Recently, I read an article titled, “What makes for success?” by Kemmons Wilson, the founder of Holiday Inn. He said, “It is great to attain wealth, but money is really just one way — and hardly the best way — to keep score.”
Interesting quote, huh? Most readers of this column call me with tax problems because they have attained wealth (no doubt they do keep score in money), and they don’t want to share that wealth with the IRS. Perfectly normal. Yet, it’s amazing. Once the reader realizes that we can show them how to pass their wealth — all of it and intact — to their family (really eliminate the estate tax), the conversation turns to other ways that they might keep score. Sure they are delighted to find there are legal ways to totally win the estate tax game. But they readily admit that they don’t know how to deal with their other problems (really other ways to keep score).
The other problems fall into the general category of little kids, little problems; big kids, big problems. Stuff like which of my kids should run the business? How do I treat the kids fairly? What about the nonbusiness kids? What happens if one (or more) of my kids gets divorced? How do I take care of my wife (the second one who is 15 years — or more — younger than the caller?) The callers tell me about family problems, business problems and/or assorted personal problems.
To me every word is important, even though I’ve listened to so many tales of woe before (but although similar, each problem, as explained by each client, has its own peculiar twists and turns).
Let’s face it. Stuff happens. After years of solving wealth transfer, business succession (usually the business is at center stage) and estate planning problems, experience has taught me that solving only the money problems can never yield a perfect (economic and tax) plan.
The human stuff — your spouse and kids support your plan — must be solved too. What about your son-in-law or daughter-in-law? Do you “love” him/her? Or is “hate” the better word? I know it sounds like cornball. But if you really want to win the game of life after you have won the money game (often the easy part), you must attempt to solve the human part; the emotional stuff.
Here’s my suggestion to start the process. Make two lists: The money-problem list/the human problem list. Solve the money-problem list first (usually you are home free if you solve these three money problems: (1) Maintain your lifestyle — and your spouse’s — for as long as you live; (2) Transfer your business to the business kids, tax-free; and (3) Kill the estate tax.
An important note: Unless the client tells us otherwise, we always assume you want to control all your assets — especially your business — for as long as you live.
Once the money-problem list is complete, then it’s easier to tackle the human-problem list. Interestingly: Many times solving the money problems solves some (often all) of the human problems.
Finally, you must work with experienced professionals who know how to solve both problems: The money problems and the emotional human stuff that comes when you accumulate significant wealth and then, want to pass it to your heirs.
Important: Each piece (whether intended to solve a money problem or a human problem) of your final plan must be part of a single comprehensive and integrated plan, all implemented at the same time. Piecemeal planning, based on my 50-plus years of experience, is a disaster that only enriches the IRS, but fails to satisfy the normal problems of a typical well-to-do family.
One final point: The easiest and fastest way to create and implement your comprehensive and integrated plan is to divide your plan into two separate plans: (1) Your estate plan (remember you will be in heaven) always the easiest plan, and (2) Your lifetime plan (all the years you have left to enjoy life with your family and do the required tax planning strategies to kill the estate tax, while still controlling your wealth).
Remember, your remaining years of life — whether you are 50, 60, 70 or more years mature — should include a plan to grow your wealth (part of the lifetime plan), but keep that increased growth away from the grasp of the estate tax monster.
In my 50-plus years of practice — working with successful business owners — following the above planning outline always solves the money problems and (most of the time) solves the human problems. The lifetime plan (including showing you how to grow your wealth) is always fun.
If you want to join the tax-saving fun and talk about your estate or lifetime planning problems — money, human or how to grow your wealth — call me, (Irv) at 847-674-5295.
Irv Blackman is a certified public accountant who lives part-time on Marco Island and specializes in estate planning, business succession and asset protection. E-mail him at firstname.lastname@example.org or call 417-9732. His Web site is taxsecretsofthewealthy.com.