Business Owner with Charitable Intent

Business Owner with Charitable Intent

Client Business owner age 65
Situation
  • Business nets $1.0M annually of taxable income
  • Younger spouse and 2 grown children
  • Charitably inclined
Pain High income taxes
Solution Charitable LLC
Results
  • Income taxes reduced approximately 70%
  • Efficient charitable gifting
  • Created tax free retirement fund asset protected from creditors

Partners in Professional Services Firm need business planning

Client Two partners ages 45 and 48
Situation
  • Eight non-partner employees
  • Existing company 401K plan
  • Business nets $2.1 M taxable annually on $5.0 M gross revenue
  • No partner Buy/Sell agreement and no executive incentive plan
  • High income taxes
Pain
  • Death of a partner would weaken business
  • A key executive employee could resign and take clients
  • Company profits are subject to tax at highest marginal rate
Solution
  • Capital Split Dollar plan
  • Buy/Sell agreement (owners) and:
  • Non-qualified executive compensation plan
  • covering owners and key executives
  • Tax deductible executive benefit plan covering owners and key employees
Results
  • Lower taxes from business profits
  • Greater security for business success and continuity
  • The death or disability of an owner or key executive will not be catastrophic to the business or the survivors
  • Additional tax free retirement income pool “Golden handcuffs” retain key executives

Professional earns high W-2 income

Client 50 year old surgeon employed by hospital, earns $900,000 in W-2 income
Situation Has very little tax shelter, pays 50%+ in top marginal income taxes
Pain No relief in sight for taxes annually
Solution Charitable LLC
Results
  • Reduced income taxes by 70%
  • Funds accumulate for retirement tax deferred, paidout tax free
  • Assets in structure are protected from creditors and out of taxable estate
  • Self-completion benefit for family if client does not survive well into retirement
  • Provide benefits for charities of clients choice
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