Page 36 - MetalForming March 2010

Irv Blackman, CPA and lawyer, is a retired founding partner of Blackman Kallick Bartelstein, LLP and chairman emeritus of the New Century Bank (both in Chicago). Want to consult? Need a second opinion? Contact Irv:
Blackman, Kallick, Bartelstein 10 S. Riverside Plaza, Ste. 900 Chicago, IL 60606
phone: 847/674-5295
e-mail:
Blackman@EstateTaxSecrets.com
www.taxsecretsofthewealthy.com
The answer to the above question is a thundering ‘yes’ for about 99 percent of everyone reading these words, because it is almost certain that the tax law will be changed to make the “unified credit” (the amount of your wealth that can be left to your heirs free of the estate tax) $3.5 million (or more) per person. That’s at least $7 million tax-free for a married couple.
With a $7 million freebie to start if you are married and worth about $14 million (or less), legally beating the estate tax will be an easy-to-attain goal.
The fact is we always have been able to beat the estate tax—whether you were worth $5 million or $50 million. Now, it’s just going to be easier. But let’s face it, an estate plan does absolute- ly nothing until you enter the pearly gates. Logic tells you that a proper estate plan must include a lifetime plan to address the period from today until you die.
With the new unified credit (at least $3.5 million, $7 million if married) the estate-tax monster won’t be scaring as many people. The goal of this article is to change the way you think about estate planning.
For the moment, please pretend you are my client, sitting in my office to talk about your estate plan.
Here’s the first question I typically would ask: “Assuming, (Type 1 clients) you do not have enough wealth to worry about being hit by the estate tax or (Type 2 clients) perhaps you know you will be hit hard by the estate tax but for the moment, forget the awful tax even exists and tell me, what is your single biggest concern?”
Let’s talk about the major difference between Type 1 clients and Type 2
clients separately. (You can only be one of them.) Hands down, the most impor- tant concern of a Type 1 client is, “To maintain my lifestyle, and my spouse’s, for as long as we live.” Sure the client has other concerns—stay healthy, transfer the family business to the kids, treat the nonbusiness kids fairly—but lifestyle is always stage center.
So professionally, we quickly take care of the Type 1 client’s death plan- ning: wills, trusts, life insurance. Always, the real emphasis is on lifetime plan- ning: transfer the business to the kids tax-free, yet have dad keep control (via voting stock) for life. Make sure mom and dad have the best health insurance at minimum cost. Create a wage continua- tion plan for dad (from the family busi- ness) if someday he can no longer work. Protect personal assets.
What’s usually the biggest single life- time planning task? Make sure with the help of others that Type 1 clients get the highest rate of return on their invest- ments, while minimizing risk.
Now let’s talk about Type 2 clients. They are affluent. Yes, they have an estate-tax problem, but they have enough wealth to no longer have lifestyle concerns. Can you guess what is their biggest concern (aside from the estate tax, which we known how to legally conquer) that requires lifetime planning? If the client still owns a busi- ness, transferring it in a tax-effective way is their biggest concern. Waiting until death only enriches the IRS— instead we use an intentionally defective trust to transfer the business to the kids or perhaps key employees tax-free. Yet dad keeps control of his business for as long as he lives, but for estate-tax purposes, it’s gone.
BLACKMAN ON TAXES IRVING BLACKMAN
Could This Be the End
of All Your Estate Tax Problems?
34 METALFORMING / MARCH 2010
www.metalformingmagazine.com