By: Thomas J. Perrone, CLU,CIC
and Sell arrangements that have emerged since the Connelly case.
The tutorial delves into the rationale behind the utilization of these arrangements and elucidates their advantages.
Furthermore, a comparative analysis of the funding costs associated with different Buy and Sell Agreement structures is presented.
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Thomas J. Perrone, CLU, CIC
It’s not easy thinking about the transition of your business! Ask any business owner who has built their business, treated it like a family member, and put all that they had in their “life’s effort”.
It’s a great story with great lessons.
By Thomas J. Perrone, CLU, CIC
Last month I posted a video on some of the general planning tools you have not used in the past eight years because of the Jobs Act. That is because of the high limits on the unified estate and gift tax amount. The high limits sheltered many estate owners and business owners from an estate tax. With the possible change around the corner it’s time to get ready.
This month I share how to use some of the tools discussed and why. Enjoy the video.
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Thomas J. Perrone, CLU, CIC
After the 2017 Jobs Act, many of us (estate and business planners), had to shift our planning topics to moderate estate, Medicaid and income tax planning.
Many of the tools we used prior to the 2017Jobs Act were often used in the planning process, simply because more business owners were affected and exposed to the Federal and State Estate Tax System. Consequently, more sophisticated strategies were needed to shift value, freeze value, or shelter value from the estate.
Once the Jobs Act came into play, the exemption amounts eliminated many small business owners from the problem of estate taxation.
However, with part of the Jobs Act heading for Sunset, we may see more businesses becoming exposed to Federal and State estate taxation.
Time to go to the shed if you want to play in this market.
This video will help guide you to some of the areas of planning you will have to dust off and rekindle for use.
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Thomas J. Perrone, CLU, CIC
tperrone@necgginc.com
BY: Thomas J. Perrone, CLU,CIC
The elephant in the room is about the four major questions that need to be asked by a business owner and advisors for the business owner to avoid failure of the business. The four major questions are.
I cover these four areas in this video.
The major question:
How Will the Failure of the Business Affect Your Family!
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By Thomas J. Perrone, CLU, CIC
Before the advisors can give you their opinion, they need to know whether the problem is permanent or temporary. See, buying term insurance when the problem is permanent is like wetting the bed, eventually you will have to get up and change the sheets.
Not only does the insurance broker have to ask tough questions about the coverage, but also the other advisors that are part of the team.
Too often, advisors knee jerk to one type of plan because of the lack of information they have, or their misconceptions of coverage. In many cases, the knee jerk suggestion is the wrong one.
This video covers some important points of what is needed to make the right decision about the coverage.
Questions such as:
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Thomas J. Perrone, CLU, CIC – NEW ENGLAND CONSULTING GROUP OF GUILFORD, INC
Growing value in your business can create tremendous wealth, however, only 15-30% of the small businesses will sell, which creates the “if factor”, the unknown.
The percentage of sales is lower for the smaller owned business, more like 15%.
Building your business to its highest potential value is possible by having guidelines of what must be done as you grow the business.
To hedge the “what if’s” of selling it, you can use the cash flow of the business to create other assets such as executive compensation and qualified benefits and plans.
Many owners neglect to consider these options and end up with too much wealth in their business, causing liquidity and tax problems when they leave, die or become disabled. This presents the problem of “how do you get your wealth out of your business on a tax advantaged method” when you want to leave the business and you need it?
Building Your Business to Sell in The Future!
Here is a list of strategies that will help in growing a robust business and greatest potential value.
When Considering Using Your Business Cash Flow to Develop Executive Compensation and Other Benefits,
Such as:
Executive Compensation Is a Fantastic Way to Extract the Value of Your Company on a Tax-favored Basis, And Not Tie It Up in Your Company, Having It Available to You When Needed.
There are but a few thoughts concerning building wealth through your business while building your business.
If you would like to receive my report on the “JFK ERA BENEFITS THAT CREATED SUBSTANTIAL WEALTH FOR BUSINESS OWNER”, CLICK THE link and it will download. This benefit was around in the 50’s, but only for the bigger companies, now it is available to the smallest of businesses, and may be one of the greatest business owner benefits available. CLICK JFK
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!
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!
To Order Brian’s Book
Enjoy Brian’s flip book.
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.
Your Business Worth 