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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By Thomas J. Perrone, CLU, CIC
An Insurance LLC is a limited liability company (LLC) created to own and manage one or more life insurance policies to help meet the obligations under a buy-sell agreement. The Insurance LLC is a new business entity formed under local law, separate and apart from the business or businesses that are subject to the primary buy-sell obligations. Since the Connelly ruling, Advisors are looking for ways to provide a funding arrangement for buy and sell agreements and the Insurance LLC is another way of providing for the buy and sell arrangements.
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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
THIS IS ONE THING YOU NEED TO KNOW!
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!
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”.
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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.
But you do need this…
Dear Fellow Entrepreneur, who wishes to grow their business and enjoy what they are building…
did you ever wonder why some business owners run a successful business while others claw up a mountain to stay in business? It comes down to one STRATEGY, in my opinion.
A Recent Survey Reveals That 86% of Small Business Owners Risk Bankruptcy or A Forced Exit by Missing This Strategy!
Only 14% Of Business Owners Will Enjoy the Value of Their Business! i
You and I are entrepreneurs, wired with passion to run our businesses. I want to share with you a powerful strategy that will change how you run and grow your business. It will give you more clarity and create more simplicity in your life. This powerful strategy is one of the major contributing factors to building value in your business.
Have you ever noticed how some business owners keep more of the money they earn, work less, have unlimited family time, avoid getting drained by taxes, keep the best employees, and run their businesses, not the other way around?
My clients tell me the strategy has given them clarity and has simplified their lives allowing them to enjoy more of what life offers!
THE ISSUE and THE PROBLEM: The mindset when you start or buy a business is to bring your product or service to market quickly to create cash flow. This is the “action planning”, and it’s all about cash flow. The problem is you stay focused on the ACTION PLANNING MODE and neglect the DETAIL PLANNING MODE altogether, creating financial chaos, and diminishing the chances of accomplishing your dreams and aspirations!
Enter the Business Growth, Wealth, and Transition Plan (GWT PLAN) which focuses on the details of the Growth, Protection, Equity creation and Transition of your business. The GWT PLAN is a “Designed Plan” and creates the future financial success of your business. The GWT PLAN is like Kryptonite, fighting off bad mistakes, lost opportunities and keeping you on the path of building your business’ future wealth!
A TRUE STORY: In 1971 my father died suddenly at age 51. His very profitable business in Hamden, CT, was sold for pennies on the dollar. My mother went from middle class to poverty level overnight. She was forced to sell the family home and move to a few different neighborhoods, giving up what she loved the most, which was cooking for the neighborhood kids. This created great emotional turmoil in the family.
THIS DID NOT HAVE HAPPEN, BUT IT DID. Why? Because my father had a “Default Plan”, NOT a “Designed Plan”. He winged it, like so many business owners do. Because of that, he lost his “Life’s Effort”, and his legacy, at an extreme cost to his family.
YOUR SCENARIO WITHOUT A GWT PLAN
If you died or became disabled today, what will happen to your business? Without a plan, the banker would call your credit line, the vendors would stop selling to you, your key people would be looking for new jobs along with other employees. Your family would need to get permission from the probate court to run the business without breaking the law.
If your Key Person told you they were leaving along with five other employees, what would you do about this? The banker will call the loan, your vendors will cease to give you credit, you may lose other employees, and you would lose income very quickly!
What if you were in a squeeze economically, business was bad, costs were high, gross revenue is not covering expenses, what do you do? Call in Mr. Banker, and hope he has confidence in your business to solve the problem (remember Covid) and hope for credit!
You had enough; you want out. What’s the value of your business you want to sell? 86% of your fellow entrepreneurs are not going to sell their business, what would make you any different?
The Same Scenario HOWEVER, You Implement Your GWT Plan!
#1: Your banker doesn’t call your equity-line and they are satisfied with your continuation plan. Your family has planned instructions on how to run the business, while your employees are satisfied and confident of the continued success of your business.
#2. Your key people stay on because you have incentives for them to stay. Also, you have protection documents that would thwart their ability to compete with your business if they left.
#3. If you were so unlucky to hit a bad economic turndown, you have a special benefit in place to fund your cash flow without having to beg for money from the bank. This was created through your business cash flow in advance. It is substantial in value, and tax-effective, creating personal wealth outside of your business.
#4. You have been systematically formulating plans over the years for the purpose of transition someday. Because of that planning, purchasers are interested in buying your business at the highest potential value.
If You Are Investing Money, Time, Pride, Sweat and Nerves in Your “Biggest Effort in Life”
Why Would You Not Spend the Time to Protect It From the “What IF’S By Implementing Your GWT Plan!
It’s Not Your Fault However! It’s the Planning Professionals Fault!
Here is the difference between planners and what we do and why we make a difference…
It’s their agenda, not yours. –
The GWT PLAN agenda is designed by you. You pick the subjects you wish to plan for.
No respect for your brevity-take too long to plan.
The GWT Plan uses educational tools such as short videos, so you learn on your own time and verification of what you learn via conference calls.
They charge too much and complicate the planning making it more complex than necessary.
The GWT Plan charges are a fraction of the market charges for planning and is designed to be communicative and simple. We use a patented plan called, “The One Page Solution”, which describes the issue and the solution on one page, and this is done, one issue at a time.
They are averse to working with your other advisors.
The GWT plan encourages your other planning team to join us, so we have all the information about your dreams and aspirations and what your team has been doing for you. We welcome all professionals to engage in your best interests.
Many planners have never run a business or walked in your shoes.
We have been in business for over 50 years and have never been in any other business professionally, and know what it is all about having staff, payroll, working with banks and having an array of tasks to deal with.
They don’t spend time learning about your business and your value system, and don’t listen well.
The GWT plan doesn’t start planning until we feel we understand what your dreams and aspirations are. By using our tools, we not only learn about what the facts are, we learn about how you feel about what you are trying to accomplish.
Despite this…To Survive and Thrive in the Future Economy YOU NEED A GWT PLAN TO…
Create a path to follow for success with clarity and simplicity for your business and personal life to help you enjoy your life.
Create a business culture to help hire the right employees, develop middle management for your future transition, and free up more time for you.
Uncover opportunities in creating wealth in your business with tax efficiency through your cash flow while protecting and growing your financial future.
Develop a solid transition plan to maximize the value of your business for your future financial security while creating wealth outside your business!
Learn the secrets of developing your GWT Business Plan by requesting my FREE E-BOOK. I am offering a limited amount of copies for distribution over the next fee days! Take control of your future and go down the path the will give you CLARITY AND SIMPLICITY ALONG WITH GREAT SUCCESS!
REQUEST YOUR FREE COPY of my published book, “Unlocking Your Business DNA”, and learn the benefits of having a GWT PLAN! ORDER NOW- distributing a limited number of E-Books.
Your Business Worth 