In this presentation we looked at the problem seen in many large estates - the lack of liquidity to deal with estate equalization, estate taxes and charitable funding. Many of our clients have significant private businesses or extensive real estate holdings that represent a large percentage of the family wealth. There is often a large shortage of liquidity to deal with the division of these illiquid assets among family members as well as pay any estate taxes that may be levied on the estate. Of course if estate taxes do need to be paid there is a limited window when money can be raised and often times this means selling property at a less than opportune time. View this recording to see various designs for creating liquidity.

1. Technical Webinar
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2. (630) 596-5090
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3.  Buy-Sell Buddies
 Fantastic Farmers
 Business Owner | Real Estate | Family Stock Lover
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4.  Second generation company owners
 Business thriving
 FMV-$60M plus
 Each partner’s net worth - $35M
 Unfunded buy sell
 No cash for estate tax
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5.  How much liquidity needed?
 Determining value of business
Appraisal?
 Agreement?

 Settling on terms
 Single pay
 Pay over time
 Insurance choices
 Term vs. permanent
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6.  Individual Ownership vs. Trust Ownership
 Estate tax reduction vs. capital gains
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7.  Health underwriting
 Tobacco
 Lifestyle

Drug and Alcohol
 Dangerous activity underwriting
 Mountain climbing
 Scuba
 Car racing
 Financial underwriting
 Substantiating the need for insurance
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8.  Review of all
 Corporate documents
 Ownership interests
 Shareholder agreements
 Bank covenants
 Estate planning documents
 Buy sell agreement
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9.  $25M of term insurance issued to fund buy-sell
agreement
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10.  Two farming families
 Net worth
 Family 1 - $40M
 Family 2 - $40M
 Partners in all ventures
 10 year plan to sell out of family real estate
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11. ASSETS
VALUES
CASH AND EQUIVALENTS
616,632
MARKETABLE SECURITIES - EQUITIES
CLOSELY HELD BUSINESS
34,034,000
RESIDENTIAL REAL ESTATE
1,175,000
TOTAL
Husband
Wife
1,758,000
37,583,632
77 Years Old
78 Years Old
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Uninsurable
Table B-D
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12. Year
Estate Tax
Liquidity
2013
$10,800,000
$2,350,000
Where will the money come from?
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13.  Sell business interests to GDOT for a note
 32 year note
 Accruing interest/balloon note
 Leave note to charity in event of death
 No estate tax
 Insure children to pay off the note
 Children have the use of the property during their lives
 Re-evaluate as farm sales occur
 Look for new opportunities
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14.  $10M of term-daughter
 $10M of term-son
 $20M or GUL-survivorship on siblings
 Paid for with business profits
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15.  Client owns
 Business - $15M
 Family Corporation Stock - $25M (public company)
 Real Estate - $10M
 Collectibles - $7M
 Goals
 Keep business
 Keep family stock
 Keep real estate
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16. $7 0,0 00,0 00
$6 0,0 00,0 00
$5 0,0 00,0 00
$4 0,0 00,0 00
After other planning techniques
-
$3 0,0 00,0 00
$2 0,0 00,0 00
$1 0,0 00,0 00
F am ily Stock
F am ily Stock S o ld
Th is ch art com p ares th e am ou n t o f you r Fam ily sto ck so ld to p ay e state taxe s un d er th e p rop o se d p lan .
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Esta te T a x
30
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C
ur
re
nt
$-

17.  Income - $1.2M
 Expenses - $1.2M
 Need cash flow for premium ($250k per year)
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18.  Suggestion #1
 Sell collectibles
 Objection – no basis – high tax rate (28% plus state)
 Solution
 CRT for collectibles
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19.  Suggestion #2
 Refinance commercial real estate
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20.  Suggestion #3
 Captive Insurance Company
 Use reserves in future to pay life premiums
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21.  $15M of GUL in force
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Oak Brook, IL 60523
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