Nessun titolo diapositiva

1
The Jack and Faith Daniels Estate
2
The Daniels Family Tree
3
Jack Faith Daniels Estate

• Cash Checking
• Money Market
• Michigan Residence
• Florida Condo
• Traded Stocks
• Bonds
• Real Estate
• Auto Company Stock
• Pension Plan
• Daniels Manufacturing
• Total Assets
• Condo Mortgage
• Real Estate Mortgage
• Total Liabilities
• NET WORTH

• 25000
• 300000
• 600000
• 400000
• 500000
• 400000
• 1500000
• 500000
• 2000000
• 8000000
• 14225000
• 200000
• 150000
• 350000
• 13875000

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Shareholder Ownership
5
Jacks Main Concerns
Business Related

• Tax efficient transfer of company ownership to
  family members
• Let Jane have the option of becoming a part owner
  of the family business

Personal Estate Planning for Jack and Faith

• Provide sufficient income to cover Jacks
  Faiths retirement needs
• Provide Faith with stable income in the case of
  Jacks death
• Provisions for disabled grandchild
• Strong interest in charity gift
• Tax efficient and fair distribution of wealth and
  without providing to too much easy money to
  beneficiaries

6
The Jack Faith Daniels Estate Planning Proposal
Presented by The Bankers Trust Co. And Rych
Associates
29th October, 1999
7

• The Bankers Trust Co.
• Part of the Deutsche Bank Group
• The largest bank in the world in terms of
  total assets
• Large global network
• Awarded the best Financial Planning outfit
  in the world, by MEC Co.

• Rych Associates.
• Partners Robert, Yves, Christoph Heiko,
  experts in Trust Management Estate Planning
• Estate Planning boutique, highly respected
  in this business

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Our Recommendations
9
Jacks Main Concerns
Business Related

• Tax efficient transfer of company ownership to
  family members
• Let Jane have the option of becoming a part owner
  of the family business

Personal Estate Planning for Jack and Faith

• Provide sufficient income to cover Jacks
  Faiths retirement needs
• Provide Faith with stable income in the case of
  Jacks death
• Provisions for disabled grandchild
• Strong interest in charity gift
• Tax efficient and fair distribution of wealth and
  without providing to too much easy money to
  beneficiaries

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
10
Transfer of Company Ownership
Recapitalization of Company
Family Limited Partnership
Jacks 70 stake
General Partners (Common Stock)
Limited Partners (Preferred Stock)
Convertible Bonds
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
11
Who Gets Which Stocks?
Transfer of Company Ownership

• Common stock (voting rights) to Tim and Ted
  involved in business
• Preferred stock (stable dividend) to Sam not
  involved in business
• Bonds convertible into common stock to Jane

Management Concerns

• Appointment of an external (non-family member)
  Chief Operating Officer (COO)

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
12
Jack Faith Daniels Estate
Cash Checking Money Market Michigan
Residence Florida Condo Traded Stocks Bonds Real
Estate Auto Company Stock Pension Plan Daniels
Manufacturing Total Assets Condo Mortgage Real
Estate Mortgage Total Liabilities NET WORTH
25000 300000 600000 400000 500000 400000 15
00000 500000 2000000 1000000 7225000 200
000 150000 350000 6875000
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
13
Jacks Main Concerns
Business Related

• Tax efficient transfer of company ownership to
  family members
• Let Jane have the option of becoming a part owner
  of the family business

Personal Estate Planning for Jack and Faith

• Provide sufficient income to cover Jacks
  Faiths retirement needs
• Provide Faith with stable income in the case of
  Jacks death
• Provisions for disabled grandchild
• Strong interest in charity gift
• Tax efficient and fair distribution of wealth and
  without providing to too much easy money to
  beneficiaries

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
14
Coverage of Retirement Needs
Transfer of Residence
Primary residence Michigan Secondary residence
Florida Condo
JF
Children
After 15 years
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
15
Coverage of Retirement Needs

• Creation of a Qualified Personal Residence Trust
  (QPERT) Irrevocably transfer both residences
  for a term of 15 years.
• Upon maturity of the term, the property is
  passed on to the children
• If JF die prior to the end of the trust
  term, the proceeds thereof are subject to
  estate tax.
• During the period of the term, JF have the right
  to occupy and use the residences.

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
16
Coverage of Retirement Needs
DMC
Commercial Building owned by Jack Faith
Lease of 10 Years
Rent of 200,000 p.a.
Gradual Payments via Notes Receivable (200,000
p.a.)
Sale of Property to children for 2,000,000
Children
Lease of 10 Years
Rent of 200,000 p.a.
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
17
Sell Real Estate to children and have them lease
it back to the company
Coverage of Retirement Needs

• With the collected rent paid by the company, the
  children gradually pay back the sum via notes
  receivable
• Advantages
• The Real Estate exits the parents estate
• The parents continue to receive fixed income
• Only gift tax on the residual

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
18
Jack Faith Daniels Estate
Cash Checking Money Market Michigan
Residence Florida Condo Traded Stocks Bonds Real
Estate Auto Company Stock Pension Plan Daniels
Manufacturing Total Assets Condo Mortgage Real
Estate Mortgage Total Liabilities NET WORTH
25000 300000 0 0 500000 400000 0 500000 2000
000 1000000 4725000 200000 150000 350000
4375000
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
19
Jacks Main Concerns
Business Related

• Tax efficient transfer of company ownership to
  family members
• Let Jane have the option of becoming a part owner
  of the family business

Personal Estate Planning for Jack and Faith

• Provide sufficient income to cover Jacks
  Faiths retirement needs
• Provide Faith with stable income in the case of
  Jacks death
• Provisions for disabled grandchild
• Strong interest in charity gift
• Tax efficient and fair distribution of wealth and
  without providing to too much easy money to
  beneficiaries

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
20
Coverage for Faith upon Jacks Death

• Faiths 10 stake in the company will be changed
  into preferred stock in order to increase the
  stability of dividend income
• Creation of a Delaware Trust which will be
  funded by the defined contribution plan valued at
  2000000 (Unified Credit Exemption). Amount in
  trust to be invested in a growth portfolio.

The Delaware Trust is perpetual, therefore has
an unlimited trust term.
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
21
Jack Faith Daniels Estate
Cash Checking Money Market Michigan
Residence Florida Condo Traded Stocks Bonds Real
Estate Auto Company Stock Pension Plan Daniels
Manufacturing Total Assets Condo Mortgage Real
Estate Mortgage Total Liabilities NET WORTH
25000 300000 0 0 500000 400000 0 500000 0 10
00000 2725000 200000 150000 350000 23750
00
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
22
Jacks Main Concerns
Business Related

• Tax efficient transfer of company ownership to
  family members
• Let Jane have the option of becoming a part owner
  of the family business

Personal Estate Planning for Jack and Faith

• Provide sufficient income to cover Jacks
  Faiths retirement needs
• Provide Faith with stable income in the case of
  Jacks death
• Provisions for disabled grandchild
• Strong interest in charity gift
• Tax efficient and fair distribution of wealth and
  without providing to too much easy money to
  beneficiaries

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
23
Charitable Remainder Trust
Provisions for Disabled Child Charity
Auto Company Stocks 500000
Non charitable income beneficiary (Jack Faith)
Charitable Remainder Trust
Bonds 400000
Charitable Remainder
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
24
Irrevocable Life Insurance Trust 2nd to Die
Policy
Provisions for Disabled Child Charity

• Purpose
• Replace the principle of the C.R.T. at Jacks
  and Faiths death in order to provide further
  income to the disabled child other
  grandchildren which will be managed by trustee
  for childrens benefit.

The Public Benefits Programme for disabled
individuals should be considered before
determining the distribution to the disabled
child.
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
25
Jack Faith Daniels Estate
Cash Checking Money Market Michigan
Residence Florida Condo Traded Stocks Bonds Real
Estate Auto Company Stock Pension Plan Daniels
Manufacturing Total Assets Condo Mortgage Real
Estate Mortgage Total Liabilities NET WORTH
25000 300000 0 0 500000 0 0 0 0 1000000 1825
000 200000 150000 350000 1475000
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
26
Jacks Main Concerns
Business Related

• Tax efficient transfer of company ownership to
  family members
• Let Jane have the option of becoming a part owner
  of the family business

Personal Estate Planning for Jack and Faith

• Provide sufficient income to cover Jacks
  Faiths retirement needs
• Provide Faith with stable income in the case of
  Jacks death
• Provisions for disabled grandchild
• Strong interest in charity gift
• Tax efficient and fair distribution of wealth and
  without providing to too much easy money to
  beneficiaries

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
27
Tax Efficient Distribution of Personal Wealth
DMC buys back stock from J Fs estate
DMC Stock still in J Fs Estate
DMC Corp.
Upon J Fs death, the proceeds from the
insurance go to the company
DMC buys Insurance for J F
Money received from the sale of stocks to DMC is
used to cover estate costs
Life Insurance on Jack Faith
Estate Costs
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
28
Liquidity Provision for Payment of Estate Tax
Tax Efficient Distribution of Personal Wealth

• Company buys life insurance for Jack and Faith
  Daniels with second to die clause.
• Establishment of contract between Jack and
  company obliging company (upon the death of both
  Jack and Faith) to buy back enough stock from the
  estate in order to cover the estate tax and
  administrative costs.
• Company pays for stock with proceeds of life
  insurance.
• Advantages
• Enough funds to cover estate and administration
  costs
• Estate does not need to be liquidated
• Insurance proceeds to cover costs are not taxed
  if the value of stock redeemed does not exceed
  the estate tax and administration espense costs
  (Section 303)

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
29
The Story of Yvette Daniels Present Status
Study and Recommended Solutions for Mrs. Yvette
Daniels (wife of Tim Daniels), a French citizen
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
30
The Story of Yvette Daniels

• Considerations
• Transfer of wealth upon Tims death would result
  in US Estate Taxes
• Gifts of upto 100,000 per year during the
  lifetime of Tim are not subject to US Estate
  Taxes

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
31
The Story of Yvette Daniels

• Proposed Structure
• Tim creates a Limited Partnership with Yvette and
  gifts her with limited partnership interest with
  value 100,000 p.a.
• Advantages
• More value (of stock) can be transferred due to
  permitted discount for lack of control and
  marketability.
• Yvette cannot cash in or transfer her limited
  partnership interests without Tims consent, i.e.
  she cannot spend it while Tim is alive.

Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
32
Conclusion
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
33
Jack Faith Daniels Estate
Cash Checking Money Market Michigan
Residence Florida Condo Traded Stocks Bonds Real
Estate Auto Company Stock Pension Plan Daniels
Manufacturing Total Assets Condo Mortgage Real
Estate Mortgage Total Liabilities NET WORTH
25000 300000 0 0 500000 0 0 0 0 1000000 1825
000 200000 150000 350000 1475000
Net Taxable worth of the estate has reduced
dramatically therefore cutting down the estate
tax to a great extent
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
34
Benefits of the Proposed Financial Plan
Actual tax and wealth transfer expenses on the
estate of 13,875,000 Taxes and Expenses with
the proposed plan 43 estate and wealth transfer
tax on an amount of 1,475,000. 15 Gift Tax on
the QPERT (1,000,000) payable by the
beneficiaries upon maturity of the QPERT. 8
Consultation and Management Fee on total present
net worth
60
14 (/- 3)
5 Surcharge applicable over the standard 55
for amounts between 10,000,000 - 24,000,000
Recommendation for Mrs. Mr. Jack Daniels BT Co.
Rych Associates
35
BT Co.
Erika Belloni 1 212 454 8697 erika.belloni_at_bt.com
Melissa Dolan 1 212 454 8456 melissa.dolan_at_bt.com
Chetana Munot 1 212 454 3453 chetana.munot_at_bt.com
Rych Associates
Heiko Jungmann 1 210 739 0234 heiko.jungmann_at_bt.c
om
Robert Sorio 1 210 739 0405 robert.sorio_at_rych.com
Yves Windey 1 210 739 0343 yves.windey_at_rych.com
Christoph De Wilde 1 210 739 3533 christoph.dewil
de_at_rych.com