The End Game: Passing the Maximum Dollars to Your Progeny & Charities

The estate plan may sound like a traditional defined benefit plan, but it is much more than that, the death benefit proceeds can pay for estate transfer taxes for pennies on the dollar.  What we are recommending has three elements at its core: The way these elements are defined and the relationships among them give the plan its unique character.

1. Sponsoring Entity:

An entity must have a valid business purpose. There may be one or more entities. The entities may already exist or can be created. Entity (entities) may employ both spouses.
• Entities must have infinite life. Some portion of the Entity’s income must be active or earned W-2 income. The entity may take the form of: Corporation (either C or S), Partnership, Family Limited Partnership, or Limited Liability Company.

2. Qualified Retirement Plan and Trust:

You can have one or more defined benefit plans. The plan can cover both husband and wife. The plan must satisfy rules of reasonableness of compensation. 


3. Participant’s Trust

The trust is usually a new trust(s). The trust can be created by the husband and the wife separately. The spouse is not a beneficiary. (View the video URL link)

Bottom line, the Defined Focused Defined Benefit Plan generates significant tax deductions, lifetime income for both husband and wife as well as a death benefit for any transfer taxes that may occur.

Charlie Day is a co-contributor to this press release.