By John A. Wenstrup
Sweeping reform has dramatically changed the financial services industry allowing banks, brokerage firms and insurance companies the opportunity to do more for our clients. The impetus for these changes is consumer demand for high performance, top quality, and comprehensive services. Clients want a team of advocates who find the products and services to implement a dynamic personal financial strategy on their behalf.
For example, Jean is thinking of transitioning ownership of her architectural design business to her eldest daughter over the next five years, but is concerned about doing something equal in value for her other daughter and son who do not work in the business. Jeanís spouse, Tom has a significant 401(k) balance so Jean wants to maximize her own cash out of the business in a way to supplement their retirement but still have control over when and how she receives the money.
Finally, neither Jean nor Tom is all that comfortable with the sunset provisions of estate tax reform and realize that they must do something now in light of this "reappearing" estate tax.
We get investment reps, trust officers and insurance advisors gathered around one table to consider the alternatives together. We arrange a meeting with Jean and Tom to clarify their desires and make sure we have all the important information. The team presents all the thinking that went into every alternative. Together Jean, Tom and their team weigh the advantages and disadvantages of each alternative and implement the plan.
Working with a group like this makes our client comfortable with asking questions, making decisions and moving ahead.
Two years ago, Craig, Jim and Pat acquired The XYZ Corporation with the help of their loan officer, Dave. At that time, the bank required key executive life insurance. The corporation entered into a "Buy-Sell" stock repurchase agreement to assure smooth transfer of business ownership if one of them should die unexpectedly. The insurance advocate found quality life insurance and negotiated suitable insurance contracts to guarantee the cash to buy back the stock if Craig, Jim or Pat died. Today, with over 100 employees, Dave suggested that it might be very beneficial to review XYZ's benefit plans. This helped the owners reconsider what they were providing, and consider other possible benefit alternatives to attract and retain employees in the tough employment market.
Over the last two years business has been very good for XYZ and now it's time to consider adding voluntary benefits and a better retirement plan. Once more Dave arranged to provide critical alternatives for XYZís $2,500,000 401(k) assets. First on the list next year is a well-deserved executive bonus plan.
Our commitment to be an essential partner with our customer means better communication and execution for the client, and a deeper, broader relationship with us.
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The Wealth Alliance does not provide tax or legal advice. Tax laws are subject to change.
513-248-9242
John A. Wenstrup is a Chartered Financial Consultant and president of The Wenstrup Company. John specializes in retirement, wealth transfer & business succession planning. |
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