Page 33 - MetalForming July 2010

get its many pounds of flesh (the exact amount depends on the estate-tax rates when Molly dies).
Another sad footnote: Molly, some- what of a health nut, became uninsur- able about a year before Moe died. The most basic estate-planning strategy would have been a large second-to-die life-insurance policy on Moe and Molly (both of whom were healthy and very insurable until near the end of this drama). The policy in an irrevocable life insurance trust (like Joe and his wife had) would have yielded millions of dollars of estate tax-free insurance for Moe.
Joe now owned 100 percent of Little Co. Sid and Sam were ready to take over the company, but they owned no stock. Uncle Joe, as always, wanted to do the right thing. So, after consulting with me, he sold half of his Little Co. stock to an intentionally defective trust (IDT) for $11.5 million and made the beneficiar-
ies of the trust his nephews: Sam and Sid.
Under the tax-law rules, the $11.5 million plus interest to be collected by Uncle Joe from the IDT will be tax- free. How will Sam and Sid pay for the stock, which they will receive from the IDT after Uncle Joe is paid in full? The IDT is a tax miracle worker. Sid and Sam will not pay one penny. The com- pany’s cash flow will be used to pay Uncle Joe.
When the IDT is finally done (Uncle Joe paid and the stock distributed to Sam and Sid) Moe’s sons will own 50 percent of Little Co. (25 percent each) and Uncle Joe will own the other 50 per- cent, just the way Moe wanted it.
The buy/sell agreement was updated with appropriate language, to accom- modate all possibilities—basically dis- ability, death or any type of transfer—for Sam, Sid and Uncle Joe. Life insurance
in partnership with METALFORM tradeshows
was acquired for Sam and Sid.
The intent of the new buy/sell agree- ment is that when Joe dies, Little Co. will redeem Joe’s stock and his two nephews will own 100 percent of Little Co. Since Joe is still insurable, additional life insurance was acquired to cover the
then fair market value of Little Co. Every detail of the plans for Joe, Sam and Sid (before and after Moe’s death) are not included in this article. The most
important points to take away:
1) Prepare a comprehensive estate plan and the IRS will not become a partner sharing in your family’s wealth. 2) Failure to keep your estate plan updated guarantees the IRS a big pay
day when you die.
Want to learn more about how to do
your estate plan right? Browse www.tax- secretsofthewealthy.com. There’s a mountain of free information. In a hurry, call Irv at 847/674-5295. MF
PRESSROOM TECHNOLOGY SHOW ON THE WEB—NEW products at
MetalFormingMagazine.com
Equipment suppliers:
Interested in advertising in this unique offering?
Contact Kathy DeLollis, MetalForming publisher: 216/901-8800; kdelollis@pma.org
New Pavilions in 2010
The very successful Pressroom Technology Show on the Web, launched by MetalForming magazine in 2007, continues to grow.
The online new-product showcase, presented in partnership with METALFORM tradeshows, boasts three new pavilions for 2009—Materials and Coatings, Welding/Assembly, and Fabrication, and two new pavilions in 2010—Sensing and Rollforming.
Stay tuned and visit the online tradeshow often, as we’ll also be adding new exhibits regularly from equipment suppliers.
MetalForming magazine’s Pressroom Technology Show on the Web is the only online location where you can check out all the latest and greatest new products and technology from companies serving the metalforming industry.
www.metalformingmagazine.com/show
www.metalformingmagazine.com
METALFORMING / JULY 2010 31