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  Case #13 Case #14
Case #15 Case #16
 


 

Case #13
Father/Son Succession Plan

Profile:
Small, heavy construction contractor was near retirement. Company had a pension plan in place, but no buy/sell or estate plan. Father and son operated the business. Company had 7 employees.

Problem:
Company was too valuable to gift outright to son. Family was concerned about equalizing estate values with other son who was not active in the business. Company was continuing to grow and making the problem bigger.

BMI Solution:
BMI appraised the company using discounts to reduce value. Total value was reduced 60%. BMI then set up a retirement plan for the father which created a liability equal to book value. Father was able to recapitalize the company and gift the stock to the son for $100,000, making the purchase price totally tax deductible in the form of a retirement benefit. To equalize with the son. BMI arranged for the retirement plan to be payable to
the son at Mom and Dad's death, estate and income tax free.

 
   
     
 

Case #14
Equalization of Assets to Heirs

Profile:
Local farmer with two sons operating the ranch. There are two other children not involved in farming operation.

Problem:
Father (72) wanted to protect the farm operation from estate taxes and pass the ownership to the two boys operating the ranch. Wanted to equalize with the other children.

BMI Solution:
BMI arranged for a gifting program to pass acreage to the boys at today's valuation. BMI restructured the estate plan and calculated the estate costs and value of non-farm assets. To equalize with the other children, BMI arranged for insurance financing to fund the estate tax liability and provide equalization for the non-farm children.

 
   
     
 

Case #15
Control During Succession Plan

Profile:
Telecommunications company with multiple family members involved. Son is operations manager.

Problem:
Dad is ready to retire and wants to structure a plan to pass ownership to his children. Dad is worried about estate taxes and how to maintain control of the company while passing on the appreciation to the children.

BMI Solution:
BMI appraised the company to determine the lowest value the IRS would accept for estate tax purposes. Dad recapitalized the stock and gift the non-voting stock to his children in the business. Dad retained the voting stock and control. The values of the stock was less than 5% of the FMV of the company. BMI structured a buy/sell between the children and arranged for the voting control to be passed to the son who was in charge of operations. The son had the option to purchase the stock from the other children.

 
   
     
 

Case #16
Succession Plan with Partial Ownership

Profile:
Large oil field construction company owned by father with son in the business.

Problem:
Father was faced with a potential unreasonable compensation problem due to the profitability of the company. He was also concerned about the business continuity issue and wanted to formulate an estate and business succession plan.

BMI Solution:
BMI did an analysis of the wages the father had not earned during the beginning years of an offsetting liability to defray the income tax liability. BMI also designed an estate plan to provide liquidity to fund their estate tax liability. BMI also designed a business succession plan to give partial ownership to the son.

 
   
 
 
 
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