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 »

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 »

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 »

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 »

What The Current Tax Laws Means For Advisors

Posted on July 3, 2012 by thecomplexestate

Never before has collaboration become so important in meeting the needs of high net worth clients. Faced with so much uncertainty, the most important role of the advising team is to focus on what they can help the client control today.

In the recent survey by US Trust on Wealth and Worth, it was noted that more than one-quarter of the surveyed Baby Boomers are motivated to leave an inheritance as a tax strategy. This is a very low percentage however it is not surprising.

US Trust 2012 Survey

Many professionals who are leading with the tax strategy approach will find that this  approach will not work for the majority of high net worth people. Alternatively, the InKnowVision process focuses on four key elements which helps clients gain clarity in the advanced planning process.

Focus on Today

How can I protect/increase my cash flow to maintain my lifestyle needs and create a peace of mind?

How can I reduce income tax liability to compound future growth?

How can I protect what I own against lawsuits, creditors and predators?

If I become disabled what planning choices to do have?

Once high net worth clients have a peace of mind then their motivation for inheritance increases. Many from the survey stated that they wanted to leave money to protect family wealth, influence children after they are gone, carry on a family tradition, and some said they that it was a moral obligation. These reasons are more emotional than tactical. Advisors will need to their approach to a high net worth client’s planning conversation.

In October, InKnowVision will be hosting its national conference to teach planning advisors how to achieve success in the high net worth space. I hope you will join us.  You will find the agenda and registration here.

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

Art Triggers an Advanced Estate Planning Issue

Posted on May 8, 2012 by thecomplexestate

A composite of studies of trust and estate attorneys, trust officers, and financial planners revealed that:

  • Fewer than 10% of plans for their clients addressed art, antiques, and collectibles
  • Fewer than 10% used art assets in intergenerational planning
  • Fewer than 15% used art assets in philanthropic planning
  • Fewer than 5% realize that the true cost of selling a million dollar painting at auction is approximately 35%
  • Fewer than 1% used the services of an art succession planning specialist

So what’s the problem?  The problem is that collectors and their families can lose, at minimum, as much as 75% in the value of the collection if upon death items are sold through traditional means.

And the collections of which we write are not all Rembrandts, Monets, and Picassos.  The collection could consist of antique firearms, Western American art, African ritual masks, textiles, folk art, stamps and coins, classic cars or just about anything else!

In 2009 art was estimated to be a $40 Billion industry1..  There are approximately 17,500 museums, 25,000 galleries, 25,000 historical societies, and 50,000 art shows in the United States alone.  Business Week reported that approximately 1/3 of families with a net worth in excess of $10 million are art collectors.  And those personal collections, valued at $4 – $6 Trillion nationally, will be transferred to others over the next two generations.  Recent trends show the dramatic increase to much higher possibilities.3 Those numbers are stunning, but what’s even more surprising is that the great majority of these collectors haven’t given a thought to that succession process.

If you are not planning for your client’s most prized possessions or favorite hobbies, their beneficiaries may be the ones screaming all the way to the IRS.

Enjoy our white paper.

Kim Hamilton

 

What Every Serious Collector Needs To Know (White Paper)

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

The “Art” of Planning

Posted on March 5, 2012 by thecomplexestate

More often than not, advanced estate planning for the ultra high net worth contains assets such as fine art and fine collections such as automobiles, wine, and guns for example. Each has its own unique circumstances and emotions tied to them.

Artist Jason Brammer

Recently, one of our business owner clients disclosed a fabulous $40M collection, of which $20M was crated in the basement of their home. They were already making annual gifts to a major museum. However, at this time, they were in need of creating liquidity to meet their business transition needs and maintain their lifestyle as they prepared to leave their family owned business.

As it turned out, we were able to create a plan that provided for increased cash flow, a reduction in taxes and a peace of mind using the $20M worth of art stored in their basement. Had we not taken our client up on the offer to come to their home there was a good chance we could have missed this opportunity, as the advisory team did not have these assets listed on any of the balance sheets.

When planning for art the advanced estate planning team should include an expert art advisor and an advisory team with extensive experience in estate and tax planning for these unique assets.

Be sure to make a visit to your clients’ homes. A planning opportunity may be hanging on a wall or hiding in the basement.

Kim Hamilton

Filed under: Advanced Estate Planning, charitable planning, Estate Planning for Art, gifting, High Net Worth, Legacy Planning, philanthropy | 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 »

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 »

Shareholder Revolt Leads To Advanced Estate Planning

Posted on December 13, 2011 by thecomplexestate

Allen and Nancy Wilson are 58 and 53 respectively. Both are physicians with a combined annual income of approximately $300,000. Many years ago they invested in a company that was designed to grow through acquisition of other similar companies.

The company now has significant value and generates $4-$6 million in annual taxable income for our clients. The bad news is that the company only makes distributions sufficient to pay taxes on the income.

As a result of shareholder revolt, the company has now agreed to provide an additional $1M in distributions to Allen and Nancy until the expected sale of the company, which should occur sometime in the next 5 years.

Upon sale of the company, there will be an enormous capital gains event for Allen and Nancy. They currently spend about $750,000 per year and expect to be spending their investment account principal over the next few years until the company sells and provides them with a large influx of cash.

This story ended on a positive note. Thanks to the shareholder revolt, these clients were able to achieve significant success through the advanced planning process.

Now onto the remaining five hundred plus shareholders….

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

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