Case Example 1 - CPA has Business Partner clients, ages 58 & 61 in C Corporation, with Business valued at $5,000,000 and Each Partner with a net worth of $3,000,000.
Situation: 401(k) in place with Key Man Insurance to fund Buy Sell. Golden Handcuffs Executive Perks desired, with income replacement if either Partner became disabled. Both concerned with asset protection against Long Term Care costs. 58 year old partner has diabetes and 65 year old had prostate cancer surgery 1 year prior.
AA Solution: Added $2,500,000 Term Life on each partner, plus Long Term Care and own occupation Long Term Disability, with all premiums paid and tax deducted by their Corporation.
Case Example 2 - MD Husband & Wife aged 48 and 47, Net Worth $6,000,000 and MD Practice annual collections of $800,000 in process of upgrading their Estate Plan.
Situation: Estate attorney and CPA identified that Client had inadequate life insurance for estate planning purposes, but Client was reluctant to pay the substantial premiums needed to add the life insurance.
AA Solution: Implemented one of several available "Asset Protection" strategies to use practice cash flow as security to finance the life insurance premium, with the annual below prime interest only payments made by the practice. Result is two $3 million life insurance policies with 90%+ of premium in cash value, growing at 9% compounded annually, with 5% annual simple interest. The CSV can be borrowed tax-free to supplement retirement, while the family is protected in the event of death of either husband or wife.
Case Example 3 - CPA provides tax planning advice to Husband aged 60 & Wife aged 58, Net Worth $6,000,000 and Income $200,000.
Situation: Client had recent family inheritance with monies in trust for his life, then passed to his children. However, premature death of Husband would leave Wife with little income.
AA Solution: $ 3,000,000 additional life insurance coverage for benefit of the spouse, with premium financed at below prime, with interest only payments.
Case Example 4 - Attorney is working with Financial Counselor in updating wills fo Client Male age 68 & Female age 63, Net Worth $2,000,000 and Income $250,000, and notes four different life insurance policies.
Situation: Life Insurance policies provided more than adequate coverage, but two policies were unnecessarily expensive.
AA Solution: One policy was dropped and premium saving invested with independent Financial Counselor. One policy was cost efficient and left as is. Two policies were replaced with a premium savings to the client of about 40%, with the difference being available for the Financial Counselor to reinvest.
Case Example 5 - Male aged 58 & Female aged 55, Net Worth $9,000,000 and Income $200,000 consult attorney about estate tax concerns.
Situation: Estate Planning with Attorney uncovered a need for minimum of $3,000,000 of Estate Tax Liquidity. However, client did not wish to purchase insurance because he thought estate tax repeal may actually occur. But, client also did not want to leave their estate exposed if taxes were imposed.
AA Solution: Purchase a minimum funded survivorship policy, with the option of extending the coverage at a later date. Used publicly traded securities to obtain 90% loan to value, non-recourse, below prime, interest only financing to pay for premium. If portfolio value declines more than 10%, client abandons the collateral and premium financing debt is cancelled. If portfolio value increases, stock can be sold at long-term capital gains and part of proceeds can be used to pay of premium debt.
Case Example 6 - CPA's client Husband age 54 & Wife age 52, Net Worth $15,000,000 and Income $250,000.
Situation: Professor Husband recently developed a new drug which will produce royalties of $15,000,000 to be paid over 10 years. Client wishes to guarantee inheritance to his children and offset future growth of his estate, but only wants to pay premiums with royalty income.
AA Solution: $5,000,000 Survivorship Life policy with increasing coverage to offset inflation of the estate with only 10 years of $105,000 annual premium.
We work directly with CPAs, Attorneys and Financial Advisors, like you to help evaluate each case and then develop customized strategies to be recommended to your client. We have identified innovative, tested and proven solutions offered by top rated carriers, financial institutions and service providers, and we make these available for your clients.
Here are illustrative examples of how AA can help YOUR clients:
Coverages and availability vary by state. Not all businesses and individuals qualify. This does not constitute legal, tax, or accounting advice or opinion. Consult with an experienced and properly licensed professional regarding the specific suitability of any planning technique.
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