Estate Planning is a Matter of Trust

John, 58, is married with three children and is a partial owner of a tech business. He and his partners plan to sell the business in the near future and although John is onboard to do so, he is a bit nervous about how to handle his estate with this big change. John has a large net worth, with shares of approximately $50 million, plus $20 million of real estate. John has a good relationship with his Financial Professional, Paul, who has been a great help with his financial planning throughout the years. John has now reached out to Paul for his help with the upcoming business liquidation.

During one of their meetings, Paul informed John that in order for him to give the best service and advice on his estate, he wanted to introduce him to Jude who is an Estate, Trust, & Tax Planning Attorney, whose expertise in corporate tax planning is one of the main reasons Oppenheimer includes him as an Alliance on their platform. During their first introductory meeting, Jude reviewed John’s profile, and based on John’s shares and real estate, Jude advised him that he has a large estate tax liability of about $30 million. John was startled to hear that and wanted to learn more about how Jude could help him.

The following week, John, Jude and Paul sat down in a meeting to discuss the situation further, where Jude instructed John on the next steps that would need to be taken to protect his estate. The first step, was to address certain documents that John will need such as a trust, will and most importantly, life insurance. Since John is a family man and has a large net worth, the life insurance would be a vital component in his estate plan. Based on the size of John’s estate, Jude advised that they purchase a 10 million dollar life insurance policy and put it into an Irrevocable Life Insurance Trust (ILIT). He explained how this would allow the death benefit from the life insurance to be used to pay any estate taxes after his death. Paul worked with John and they secured the ILIT per Jude’s suggestion.

The second step was to create an additional irrevocable trust to transfer a percentage of John’s share from the sale of the business. Jude explained how this will help mitigate the estate tax problem down the road since property that has been transferred to an irrevocable trust does not contribute to the gross value of your estate.

A few months later, the business liquidation occurred, and John’s proportionate share of cash from the sale flowed into the trust as advised. John was happy that Paul introduced him to Jude, since not only was he able to successfully sell the business, but now his family knows that his estate is secure and they will not be hit with any large estate tax. Paul was grateful that with the assistance and expertise Jude provided, he was able to give his client the proper guidance through this process.