06 Jul FINC 355: Retirement And Estate Planning Business Estate Planning Case Study #2
The goal of this Estate Planning Case Study is to make adjustments to an existing estate plan to eliminate the potential estate tax liability.
Today is January 2014, John has been your financial planning client for over ten-years. He is 61 and married to Jane, age 60. He owns Victory Company, a family business professionally valued at $5.6 million. He and Jane have three children and seven grand- children. One son, Paul, manages Victory Co. and will someday own it.
John is a member of a study group made up of 20 owners of closely held businesses. The group meets monthly and once a year invites an estate planning professional to talk about how to create the best estate plan.
Each year, one member becomes a case study for this discussion, and this year John was the subject of the case study. The presenter, a financial planner named Bryan, recommended a few changes to John’s estate plan.
Bryan, like 99 percent of his estate planning peers, is a “traditionalist.” His estate planning goal is to make sure that there is enough liquidity (cash-like assets owned by the client, life insurance or both) to pay the potential estate tax after the client dies. Your goals, on the other hand, are much more ambitious: 1) eliminate or reduce as much as possible the potential estate tax liability and 2) maximize the amount of wealth to the client’s heirs (typically the children and grandchildren).
John wants to hear your second opinion on Bryan’s recommendations, and your task is to adjust his overall estate plan to make sure that he and Jane can maintain their lifestyle, and to keep John in control of his assets-including Victory Co.for the rest of his life.
John’s overall wealth is about $15 million. This includes the $5.6-million value of Victory Co., which nets $1.5 million before tax and after paying John a $300,000 salary plus liberal fringe benefits. After taxes, John earns about $400,000 to $600,000 more per year than he and Jane spend.
The balance of John’s wealth includes two homes (a main residence and a vacation home) worth a combined $2.7 million; $1.7 million in his 401(k) plan; cash, and a stock and bond portfolio totaling $1.8 million; $2.9 million in income-producing real estate; and $300,000 in sundry assets.
There also is $6.2 million in insurance on John’s life that, per Bryan’s recommendation, is now owned by an irrevocable life insurance trust (ILIT). This insurance includes a $1.2 million whole life policy and $5 million in 10-year term insurance (with six years remaining in the term).
1
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.