Author: YOUR BUSINESS WORTH

Business and Financial Planning to help business owners create business strategies to growth wealth, protect wealth, and to be a position to extract their wealth when they need it the most.

State Drawn Will in Common Law States

by YOUR BUSINESS WORTH, posted in Uncategorized

Thomas J. Perrone, CLU

New England Consulting Group of Guilford, Inc.

Last Will of Paul Procrastinator

First: I direct the Probate Judge to appoint anyone of his

choosing to administer all property in my name and

distribute it under the terms of this will.

Second: I direct that all of my assets be converted to cash,

all of my debts paid, including taxes, probate fees,

administrative fees, and attorney’s fee.

Third: I direct that one-half (if I am survived by one child) or one-third (if I am survived by two

or more children) of my separate property, be paid to my spouse.

Fourth: I direct that the balance of my estate be distributed outright, and in cash, in equal

shares to my children.  If any child be a minor, I direct that his share be held by a guardian for

his benefit.  The guardian may be anyone of the court’s choosing.

Fifth:When each of my minor children attains age 18, I direct that his share be then paid to

him outright, regardless of his financial or emotional maturity.

Sixth: In the event that my spouse does not survive me, I direct that his/her share be added to

the children’s shares created under Articles Fourth and Fifth

Seventh:If none of my children survive me but my spouse does, I direct that the remainder

under Article Third be distributed outright in the following manner:

●One-half of my separate property to my spouse.

●The balance to my parents, if living, otherwise to my brothers and sisters or their heirs.

Eighth:If I am not survived by my spouse, children or parents, I direct the Probate Court to

seek out my closest blood relatives and divide my estate among them in a way which gives an

equal share to my closest relatives or their descendants.

Ninth:If no relatives are located, I direct that all of my property go to the State.

Learn about the GWT planning system to help you organize you estate and business.              Click Here TO VIEW THE VIDEO.

Why You Need a Business Valuation!

by YOUR BUSINESS WORTH, posted in Uncategorized

By: Thomas J. Perrone, CLU, CIC

A business appraisal is a process of determining the economic value of a business, giving owners an objective estimate of the value of their company ³. It is typically done when an owner is looking to sell all or a part of their business, or merge with another company. Other reasons include if you need debt or equity to expand your business if you need a more thorough tax analysis or if you plan to add shareholders ³. 

If you are a business owner, you may need a business appraisal for various reasons such as:

  1. Selling your business: A business appraisal can help you determine the fair market value of your business and help you set a realistic asking price ³.
  2. Mergers and acquisitions: A business appraisal can help you determine the value of the business you are acquiring or merging with ⁴.
  3. Estate planning: A business appraisal can help you determine the value of your business for estate planning purposes ⁴.
  4. Tax purposes* A business appraisal can help you determine the value of your business for tax purposes ⁴.
  5. Litigation: A business appraisal can help you determine the value of your business in case of a legal dispute ⁴.

If you are looking for a professional appraiser to assess your business’s fair market value, you can consider contacting P C Appraisal Services located in Branford, CT ². They specialize in residential and commercial real estate property appraisals and have a 5-star rating on their website ².

Source: Conversation with Bing, 1/2/2024

(1) How to Do a Business Valuation – U.S. Chamber of Commerce. https://www.uschamber.com/co/run/finance/business-valuation-how-to-guide.

(2) What is a Business Appraisal and When a Small Business … – BizBuySell. https://www.bizbuysell.com/learning-center/article/what-is-business-appraisal/.

(3) P C Appraisal Services. https://www.pcappraisal.org/home.

(4) . https://bing.com/search?q=business+appraisal.

(5) What is a Business Appraisal – Website Closers. https://www.websiteclosers.com/resources/what-is-a-business-appraisal.

(6) Business Appraisals: What Are They? – The Balance. https://www.thebalancemoney.com/what-is-an-appraiser-how-does-an-appraisal-work-398126.

For  a Free Business Valuation Guide, CLICK THE LINK.  Your report will download immediately! 

THOMAS J. PERRONE, CLU, CIC

tperrone@necgginc.com

Benefit Planning Executive Bonus Arrangement1 

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, Executive Benefits, Funding your Buy and Sell, Income from your business, Life Insurance Types, retirement, Tax Efficient

An executive bonus arrangement is a method of compensating selected key employees in  which the employer pays the premiums of a life insurance policy covering the employee’s life. 

How the Plan Works 

●Life insurance policy: The employee purchases, and is the owner of, a life insurance 

policy on his or her own life. The employee retains – at all times – the right to name 

the policy beneficiary and to receive the death benefit. 

●Employer not a beneficiary: The employer cannot be the beneficiary, either directly or 

indirectly, of the insurance policy. 

●Written agreement: A written agreement provides for payment of a “bonus” in 

exchange for the employee’s agreement to continue working for the employer. The 

employer may also wish to pay a “double bonus” to help cover the employee’s 

additional income tax liability. 

●Premium Payments: The employer may make the premium payments directly to the 

life insurance company, or the payments may be included in the employee’s paycheck, 

with the employee paying the premiums. 

●Tax treatment – employee: The employee includes in current income – and pays tax 

on – the net premium paid by the employer. 

●Tax treatment – employer: Subject to the “unreasonable compensation” rules, and as 

long as the employer has no interest in the policy, the additional compensation is 

deductible to the employer as an ordinary and necessary business expense. 

Benefit to Employer  Benefit to Executive 
Can reward selected key executives with varying coverage amounts. The executive owns the policy. If he or she changes Employers, the policy is not lost.  
Simple to implement, with little or no administration  Accumulated cash values can be used in emergencies, at retirement, or for personal costs investments.2  
Premium costs are tax deductible. Death benefit is generally received income-tax free.  
Can be stopped without IRS approval or restrictions. Proceeds may be used for estate settlement costs.  

1 The discussion here concerns federal income tax law. State or local income tax law may vary. 

2 A policy loan or withdrawal will generally reduce cash value and death benefits. If a policy lapses, or is surrendered with a 

loan outstanding, the loan will be treated as taxable income in the current year, to the extent of gain in the policy. Policies  considered to be Modified Endowment Contracts (MECs) are subject to special rules. 

For a free report on Business Retirement Plans for Small Business Owners, click and submit. The report will be downloaded immediately. Learn how to use your cash flow to create tax-free wealth! 

Click Here! 

ESTATE PLANNING The LOST FOCUS

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Estate Planning, Funding your Buy and Sell, Life Insurance Types, retirement, Selling Your Business, Strategies of growing business, Valuation, Working On Your Business

By Thomas J. Perrone, CLU, CIC

Since the exemption credit increased to a substantial amount a few years ago, the term “estate planning” took on a new meaning.  

At one time  estate planning was considered tax planning along with other aspects of planning of your estate, depending on whether you owned a business or not.  Things like income for the family, debt payments, taxe reduction, income tax planning, and of course distribution of assets.  There was always an emphasis on avoiding estate and state estate taxes.  

However, as the exemption credit increased to the point that most American tax payers  would be exempt, the emphasis change on how estate planning was done.

However, in 2025 the sunset provision will kick in and will redefine the estate planning landscape.  The provision is set to go back to the exemption credit of about $600,000.  However, most professionals feel it will be higher.  Anyone’s guess.

With the possibility of lower exemption, estate planning will change.  I personally feel small business owners will feel the impact more than most, as their business values will increase their potential exposure to Federal and State estate taxes.   

Estate planning is an essential aspect of managing a small business. It can help ensure that your business is preserved as you want it to be, and that it can continue to operate smoothly even after you pass away. Part of estate planning for business owners will be to focus on the transition of the business more than before. If the exemption is lowered, small business owners will find themselves having to deal with a large tax at their death, upon the transfer of the business. Much can be avoided by doing planning now and using the exemptions available today.

Areas that need planning are:  

  1. Drafting a will and basic estate plan.
  2. Planning for tax efficiencies.
  3. Sorting out issues in family-owned businesses.
  4. Drafting a buy-sell agreement (for multi-owner businesses).
  5. Purchasing life and disability insurance.
  6. Creating a succession plan.
  7. Having a discussion with affected parties.

In order to have a proper discussion about estate planning the short video below will help you understand the main concept of asset distribution.  If you are a small business owner, this information may be critical to your planning structure.  

Request our FREE ESTATE PLANNING GUDIE FOR BUSINESS OWNERS:

For our FREE ESTATE PLANNING GUIDE FOR BUSINESS OWNERS, submit this short form AND the Estate planning guide will download immediately.  

The Guide covers many of the areas you need to understand when doing your estate plan. It is also written in language you will understand.  

Download Your Free Estate Planning Guide 

CLICK HERE

For a better understanding of Estate planning view this short video of how asset distributions work in different estates.

Note: I engage in a working relationship with professional advisors for their business cases.

203 530 6615

tperrone@necgginc.com

 

Creating A Final Pay Relative to Earnings!

by YOUR BUSINESS WORTH, posted in Uncategorized

BY: Thomas J. Perrone, CLU, CIC

One of the biggest problems with high earning business owners is the limitation on the amount of contributions they can make towards the 401k or other contributory plans. The limitation is driven by the makeup of the employee group and the comp 

The problem is trying to fund their final earnings of the last 3-5 years with a contributory plan where there are limitations to the number of contributions they can make.  

For example, a business owner currently earning $250,000 versus an employee earning $100,000.  

When you compare the same situation with an employee who is earning $100,000 a year you can see the inequities in the level of funding of a retirement plan and the final earnings. 

Because the high earning owner (HEO) is limited, they can’t use the contributory plan to fund a sizable percentage of their retirement. Consequently, executive compensation programs are needed to make of a good part of the difference in final pay.  

The video discusses one of the ways to make up the difference for the HEO. 

Endorsement CEEP 

A Blended Family, S Corp, And Marital Deduction! What do they have in common!

Featured by YOUR BUSINESS WORTH, posted in Uncategorized

It’s very common to find this combination of family dynamics frequently! Blended families make up a good part of our family structure and like all families, they need planning.

However, in this type of situation, the final distribution of assets is not necessarily uniform. Each parent wants to treat their children differently in most cases, however, many times both spouses are on the same page in protecting each other.

In this short video I cover some of the planning objectives when you combine the blended family along with an S Corp ownership, and the goal or retaining a marital deduction.

“Unlocking Your Business Wealth?  

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, evaluations, Income from your business, Key People_Or Group, Selling Your Business, Strategies of growing business

By Thomas J. Perrone, CLU, CIC

A great business book has just come out. Its called “Unlocking Your Business Wealth”, written by Brian Kerrigan.

Brian is a specialist in business growth. He is extremely passionate about helping business owners build wealth in their business so they can become financially independent in the future and enjoy the lifestyle financial freedom brings.   

Many business owners run their business with the focus on personal income, and the freedom of time.  However, the business can also be a valuable financial asset worth much more than the salary being earned.  Business wealth is an asset that can create financial independence for the business owner.   

Many business owners also put too much wealth in their business and when they wish to use this equity find it difficult to get out, or extremely expensive to get out. In many cases, it can be lost due to the market and elements of the business environment.   

In this book, Brian discusses the building of business wealth and the opportunities it creates. Each chapter is a steppingstone to create business wealth.  

A great short read, and necessary if you are an entrepreneur.   

Brian discusses parts of the book, how it will help you grow your business and help you to avoid the traps that you may experience in your business life.  

To Contact Brian:  

860) 303-8929‬ mobile 

Email Brian:  bkerrigan@taylorfoleylaw.com to schedule a complimentary consultation to discuss your results and lay the foundation for your future success. Remember, the first step is often the hardest, but it’s the only way to reach the top. 

Enjoy our recent podcast with Brian about his wonderful book!

https://podcasts.apple.com/us/podcast/building-and-protecting-your-business-worth/id1539791693?i=1000626000478

To Order Brian’s Book

Enjoy Brian’s flip book.

https://publuu.com/flip-book/47240/465013/page/1

When Running Your Business Gets in The Way of Your Retirement!

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Estate Planning, Income from your business, retirement, Selling Your Business, Uncategorized

Many small business owners are focused on running a business that they neglect to plan for their retirement when they retire.   

In many cases they put too much wealth in their business and have a hard time getting it out when they retire. 

Too much wealth is tied in most business owners business. When the time comes that they need it, it becomes difficult to turn into a liquid asset quickly.

This report will help you understand the options that small business owners have and why they need to pay attention to the details of retirement.

Download this free report on how to build your retirement plan for the future. 

Buy And Sell Agreements and The Use of an LLC! 

Featured by YOUR BUSINESS WORTH, posted in Uncategorized

By Thomas J. Perrone, CLU, CIC 

A much-overlooked area of planning for small business owners is their buy and sell planning.  A business is fluid and forever changes its financial position. In many cases industry changes and markets affect the value of the company.  Because of the ongoing changes in business value and growth pattern, the buy and sell agreement should be reviewed more than periodically. I suggest the professionals and parties to the agreement review the value and the elements of the buy and sell, yearly.  There are two parts of the review. 

  1. The agreement should be reviewed for the “triggers” which will set in motion the BSA.  There are many BSA that have been executed which only deal with the death, disability, and retirement of the owners.  Some other triggers would be bankruptcy, divorce, non-voluntary termination, voluntary termination.   

The Funding:   

This area strives to make sure the parties are sufficiently liquid when needed to fulfill the obligation of purchasing the ownership value.  

Cross purchase: Members buy and own life insurance on other members.  For example, if you had four owners, twelve policies would be in force (3×4).   

Endorsement: The Company purchases and owns life insurance on the parties to the agreement. At their death, the company receives the proceeds and purchases the value from the deceased’s estate.  

The endorsement method is simple, as the company will purchase life insurance on the party to the agreement.  For example, if there are only four owners, the company will purchase life insurance on each of them, or four policies.  Upon the purchase of the decedent’s equity, the surviving owners will not have an increase in business cost basis.  

Using the LLC 

The LLC is set up to purchase life insurance policies on each owner.  Upon their death, the LLC collects the proceeds and purchases the ownership for the surviving owners.  

There is no “transfer for value,” as partnerships are an exemption for the transfer of value.  The remaining owners have a cost basis increase.  

This short video discusses buy and sell in more detail.  

BUY AND SELL MISTAKES FUNDING 

If you would like our comprehensive business planning guide, click the link and the report will download immediately.  

GET YOUR BUSINESS KIT  

Get Your Business Kit – Click to download

Now It’s Available for You!

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, Estate Planning, Executive Benefits, Inside Sale, Key People_Or Group, Passive Ownership, Selling Your Business, Strategies of growing business

IN THE “John F. Kennedy Era” 

Business Owners Created Substantial Wealth Using This Benefit!  

Business owners are the most susceptible to it…

Don’t feel bad if this happens to you! 

 WE are susceptible to “not knowing” things WE need to know TO SECURE OUR business growth.

This is why WE need good business advisors.   

However, sometimes by not knowing, you are too late to the party, and opportunities are missed.

THIS IS ONE THING YOU NEED TO KNOW!

It is called “The Corporate Equity Executive Plan”, (OR CEEP.)  It is designed for highly paid business owners and executives.  The plan has been around since the 60’s, and it was used by the “big guns “of the Fortune 500 type companies.  

And You Don’t Want to Be Late TO THIS PARTY!

However, over the years, the plans have been redesigned for the smaller business owner, making it possible for you to take advantage of this substantial benefit plan.  

Because this benefit has been used in large companies such as the S&P 500, many advisors are not aware of this “Hidden Gem of a Benefit.”

Leo had a successful business in wholesale.  He gave his employees great benefits, treated them well, had a 401k, and great health benefits. 

His problem was the 401k limited the amount of contribution he personally could make to the plan because of his high salary.  This was a problem for Leo, because even though he made 401k contributions his percentage of final pay was much lower compared to final earnings. 

Leo didn’t want to depend on selling his business for his retirement, as he had children and grandchildren who wanted to run it and Leo regarded his company as a legacy to his family. 

 Leo wanted his company to support his future security, however, the 401k limited this ability.  

When we projected his retirement benefit percentage compared to his final pay, he was substantially lower than his lower paid employees.   His employee group would retire with social security and their retirement benefit at about 65-80% of their final earnings.   In Leo’s case, his percentage would be about 40% of his final earnings.     

To make up the difference we introduced Leo to the CEEP plan.  The plan allowed him to decide the number of deposits he wanted to make into the plan.  Leo decided to put in $50,000 more a year until his retirement.  This added amount, would increase his final income to around 80-90% of his final pay, adjusted for inflation and salary increases. 

Because the business is funding his retirement plan, he has the benefit of having very efficient tax results.   The plan allowed Leo to use the funds whenever needed, and all withdrawals were tax-free.  Leo was the only participant in the plan, but he plans on adding a few family members to the plan in the future. 

 Considering all the withdrawals would be tax-free, unlike a qualified 401k plan, Leo was able to secure his financial security through the funding by his company! Because very little of the contribution is part of his total compensation, Leo saw a great opportunity for the company to pay for his retirement. They pay for his cars, country club, lunches, some vacations, why not his retirement?

This was a case where the CEEP allowed the highly paid owner to create wealth for themselves, but also on a tax-free basis, allowing more flexibility at retirement for him and his family.  

“Create Your Own “Tax-Free Haven”

By using your company’s cash flow, you can create a tax-free retirement plan. Imagine, no taxes on your income when you retire!

  • Participations: You do not have to include anyone else in the plan. 
  • Contributions: Contribute to the plan as much as you want with flexible contributions, including skipping ability.  
  • Contribution allocation: All the contributions go to your account, and you are not forced to share contributions with anyone.
  • Usage of funds: You can withdraw these funds before 59 1/2 without taxes, penalty, or restriction-why not fund your inventory this way- without a banker! 
  • Funded by your company:   Like a 401k plan, your company contributes to the plan, to your account, since you are the only participant.  
  • Deductible: The company can decide when they wish to take the deduction of the plan.  
  • At Death:  From day one there is a “self-completion clause”, if you die, a tax-free lump sum benefit is paid to your family. In most cases this is the amount of money you would have created in retirement had you lived to retirement. 
  • No force out like RMD: At retirement you are not forced to take withdrawals from your plan, like the required minimum distribution rules under 401k’s and IRA’S.  
  • No Tax on Inheritance:  All benefits are tax-free to your family at your death.
  • more….

Do you remember When?  

When you were a kid, did you ever lay down in freshly mowed green grass and stare up at the blue sky and watch the clouds move?  You smelled the sweetness of the cut grass and just felt so relaxed?  In the background, you hear a twin-engine airplane flying above.  This is the moment in time when there were no issues in life, things were great and easy, and you were so relaxed…

Imagine that feeling, but now it’s at a time in life where you are ready to enjoy more time to “lay in the grass” again and feel that same feeling.  Only now, you are retired, and because you made the right planning decisions, there are no issues.  Financially, you are enjoying a wonderful retirement lifestyle.  The reason: you eliminated income taxes!   You are living the tax-free lifestyle which the CEEP plan offers.   

That is what the CEEP can create for you, and I want to give you more information about it because it is

one of the best benefits ever for business owners.

This is one of those moments you don’t want to show up late for the party!  If you haven’t been exposed to this type of executive benefit, do yourself a favor and download this Free White Paper that explains it all.

I encourage you to take a new path that will give you the opportunity to create greater financial wealth for your future.  A path that will educate you on the great usage of business cash flow to create more financial security.  The path you want to take is to request this free report, download it and spend some time learning about this fabulous benefit used by many high earning business owners and executives since the “John Fitzgerald Kennedy Era”. 

To receive your FREE WHITE PAPER, SCAN THE QR CODE.   COMPLETE the short form and your FREE WHITE PAPER WILL DOWNLOAD IMMEDIATELY…

Or CLICK OR TYPE IN

P.S. SPECIAL OFFER: The first 15 requests will receive a free copy of my book, “Unlocking Your Business DNA”.  A BOOK filled with business strategies that will allow you to grow your business and create an ungodly amount of leisure time to enjoy what you are building. 

https://bit.ly/3WjP0yw