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
Retirement plans such as 401(k), IRA, 403(b), Cash Balance, Profit Sharing, and other qualified plans are popular choices for securing one’s future. While these plans focus on accumulation and stock market returns, which can be quite exciting, there are significant drawbacks associated with them.
Although retirement plans offer the appeal of disciplined savings and the potential for growth over time, they also come with inherent risks that are often overlooked. These plans, designed to assist participants, can sometimes result in financial shortfalls or unforeseen tax liabilities. The unpredictability of market performance and regulatory constraints may cause participants to question the adequacy and reliability of such strategies. Addressing these concerns proactively is essential for ensuring a smoother retirement journey and providing stronger security for loved ones.
Life insurance can help mitigate these downsides. However, there are several critical discussions that are seldom addressed when dealing with qualified retirement plans:
These issues can be addressed effectively by incorporating life insurance into the retirement strategy.
The accompanying video explores some of the most pressing questions regarding retirement plans.
Learn about the JFK ERA benefit plan used for high earners, a plan that will create tax-free benefits with very few restrictions. This is a plan every Business Owner should know about.
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Thomas J. Perrone, CLU, CIC
tperrone@necgginc.com
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.
Download your Free Business Guide which will help explain many of the topics discussed. Immediate download, CLICK HERE!
Thomas J. Perrone, CLU, CIC
tperrone@necgginc.com
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
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:
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.
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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.
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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.
Are you working hard to Grow and Prosper in your business?
Give Me Three Minutes and I’ll Reveal the Key Secret to Creating Greater Success and Prosperity!
You saw it coming… The instinct and driving force to create something…
While the outside world thinks building a business is magic and easy, you know differently!
You, like many entrepreneurs, are wired to build, discover, and create success and prosperity. You have the fortitude to survive and grow.
You know taking financial risk isn’t just about you, it involves your employees, vendors, and your family.
Many people would not understand why you take risks with no guarantee of success.
Chances are you entered your business, like many of us, without a lot of business knowledge, but the excitement of a great idea and the boldness and motivation, to make it successful… With all of that going for you why do small business FAIL 70% of the TIME?
FACTS BEING FACTS…70 % OF BUSINESSES FAIL WITHIN 10 YEARS. [1]
86% OF BUSINESSES CAN’T BE SOLD [2]
The answer is obvious, but not to the busy and enthusiastic business owner in the thick of running their business…
The stickler is…. YOU GET HOOKED ON THE “ACTION PLAN”- (the process of bringing your product or service to market and creating cash flow, profits to feed your operations. This is the exciting part of being a business owner). It’s “THE BUSINESS HIGH” …
Holy Cow… you’re saying just because I like doing something and want to be part of it all the time, IT WILL cause my business to fail? Yes and NO! Yes, because you not only spend most of your time there, but no, it’s good, because you are creating cash flow and profits…
THE PROBLEM: -You Have an Action Plan —————But No “PLAN FOR DETAILS”!
A critical part of the long-term success of the business. It is the empowerment of your business, the “Vin Lombardi” attitude for success. It creates confidence to grow. It is the “BUSINESS PLAYBOOK”! In a Nutshell it’s the solution to the eight reasons why 70 % of businesses fail in 10 years, and the reason why 86% of the businesses can’t be sold… IT’s That Simple…
Let’s break it down…
Eight Reasons Why 70% of Businesses Fail Within Ten Years!…
No Vision-No Niche-No Business Plan-No Marketing-No Commitment To Continual Learning-No Action –No Follow Through-No Consistency
The same reasons 86% of businesses can’t SELL! ——— There is no “Plan for Details.”
Why Don’t Business Owners Create a “PLAN FOR DETAILS” to fix the problem?…
The Major Reason Why …
Advisors make planning more complicated than it must be.
They charge too much in fees.
They don’t respect your brevity of time.
They don’t understand the business owner and never ran a business (employees, payroll, worked with bankers and inventory).
The advisors have their own agenda, not the agenda of the business owner.
Many advisors are not competent to plan the complexities of business and only want to sell products under a hidden agenda.
Many advisors don’t specialize and have conflicts of interest- such as a lawyer or account selling investment products.
YOUR “PLAN FOR DETAILS” – “YOUR “BUSINESS PLAYBOOK” to the RESCUE
NOT HAVING A “Plan for Details”, HAS CONSEQUENCES!
| EASY TO PLAN | You can plan your path to success and prosperity within 30 days or we do it for free. You will learn in about a total of 4 hours or less over the 30 days. |
| LEARN ON YOUR TIME | Our Educational videos are short and easy to understand AND LEARN. The basis for your “Plan of Details” |
| ONE ON ONE COACHING | Four videos explaining the material along with a discussion after each step. This will clarify the questions you may have. |
| YOU CREATE AGENDA | Sixteen Business areas of planning. We call it Blueprints. You select the topics for your agenda. Solve one issue at a time and move to the next. |
| BREVITY RESPECTED | Videos less than 20 minutes. Conference calls, less than 30 minutes. |
| EASY TO LEARN MATERIAL | Resource Video Guide on many topics. Resource Study Text Guide written in simple language. Also, open a library to use for your knowledge base. |
| AUTO UPDATING | You set the schedule to update and assess other areas in your planning. You are always current because we make it automatic for you. |
| ONGOING SUPPORT | Monthly, you receive ideas on planning which you can use, and phone support. You are given a link to our calendar to schedule conference calls. |
| Situation | NO “Plan FOR Details” THE RESULTS | Business Planning System-PLAN FOR DETAILS |
| Covid Hits- Lack of Capital | Shut down, layoffs, a business closes. Banks recall your credit line, you incur debt. | Planned for reserve of capital, through cash flow. Bankers are pleased with your plan and extend credit. Business as usual! You are prepared! |
| You Die or Become Disabled | Key employees leave with others. Family has no permission to run business Banks recall loans. | Planning satisfies banker and probate courts. Employees stay, there is incentive in place for them, Family or key group run the business. |
| You Want Out of Business | Wealth tied up in your business not liquid. Must sell at deep discount to raise money! | Executive compensation plans set up. You have the capital to retire and sell your business without forced sale. |
| Key Person (Group) Leaving | Bankers, vendors, end credit. Employees leave. | You created a vesting benefit for your key people. Too rich for them to leave you, along with documents that are in place to protect you if they do leave. |
EMPOWER your growth by formulating a “Plan for Details”.
Consequences Don’t Always Happen to the Other Guy! Don’t Be That Other Guy!
Your “Business Playbook” Your Favorite Banker Will Be Impressed!
WHICH PATH? Continue doing what you are doing without a “PLAN FOR DETAILS” and risk MANY UNKNOWN CONSEQUENCES! OR take the path of AWARENESS and Avoid Financial Mistakes through Knowledge!
Educated Entrepreneurs Are Aware of BUSINESS OWNERS!
View the demonstration Video of the GWT Business planning System. Fill in the few questions on the form and it will take you to the short video .
[1]Lauren Cowan, Former Forbes Contributor CPA, Attorney, Elevate
[2] Doug Baily Feb. 9, 2016, Talking Business
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 