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 »

How Much Is Enough?- Advanced Estate Planning

Posted on September 24, 2012 by thecomplexestate

How Much Is Enough?  This vexing “elephant-in-the-room” question faces most families of wealth. “How much ought we to leave the children when we die?” Here is what Bill Gates and Warren Buffet said about leaving money to their heirs.

“One thing is for sure,” said Bill Gates in Forbes Magazine, “I won’t leave a lot of money
to my heirs because I don’t think it would be good for them.” He stated that he would leave each of his children $10 million.

“The perfect amount to leave children,” said Warren Buffet, “is enough so they would feel they could do anything, but not so much that they could do nothing.”

The “How Much?” question is enormously complex and, once opened, reveals other questions inside. Looking closely we see the question voices the parental worry that adult children will not know how to manage their inherited wealth.    But how did Bill Gates and Warren Buffet learn to manage their own wealth in ways that did not distort their character?

The idea that parents must limit their children’s wealth in order to preserve their children’s sanity and industry sounds appealing but, to me, it suggests either that parental values had not been inculcated into the family culture or that the parents don’t believe in their children’s ability to take to heart what they had been taught about life, wealth, and balance.

One anti-dote to the worry about inheritance distorting children later in life is to help children grow to become self-confident emotionally healthy adults, wealth aside.  This growth is not a “pie-in-the-sky” dream.  It is possible.  However it requires family interactions that are attuned to children’s emotional needs, from the crib onward. It’s a worthwhile investment because attitudes of confidence, industry, kindness, and generosity developed during childhood will protect inheritors from getting lost later in their lives.  These qualities and attitudes must be absorbed early in life.  They cannot be inculcated from the grave.

Usually family wealth is a veiled secret, vaguely acknowledged, but rarely discussed openly. In relation to families, I have a bias toward transparency, openness, & continuing familial communication especially because wealth does not remain a secret and end of life is way late in the game to begin such a truly intimate conversation.

I believe that wealth needs to be discussed in matter-of-fact ways in the family and that children should be brought in to the fact of family wealth at the earliest possible time, which, of course, will vary with the child and with the family.  For example, young children could be present at some meetings of family foundations.  When a bit older they even could be given some limited funds, under supervision, to distribute in considered ways.  The tradition of judicious financial management also should begin early.   When children are kept ignorant of the big secret that swirls around them they will be overwhelmed when they learn the truth.  As with most things, acknowledgement rather than avoidance of life’s obvious but sometimes uncomfortable realities is a preventative vaccination.

Of course there are families of wealth that do not function well.  This is not necessarily a function of wealth but of parental misattunement to the children’s needs.  All children rich, poor, and in between need the same thing – attuned parents.  Any time a special circumstance occurs in a child’s life, the child navigates that circumstance best when the circumstance is addressed and managed openly.  This applies to financial specialness as well as to physical specialness, handicaps, and even remarkable personal gifts and talents.

Legal structures and limited inheritance should be matters of last resort.  They are needed when children grow to be emotionally deformed adults.  In these situations too, however, it is essential that the children know of the structures and limitations created by their parents and the reasons for they were created, long before their parents die.  Nothing should come as a surprise at the end.   Sometimes it might be useful to engage these difficult conversations with a trained third-party since parents who could not engage an essential life long conversation with their children certainly will not have the ability to do that when they are looking at their disappointments as they end their lives.

 

Courtesy of Allen Siegel, MD  principal founder of the Nautilos Group in Chicago, IL

Website:  www.nautilosgroup.com   email:  asiegel@nautilos.com

 

Want to learn more about how InKnowVision can help your practice?  Call us today. 630-470-4683.

 

Filed under: Advanced Estate Planning, Estate Planinng, Legacy Planning | Tagged: , , , , , | Leave a Comment »

Thomason High Net Worth Case Study

Posted on September 6, 2012 by thecomplexestate

John is 48 and recently divorced with two young children. He currently spends about $200,000 a year after taxes. John owns and operates a trucking company, which creates significant taxable income each year in excess of $2M. This income is somewhat deceiving because it’s not really free cash to John. Instead, he uses the profits to plow back into his business so that he can purchase and transport more product. In this planning scenario, it is essential that John have the ability to push all of his company profits each month back into the business to build and grow value for future sale.

  • The current value of the business is estimated to be about $10M and is owned inside an LLC.
  • John also has other cash/securities in a separate LLC worth approx. $10M.

John has two big concerns, the first of which being his key employee. His key employee maintains the connection with most of John’s buyers and suppliers and would be essential in preparing the business for future sale.

John’s second concern is his two daughters. He wants them to be provided for now and into the future, but he does not want to leave them a large outright inheritance. His wish is for them to have the opportunities that their significant inheritances will allow, while at the same time not receiving everything in an uncontrolled manner.

Watch the video to see how the case was planned for.

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

To Be or not To Be? – That is the Family Office Question

Posted on September 4, 2012 by thecomplexestate

English: Here is stated that the photograph wa...

Thinking about becoming a family office? Think again.

Often InKnowVision is approached by the management teams of family offices to review a family’s current planning. It could be the planning that the existing family office team put in place or a review for a transitioning new team. Either way the result is always the same, not good.

That is correct. Not good. First, the review reveals holes in the data. There are assets missing from the balance sheet, which are on the annual tax returns. There are outdated planning documents that should have been reviewed and amended annually. There are investments funded to the wrong tax structure. There is wealth leakage due to lack of advanced income tax planning. The list goes on and on.

Yet at the end of the day when we’ve completed our review and delivered our analysis of risks and missed opportunities, we receive a heart felt thanks but no thanks and off they go. Yes we collect a check for our services but the family office team now feels threatened. Instead of asking for help they run for cover.

There is a lot to be learned from the family office arena. Experts are needed in every role of the family office team. The next time you think you may want to start a family office there are several things you may want to consider. Richard Wilson, of the Family Offices Group, has done a great job outlining them in this Family Office Report.

 “I believe that a family office is defined by how they operate and what solution they provide to the family, and not by their asset size.”

Richard Wilson –

Family Offices Group

 

Kim Hamilton

InKnowVision, LLC

Filed under: Family Office | Tagged: , , , , , | Leave a Comment »

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