The Top 10 Wealth Planning Strategies for Successful Entrepreneurs
Today’s successful entrepreneurs do not run their companies simply to generate more business for themselves. Most want to maximize their personal wealth so they can achieve three key goals:
1. Take care of their loved ones and build an amazing life of significance
2. Meaningfully support charitable causes they are deeply important to them
3. Change the world for the better by creating a big impact
Accomplishing even one of those goals can be challenging for driven entrepreneurs, who have complex situations and many “moving parts” to their businesses and financial lives. Investment management solutions alone—even cutting-edge methods—simply can’t provide the tools necessary to capture the opportunities and mitigate the risks that entrepreneurs face.
That’s a fact well recognized by some of the most successful business owners today—the self- made Super Rich, with a net worth of $500 million or more. The Super Rich deliberately and consistently make a point to seek out advanced solutions that go far beyond mere investment management, into areas such as tax mitigation, asset protection, business succession planning and charitable giving.
Based on our research and our extensive experience working with the Super Rich, we have identified the top 10 wealth planning strategies that these elite entrepreneurs implement (in partnership with their wealth management teams) to pursue their most important professional and personal goals.
Will you need all 10 of these strategies in your life? Maybe not. But it makes good sense to discuss them with your trusted advisors to determine if one or more could help you achieve all that is most important to you.
1. Defined benefit plans
Too often overshadowed by more familiar defined contribution plans like 401(k)s, defined benefit plans can potentially offer much more significant advantages to successful business owners.
Defined benefit plans can allow entrepreneurs to make larger contributions than are possible through other qualified retirement plan options, maximize tax deductions and tax-deferred growth, and potentially receive a substantial share of the money contributed and the returns generated (while also rewarding employees).
For more information request the full article called “A Benefit Plan That Can Really Benefit Business Owners”
2. Charitable trusts
Charitable trusts are very powerful tools for many philanthropic-minded entrepreneurs for a number or reasons including that they are one of the few ways to eliminate capital gains when selling appreciated assets such as a business. If you gift some or all of the appreciated equity in your business to a charitable trust and the trust sells it, the capital gains taxes on the equity will be eliminated. A percentage of the money in the trust can be used to provide you (or someone you designate) with an income stream, and—perhaps most important—a nonprofit organization of your choosing will end up getting funding.
For more information request the full articles called “Five Ways to Avoid—Not Evade—Taxes” and “Take Care of Heirs and Charities with a CLT”
3. Trusts for freezing the value of a business
Using a trust to freeze the value of your company can help you pass on sizable sums to your heirs, free of estate taxes. These solutions can be flexible and tailored to your specific situation and goals. It may make sense to consider freezing the value of your company if you anticipate selling your company, you expect it to appreciate in value, you want your wealth to benefit your heirs, and you want to avoid paying gift and estate taxes.
For more information request the full article called “To Eliminate Estate and Gift Taxes, Feel the Freeze!”
4. Captive insurance companies
An important risk management tool, a “captive” is a closely held insurance company set up to insure the risks of the parent company. The owner of the parent company wholly owns the captive insurance company. That means the business owner controls the captive insurance company’s operations—including underwriting, claims decisions and the investment strategy (within set parameters and conditions). With captives, entrepreneurs can often reduce income taxes because the premiums paid into a captive insurance company can potentially be tax deductible. Most important, captives are powerful risk management tools.
For more information request the full article called “Harness the Power of a Captive Insurance Company”
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The Top 10 Wealth Planning Strategies for Successful Entrepreneurs
Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.
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