1. Modern Planning for Closely-Held Business Owners
September 2014

2. Disclosures
The author does not provide legal, tax and/or accounting consulting and/or advice. This material is being provided to you strictly in a capacity as an employee benefits consulting firm. The information contained herein is based on data you may have provided, our interpretation of the existing Internal Revenue Code, and the application of relevant statutes, regulations, court rulings, and familiarity with this material as it currently exists. Based on the legal and accounting complexity of employee benefit issues, along with the changing statutory and regulatory environment, the author strongly recommends that you consult with, and seek the advice of, your legal and/or accounting advisor(s) regarding this material.
IRS CIRCULAR 230 DISCLOSURE:  To ensure compliance with requirements imposed by the IRS, we inform you that any federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on you, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
This report has been created for your sole use. It contains proprietary information of The Executive Benefits Guy and possession of it is not deemed a waiver of our rights. Distribution to a non-affiliated party is prohibited.
Insurance Products:
any illustrated guarantees are only backed by the claims-paying ability of the issuing insurance company;
are not a deposit or other obligation of or guaranteed by, any bank or bank affiliate;
are not insured by the FDIC or any other federal government agency, or by any bank or bank affiliate; and
are subject to investment risk, including possible loss of value.
For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec. 101(a)(2)( i.e. the "transfer- for- value rule"); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j).
Past performance cannot predict future results. The insurance product shown in this report is representative of the market and is based on a hypothetical investment yield which is not guaranteed. Actual results will be different from those shown here.

3. No Wonder…
The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.
Economist Milton Friedman
Closely-held business owners are most often distracted by taxation and regulation.

4. …Small Business Owners…
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. President Ronald Reagan, 1986
Closely-held business owners are most often distracted by taxation and regulation.

5. …are Confused!
The last thing you want to do is raise taxes in the middle of the recession because that would just suck up and take more demand out of the economy and put businesses in a further hole.
President Barack Obama, August 2009
Closely-held business owners are most often distracted by taxation and regulation.

6. 2014 Income Tax Rates
Top Income Tax Rate = 39.6% Employment Taxes = 3.8% Phase-out of Deductions MARGINAL TAX RATE = 43.4% Plus

7. AGENDA Why focus on the “Business Insurance” market?
Issues / Concerns of Business Owners
Missed planning opportunities

8. An Underserved Marketplace
Small to Mid-Size Corporations
50 – 1000 employees
New Sales, Cost of Healthcare, & Taxes are top Concerns
A vastly underserved marketplace that is in the typical “sweet-spot” of client relationships for many financial service professionals.

9. “Good” Characteristics
“Ideal” Target Market
“Good” Characteristics
Closely-held S- or C- Corporations > $5 Million in EBITDA Mature, stable business Active Owner Few shareholders
Mature, stable closely-held businesses are simply easier to work with than other business entities.

10. “Poor” Characteristics
“Ideal” Target Market
“Poor” Characteristics
Professional partnerships, LLC’s etc. Small “Mom & Pop” businesses / Early start-ups Large national / international corporations Inactive family or 3rd Party ownership
Mature, stable closely-held businesses are simply easier to work with than other business entities.

11. “I want to defer paying taxes…”

12. For the Owner of a Pass-Through Tax Entity….
…or you can pay taxes on your business return.
You can pay taxes on salary…
You can’t really defer taxes!

13. = For A Business Owner… Succession Planning!
Retirement Planning Buy-Sell Funding Estate Planning Key Employee Benefits
Succession Planning! =

14. Planning for Retirement
Limited opportunities to defer income.
Primary retirement asset is the business.
“Selling the business” is NOT a plan.

15. Buy – Sell Planning
Audit - Fire Drill! Is life insurance funding in place? Does it disenfranchise family members in the event of death?

16. Estate Planning vs. Buy-Sell
An estate plan is NOT a succession plan, but: Family transfer of business interests may be more efficient via estate planning than buy-sell planning.

17. (check if audience still awake)

18. Identifying Key People
Nonqualified Plan Design Made Easy
Who?
Gets What?
When?

19. Sliding Scale of Executive Benefits
Employee
Control
Qualified Plans
Executive Bonus
Executive Bonus with Restrictive Endorsement
Deferred Compensation
SERP
TEBG IP
Employer
Control
+ Tax Deduction -
Control over Plan Assets

20. Identifying the Key Advisors
Group Benefit Consultant
Personal Financial Advisor / Agent
CPA
Attorney
Be willing to coordinate and embrace in planning Process
Be prepared with your own resources to introduce
Be willing an able to work with other advisors. Complimentary rather than adversarial relationships.

21. A Practical Solution Suppose a Business Owner needs…
Key person coverage on Owner Business Owned Life Insurance for informal funding of SERP Personal Retirement Plan funded with life insurance Insurance for Wealth Preservation / Creation / Estate Tax How Many Policies are Needed?

22. A Practical Solution You could design 4 (or more) policies
One owned by the business on the owner (Key Person)
One owned by the business on the key employee (SERP)
One owned by the owner for personal retirement planning
One owned by a trust for wealth preservation/estate tax
Owners HATE this!

23. Control, tangible, tax efficient, cost effective
A Practical Solution
Why not just design ONE?!
Owner dies, spouse has liquidity to invest in business (capital contribution) to keep it running
Owner can borrow against cash values to infuse cash into the business to pay net cost of key employee benefits
Owner can use policy for retirement income
Owner can transfer to trust for wealth preservation/estate taxes
Control, tangible, tax efficient, cost effective

24. About The Executive Benefits Guy
27 years of life insurance wholesale, distribution and retail sales experience
Joint-venture partner for executive benefit and ownership succession strategies involving wealth accumulation & preservation
How TEBG can assist.
10809 Canfield Dr.
Austin, TX 78739
Phone:
Cell:
Website:
Securities and Investment Advisory Services offered through NFP Advisor Services, LLC member FINRA/SIPC.
NFP Advisor Services, LLC is not affiliated with Peter Viliesis, The Executive Benefits Guy.
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that any federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on you, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.