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Touchstone Services
Wealth Preservation Formulas
We work hard throughout our lives to create wealth and avoid unnecessary
income taxes only to be hit by an estate tax for the
privilege of transferring our assets to our decendents. And should
we decide to transfer any assets during our lifetime,
we are assessed a gift tax for that privilege.
Estate and
gift taxes share a rate structure ranging between 41%
and 49% of the asset value when transferred. Every
taxpayer is entitled to a credit which offsets the tax on the
first $1.5 million (increasing to $3.5 million by 2009) of cumulative
lifetime gifts and transfers at death.
Without the appropriate
strategies and mechanisms in place, the portion of your wealth
passing to loved ones or a favorite charity
could be cut almost in half as a result of transfer taxes.
This is on top of the income taxes you have paid over the years
in creating and accumulating your wealth. For those dollars that
have accumulated tax-deferred
in your retirement plan, the combination of future income tax
and estate tax can easily consume over 70% of your investment
balance.
Fortunately, by implementing the right strategies,
estate and gift taxes can be greatly diminished, or in some cases,
eliminated.
Taxes and expenses consumed about three quarters of
the Elvis Presley estate. J.P. Morgan lost almost 70% of his
estate. Yet Andy Warhol
lost only 2% of a net worth approximating $300 million.
And Sam Walton, the richest man in America at the time of his
death, lost
almost nothing. By utilizing an effective wealth preservation
strategy involving a family partnership, the Walton family
avoided about $10 billion
in estate taxes.
You don’t have to be an Elvis Presley
to have a substantial percentage of your wealth exposed
to estate taxes. If you haven’t yet engaged
in any wealth preservation planning, you will
likely be surprised to learn the consequences of inaction.
Once your accumulated wealth crosses a certain threshold,
estate taxes begin to consume your legacy at a rate
in excess
of
40%. For many successful
people, it is not particularly difficult to cross that
threshold when adding up the value of their home, investments,
business,
retirement
plan and life insurance coverage.
In concert with our other
services including Family Legacy Planning, we can help
you bring together the right balance of business,
trust and family entities along with the appropriate strategies
for protecting and preserving your wealth while providing for
how you want your wealth to be distributed.
We
begin by helping you focus on and formulate your goals and objectives,
which are likely to include:
- Providing financial security for
loved ones.
- Maintaining control over your business.
- Avoiding disputes between
family members or business partners.
- Providing for a favorite
charity or cause.
The next step is to gather the pertinent financial data and
related information to determine what will happen
if you do nothing
different. By reviewing the following kinds
of information we can quantify
the portion of your current wealth that will
be eroded by transfer taxes:
- Family data.
- Business and personal assets and liabilities.
- Income and cash flow.
- Current will and trust documents.
- Existing contractual agreements
including prenuptial, buy-sell, life insurance and partnership/shareholder
agreements.
From there we will custom design
for you the right formula of structure and strategies to substantially
reduce your
existing exposure to transfer taxes. As part of the design, we
also typically incorporate certain asset protection mechanisms
to minimize your exposure to financial loss from lawsuits or other
forms of damage claims.
After presenting and explaining the design plan,
we will guide you through its implementation working in conjunction
with your attorney and other advisors. And because certain aspects
of your situation may change, we also can provide you with periodic
future monitoring and modification recommendations as needed.
Because of what’s at stake,
it is very important to begin this process soon.
Failure to address it in time can place a significant emotional
burden on your family, not to
mention the adverse financial impact that can result from an
improperly planned estate.
Let's schedule a meeting to get started right away.
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