The Case of Future Taxes

The client has successful businesses in both manufacturing and distribution, and is worried about the potential cost of taxes on his death. What if the taxes owing on death became so onerous that they impacted the operation of the businesses?

If the businesses continue to increase in value, then who can tell how much tax might be owed? Did they need insurance to cover off this huge tax burden so that the cash would be available when needed? If so, how much insurance was needed?

Scarrow Yurman & Co led a careful and thorough discussion about the impacts of reorganizing his affairs, and recommended an estate freeze type reorganization. Under the reorganization, the founder and his spouse would freeze their interests in the family businesses at today’s values, and allow for future increases in value to accrue to other younger family members.

As a result, the founder could, with certainty, estimate the taxes that would be payable on his death in relation to these business interests.

It turned out that the projected taxes on death were not as bad as had been feared and no insurance was necessary. However, the client was able to organize wills and bequests so that funds were set aside for the payment of these taxes.

Our client gained peace of mind with a better understanding of how his estate would be taxed. He was able to turn his attention to other matters, knowing that this aspect of his personal finances was settled.

Estate Planning