We are, by nature, problem solvers. We enjoy helping people who, like ourselves, have worked hard, achieved success, and want a secure future. Building mutually trusting relationships is paramount to our business model, and there is no greater satisfaction than the word-of-mouth referrals that have helped Suncrest grow.
Suncrest has no direct competitors for many reasons, the most remarkable being its unique approach to building and servicing its client base: Suncrest does not charge for its advisory services or for its professional referrals; clients never receive a bill from Suncrest. Suncrest does get paid, but only if and when a highly customized insurance product is part of the solution, and the professionals in the Suncrest network get paid, but only if and when a client enters into an explicit engagement with them.
Wealth maximization and protection are very personal, delicate matters. Success for Suncrest is achieved by leaving each client in a better position than they were in before they met Boyce Lowery. A call to Boyce is the only one you need to make, he’ll take care of the rest.
Life Insurance AuditFor business owners, a life insurance audit can potentially save hundreds of thousands of dollars in taxes.
Not only will a life insurance audit look at important issues like policy ownership, beneficiary designations, policy objectives and comparative analysis, we will also look at compliance with the relevant tax laws for business-owned life insurance. The vast majority of policies purchased by businesses since August 17, 2006, are NOT in compliance with IRC Sec. 101 (j), and the penalty at claim time is severe. Most life insurance agents and even CPAs and attorneys are not familiar with this very important law. Other tax issues may be of concern as well.
We recently performed an extensive audit for a company with dozens of life insurance policies in force on its key employees. Over 40% of the policies in force were purchased after August 17, 2006, and none of those policies were in compliance. It pays to work with an independent life insurance expert at the time policies are put in place. The second best thing to do is to have an expert review your policies to find any potential problems or opportunities available to save lots of money, before it is too late.
Tax Free Cash FlowAlmost 100% of clients want to find a way to legitimately save on income taxes.
One well-known way to save taxes on the growth of investments is through the use of a Roth IRA. If one qualifies, all earnings will not be taxed when the applicable rules are followed. However, there are limitations on the amount that can be contributed to a Roth IRA and furthermore, if one makes more than the established income threshold; one cannot contribute to a Roth IRA at all.
A very popular approach to accumulating funds for the future is through the use of a “maximum funded” life insurance contract. The death benefit is minimized based on the amount to be paid in annual premiums in order to reduce the applicable fees, while still retaining the very strong tax advantages inherent in a properly structured life insurance policy. There is no limit on the amount that can be set up as the premium payment structure, and there is no income testing to see who qualifies. For those looking to accumulate money over a reasonable time frame before taking income, a life policy can be amazingly effective. Properly structured, a life policy can provide tax free cash flow for a very long time and be more effective than many alternatives.
Buy-Sell AgreementsA business owned by more than one person would be well served by having a well drafted buy-sell agreement.
The agreement can be an Entity Purchase agreement, a Cross Purchase agreement or a Wait and See agreement. The agreement can be funded, unfunded or partially funded.
Buy-Sell agreements have “triggering events” that will cause the terms of the buy-sell agreement to come into play. These “triggering events” can include myriad occurrences for one or more of the owners to “trigger” the terms of the agreement. Some examples of triggering events that are commonly included in a buy-sell agreement are death, disability, retirement, termination, bankruptcy and divorce. It is up to the owners of the business to determine which “triggering events” they want to include in an agreement.
When deciding what type of buy-sell agreement to be used, there are numerous factors to be considered. Some of them include the type of entity (C Corp, S Corp, LLC), whether or not the agreement will be funded with insurance, the age differential between the owners, and certain tax considerations. It is very important that you work with highly experienced people who are familiar with all of the ramifications when putting together the agreement and any applicable insurance to fund the agreement.
Key Man InsuranceMany businesses have one or more employees, sometimes including the owner(s), who are vital to the success of the business.
A “key man” life insurance policy is simply a regular life insurance policy (term, universal life or whole life) owned by a business. The beneficiary is also usually the business, although a business can choose to endorse a portion of the death benefit for the benefit of the key employee’s family. The policy will insure the life of the key employee. This may be the owner(s), but it can also be a key employee who simply has special skills, important business relationships or vital knowledge, and so the death of that employee would mean a financial loss for the business.
When an employer owns a policy on any employee, there are important rules that have to be followed to protect the tax benefits usually afforded a life insurance policy. It is very important that you work with an expert in the business use of life insurance to protect yourself from costly mistakes.
Key man disability insurance is also available. This type of policy is designed to provide funds that would be needed by the business to replace the employee who has become disabled. Often, the business chooses or is obligated to continue the salary of the disabled employee and the key man disability policy will provide the funds to allow for a replacement.
Golden HandcuffsSometimes, a business has one or more employees they value even more highly than others in the business, and, while the business owner is concerned about potentially losing these people, paying higher salaries is not necessarily the answer to the retention issue.
When a business has a key employee, we can combine the normal use of key man insurance with the goal of employee retention. The result is “golden handcuffs.” Typically, the employer will enter into an employment agreement with the employee. Among other terms, the employer will establish a time frame through which the employee must remain an employee in order to enjoy the promised benefits. That time frame can vary by employee and the benefits can vary from employee to employee as well.
To informally fund the agreement, the employer will typically purchase a life insurance policy on the life of the key employee, and the employer will be the owner and beneficiary of the policy. There may or may not be any immediate benefit to the employee or his/her family from this policy. Once the established time frame has passed (typically 10 years or so), the company uses the build-up in the cash values of the policy to meet the obligations of the “golden handcuffs” agreement.
There are tax issues to be considered in any such arrangement, and it is imperative you work with someone who is experienced.
Estate PlanningEstate Planning is a broad term that can include the incorporation of legacy planning as well.
Common tools utilized in the process of estate planning include wills, trusts, medical directives, powers of attorney and life insurance. When life insurance is used, it may be used to insure a single life or to insure two lives on the same policy. This type of policy is commonly known as a second to die or survivorship life insurance policy.
For larger and more complex estates, in addition to the above, other tools can be utilized. They include, but are not limited to annual exclusion gifts, lifetime exclusion gifts, Family Limited Partnerships, GRATs, Walton GRATs, IDGTs, Irrevocable Life Insurance Trusts (“ILITs”), Domestic Asset Protection Trusts, Dynasty Trusts, Spousal Lifetime Access Trusts (“SLATs”), CRATs, CRUTs and Foundations.
Working with a knowledgeable team of professionals to include an expert estate planning attorney and life insurance expert is really the only way to ensure that you receive the best advice that allows you to meet your objectives by the most effective means.
Life SettlementsA Life Settlement is simply a transaction where one has a life insurance policy they no longer wish to keep.
The insured is evaluated through medical records and perhaps a medical exam to allow an actuary to determine the insured’s projected life expectancy. Depending on the insured’s life expectancy, the type of policy to be “settled,” face amount of the policy, existing cash values and future premiums required to maintain the policy, the policy may have a value exceeding the policy’s surrender value.
In today’s market, there is little to no interest in the life settlement market for any policy where the insured has a life expectance greater than 12 years. The shorter the life expectancy of the insured, the greater the value of the policy to be settled will be, all other factors being equal.
To get the highest potential value for a policy in the life settlement market, it is important to work with someone who is willing to do the work to shop the case for multiple offers so that the best offer can be found.
Term Life – Includes Annually Renewable Term, 5-year, 10-year, 15-year, 20-year, 25-year or 30-year term periods. In addition to purchasing coverage from a highly rated insurance company that offers competitive rates, the terms of conversion are very important. Once a term policy is issued and put in force, the insurance company cannot change the premium for the duration of the term period selected. However, at the end of the term period, the policy can only be renewed at a very high premium rate.
Universal Life – Includes Fixed Rate Universal Life (traditional UL), Indexed Universal Life, Variable Universal Life and Guaranteed Universal Life. Universal Life policies offer adjustable life flexible premium coverage. The policy amount can be adjusted up or down and the premium can be varied. The interest crediting methodology is dependent on the policy terms.
Whole Life – This type of policy provides guaranteed premiums and guaranteed death benefits. Policies purchased from mutual companies, which are companies that are owned by the policy owners, can pay dividends although dividends are not guaranteed. Dividends are simply a return of premiums that are determined by the insurance company’s board of directors. Dividends can be used to purchase additional insurance coverage, paid out in cash or used to reduce premiums due.
Disability InsuranceDisability Income Insurance – This type of policy provides income to the insured in the event of a covered disability. Policies typically cover illnesses or accidents and do have some exclusions, although the exclusions are understandable.
Business Overhead Insurance – This type of policy insures a business owner of a small business and provides funds necessary to cover the overhead expenses of the business when the owner becomes disabled. The salary of the owner is excluded as a covered expense, but other employee’s salaries along with rent, insurance, and many other expenses are covered.
Disability Buy-Out Insurance – This type of policy is used to provide the funds necessary when a buy-sell agreement includes disability as a triggering event. Once the elimination period has been met (commonly 365 days or longer) from the date of disability, the policy will pay the proceeds to be used for the buy-out. The policy can be set up to pay a lump sum, installments or a combination thereof.
Key Man Disability Insurance – This type of policy is purchased by a business on the life of a key employee. The proceeds of any claim are used by the business to pay the expenses of the replacement employee.
Long Term Care or Hybrid InsuranceLong Term Care Insurance – This type of policy will pay benefits in accordance with the terms of the policy when a covered expense occurs. With a tax qualified plan, potential benefits are triggered after the insured either has a severe cognitive impairment or cannot perform any two or more of the six activities of daily living. Benefits are paid once the elimination period has been satisfied. Benefits can be received for care in a nursing home, at an assisted living facility, at adult day care or for care at one’s home. Long term care insurance policies paid for by a C Corp or an LLC taxed as a C Corp that insure any employees and/or their dependents are fully deductible by the business with no taxable income to the insureds.
Hybrid Life/Long Term Care Insurance – These types of policies provide both life insurance and long term care benefits. Some policies are designed to provide a 100% refundable premium to the policy owner prior to any claims being incurred. This allows one to reposition some of one’s assets to this type of policy with no risk to principal. Coverage is provided so long as the policy is in force, but the policy owner can choose to cancel the policy at any time and receive a 100% refund, less any claims or previous withdrawals.