The Convergent Virtual Multi-Family Office Castle is symbolic of the importance of a sound estate planning, one that builds castle walls around your wealth.  Along with asset protection, this planning needs to be in place first, to protect your wealth. 

A common expression with regards to the most desired attributes of one’s estate planning follows this line of thought: “We want to maintain the best combination of control over and protection of our wealth that is possible through the finest estate planning that is available, to pay as little income and estate taxes as allowed by law, and to benefit our family and the causes that are important to us, now and when we’re gone.”  Your thoughts may be similar, or your unique family dynamic and situation may be very different.

The best trust and estate planning provides for a multi-generational legacy, with your goals and values front and center.  We analyze your current estate plans, and through a rigorous discovery and review process determine if your goals and values are being realized to their full capacity in their present form.

One of the biggest challenges with estate design is having one’s tax *, investments and estate plans working together.  Often wonderful documents are drafted by experienced estate planning professionals, but their effects are squandered because assets and accounts are not retitled to reflect the revamped trust and estate plans.  It’s a part of our trust and estate planning checklist, to ensure this doesn’t occur.

Another challenge with estate planning is a concept known as ‘estate equalization’.  This term refers to the situation that can occur when one or more of your heirs are involved or have ownership in a business you own, and some of your heirs are not involved.  Your heirs with current involvement and/or ownership stand to benefit much more upon your passing, and yet to include your non-owning or non-participating heirs in the business or to give assets to them before your passing purely to appease them or ‘to be fair’ can create hard feelings with your heirs who have worked hard to help your business succeed.

What can be done with the ‘estate equalization’ challenge?  This issue is likely solved with the creative use of premium-financed life insurance.  Let’s say a policy is needed for $50,000,000 that will allow non-participating heirs to inherit an amount that is approximately equal to the value of what participating heirs will receive, if they continue your business.  But coming up with the premiums out of pocket for a policy this size can run in the millions of dollars per year.

This is where premium-financed policies can make a lot of sense.  How much life insurance would you want if you didn’t have to write a check for it?  Likely as much as you could get, right?  In this instance you don’t have to write checks for the premiums.  Instead, you simply need to post some collateral, usually in the range of 15% of the face amount of the policy, and at your passing your non-participating heirs can receive a death benefit that equalizes your estate.

The execution of this planning can be complex, but the results are easily understood when professionals explain the concepts in a step-by-step manner.

Trust & Estate Planning is a part of the broader topic of Asset Protection. Click Here to continue the journey around the Convergent Virtual Multi-Family Office Path of Needs.

* Convergent Virtual Multi-Family Office is not a CPA firm