Elite Resource Team

Traditionally the goal of life insurance is to provide a measure of financial security for one’s family after death. Therefore, it is prudent to re-evaluate life insurance policies annually or when you experience a major life event like marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business. Life insurance also provides a number of living benefits and recently has been used as a tool for retirement planning, college planning, estate planning, and business planning.

Premium financing involves the lending of funds to a person or company to cover the cost of an insurance premium. Premium finance loans are often provided either by banks or by third party finance entities known as a premium financing company. Typically, clients that engage in this transaction range in age from 29 to 75; with a net worth of $3,000,000 or greater. Younger clients benefit in the current environment due to the advent of premium financed indexed universal life (IUL) policies. The growth inside IUL policies often exceed the interest rates charged on the loan resulting in a positive arbitrage.

Premium financed policies can be used in a number of ways, including:

• As a buy/sell agreement
• As part of a Gifting Strategy (Leveraged Gifting)
• Inside an Employee Stock Ownership Plan (Leveraged ESOP)

An ESOP is a type of qualified, defined contribution plan designed to invest primarily in the stock of the sponsoring employer. ESOPs are “qualified” in the sense that the ESOP’s sponsoring company, the selling shareholder and participants receive various tax benefits. ESOPs are often used as a corporate finance strategy to create a liquid marketplace for closely held stock which provides a viable tax advantaged exit strategy for shareholders under Section 1042. A common misconception is that by installing an ESOP an owner has to give up control of their company to their employees, which isn’t the case. A properly structured ESOP allows an owner to sell some or all of their privately held stock, creating liquidity, while still maintaining 100% control of the company.

A cost segregation study identifies and reclassifies personal property assets to shorten the depreciation time for taxation purposes, which reduces current income tax obligations and results in increased cash flow. The primary goal of a cost segregation study is to identify all construction-related costs that can be depreciated over a shorter tax life (typically 5, 7 and 15 years) than the building (39 years for non-residential real property). Personal property assets found in a cost segregation study generally include items that are affixed to the building but do not relate to the overall operation and maintenance of the building.

Using cost remediation or cost procurement strategies, companies can maintain their competitive edge by reducing operational cost and corporate risk to improve profit performance. During cost remediation/cost procurement studies, specialists will consider a number of items to lower operating costs such as manufacturing incentives, vendor screening, energy deregulation, equipment lease audits, freight and parcel audits, hiring incentives, tax credits, cell phone audits, energy comprehensive studies, workers compensation audits, property lease audits, etc.

Asset valuation is commonly performed prior to the sale of an asset or prior to purchasing insurance for an asset. It is simply a method of assessing the worth of a company, real estate, security, antique or other item of worth, and may consist of both subjective and objective measurements. For example, in valuing a company, there is no number on the company’s financial statements that tells how much its brand name is worth. On the other hand, net profit is an objective measurement based on the company’s income and expense figures. The value, complexity, and future plans of an asset should be taken into account when considering whether to hire a general valuator who will give you a rough estimate, or a specialist whose results will be well researched and verifiable.

In their simplest form, Qualified Plans are plans that meet specific requirements of the Internal Revenue Code, and as a result, are eligible to receive certain tax benefits. There are two types of qualified plans – defined-benefit plans and defined-contribution plans (such as 401ks and profit sharing plans). A defined benefit plan is “defined” in the sense that the benefit formula is specified and known in advance. Conversely, for a “defined contribution pension plan”, the formula for computing the employer’s and employee’s contributions is defined and known in advance, but the benefit to be paid out is not known in advance.

Social Security Planning refers to the process of working directly with retirees and near-retirees to develop and implement retirement distribution and wealth transfer strategies as it relates to Social Security. With a little proactive planning, a client can make a more informed decision resulting in tens of thousands of dollars of additional benefit for them and their family.

Employee benefits (also called fringe benefits or perks) include various types of non-wage compensation provided to employees in addition to their normal wages or salaries. Most kinds of employee benefits are taxable to at least some degree. Examples of these benefits include: housing (employer-provided or employer-paid), group insurance (health, dental, life etc.), disability income protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation (paid and non-paid), social security, profit sharing, funding of education, and other specialized benefits. The purpose of employee benefits is to increase the economic security of staff members, and in doing so, improve worker retention across the organization.

Captive Insurance Company Reviews are performed by independent, licensed insurance actuaries. The review will consider items such as annual loss reserves, changes in insured’s operations, regulatory changes, adequacy of legal capitalization, actual risk transfer to pools, compliance with investment policies, and original business plan to ensure Captive remains in compliance. The IRS are very strict on Captives so annual reviews are extremely important.

According to this client’s answers, they are happy with their CPA’s work. Therefore, you should ask this client for an introduction to their CPA so you can 1) build a relationship with them using the CPA Team Based Model, and 2) bring other clients who are unhappy with their CPA to them.

Property and casualty insurance can be very important and expensive for business owners. A property and casualty plan review can assess the businesses needs to ensure that the business is getting the appropriate coverage at the most competitive cost. Reviewed items include property and casualty policies, (property, liability, auto), professional liability, workers compensation, and employee benefits. If the insurance costs are high enough, a Captive is often considered as a way to self-insure some of the businesses risks and reduce the third party expenses.