A married 72 year-old with two children had a real estate company valued at $75 million and was concerned about what would happen to the company at his death. He had recently learned that the estate tax would be $30 million and that the proceeds from his $10 million life insurance contract would be subject to an additional $4 million of taxes. Furthermore, the real estate market was booming and conservative growth models showed that the business could be worth in excess of $100 million in 10 years, creating another $10 million of estate taxes.
- Leave the business to his children at his death.
- Minimize estate taxes at his and his wife’s death and the death of future generations.
- Protect all assets left to his children and grand-children from creditors and a potential divorce.
- Establish estate documents that will allow both him and his wife to take advantage of the estate tax exemptions available.
- Create a trust (or trusts) for their children and grandchildren that could be outside their taxable estates and protected from creditors and divorcing spouses.
- Gift and sell non-controlling interests in the company to the legacy trust(s).
- Restructure the life insurance so it will not be subject to income or estate taxes.
- Work closely with their attorney and accountant to ensure everything is properly coordinated.