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Case #1 – Father/Son Succession Plan
Profile: Small, heavy construction contractor was near retirement. Company had a pension plan in place, but no buy/sell or estate plan. Father and son operated the business. Company had 37 employees.
Challenge: Company was too valuable to gift outright to the son. Family was concerned about equalizing estate values with other son who was not active in the business. Company was continuing to grow making the challenge bigger.
Solution: WorthPartners appraised the company using discounts to reduce the value. Total value was reduced 60%. WorthPartners then set up a retirement plan for the father which created a liability equal to book value. Father was able to recapitalize the company and gift the stock to the son for $100,000, making the purchase price totally tax deductible in the form of a retirement benefit. To equalize with the son, WorthPartners arranged for the retirement plan to be payable to the son at Mom and Dad’s death, estate and income tax free.
Case #2 - Equalization of Assets to Heirs
Profile: Local cranberry farmer with a son and daughter operating their company along with two other children not involved in the family business.
Challenge: Father (72) wanted to protect their company from estate taxes and pass the ownership to the son and daughter operating the business but wanted to equalize assets with the other children.
Solution: WorthPartners arranged for a gifting program to pass acreage to the working children at today’s valuation. WorthPartners also restructured the estate plan and calculated the estate costs and value of non-farm assets. A tax-efficient life insurance plan was used to fund the estate tax liability and provide equalization for the non-farm children.
Case #3 – Estate Tax Financing Plan
Profile: A real estate development company with 125 employees throughout New England.
Challenge: Owner was facing significant estate tax costs based on fair market value of his land and commercial buildings. Client wanted to pass future appreciation to children while values were somewhat depressed.
Solution: WorthPartners arranged for a current appraisal of existing assets and created a gifting program to the children to be funded over the next several years. In addition, the client separated the company into two entities and sold stock to children at depressed values. To guarantee the preservation of the assets, client agreed to fund the tax liability with discounted dollars through an estate tax free zero coupon bond yielding 8% with a maturity at death.
Case #4 – The Retiring Senior Partner
Profile: Civil Engineering Firm with 12 partners ranging in ages from 38 to 65.
Challenge: The senior partner wanted to retire within the year and the partners wanted to offer a reasonable buy-out alternative.
Solution: WorthPartners recognized there was a significant difference between the buy/sell value and the true fair market value of the firm. After performing an appraisal, WorthPartners recommended using an ESOP which resulted in a tax efficient buy-out of the senior partner and increased productivity by the remaining employees who had an increased equity interest in the firm.
Case #5 – Supplemental Retirement & Disability Income Plan
Profile: Large multi-location automobile dealership with several key people.
Challenge: Company was concerned about the cyclical nature of their business and wanted to tie key management to the company by using a long term incentive plan. In addition, company recognized there was a potential disability liability in the event one of their key people was hurt and unable to work.
Solution: WorthPartners was retained to design and implement a long term incentive plan for the company which addressed the key issues facing an automobile dealership. A Supplemental Retirement Program was implemented to provide “golden handcuffs” and fund additional retirement income benefits to supplement their 401K plan. A unique disability feature was included to protect the key managers for 65% of their salary in the event of a disability before retirement.
Case #6 – Merging Companies and Benefits
Profile: Two successful financial services companies in Boston elect to merge their firms.
Challenge: Quickly integrate employee and executive benefits of two widely different programs while enhancing employee morale and reducing expenses.
Solution: WorthPartners reviewed the benefits of both companies examining plan design, expense, claims, cost-sharing, service and satisfaction. A new slate of benefits was creatively designed around management / employee value assessments and by re-negotiating with the providers of choice. Finally, a 24/7 internet-based benefit communication and administration plan was implemented to help employees and their families better understand, utilize and appreciate their benefit program.
Securities and advisory services offered through First Allied Securities, Inc., A registered broker dealer, Member FINRA/SIPC
