How We Do It

Our Process Driven Approach

We are a Process Driven planning firm NOT a Product Firm.
The benefit is yours as exemplified below:

Our client is a married man who is 52 and his wife is 50. They have two children who are 6 and 8 years old. Their assets include their home valued at $3 million with a $1 million mortgage, rental properties with a net value of $2.5 million, $500,000 of personal life insurance which is payable to his wife in the event of his death and 33% ownership of a business (C corp.) currently valued at $36 million. The client has two business partners, ages 40 and 45, who are both married. Currently, there are no adult children involved in the business. The business has 25 full-time employees. The partners own equal shares of the factory that the business leases from them. The factory has a value of $5 million with no debt. The monthly lease is $50,000. A private equity firm has indicated that they want to buy a 25% interest in the firm for $9 million. Currently, each of the three owners earns $900,000 in annual salary and bonuses.

Our client's goals include retirement at age 62 and the reduction of their anticipated estate tax and annual income tax bill, especially in light of the upcoming sale to the private equity firm.

After several fact finding sessions and document analysis, we recommended the implementation of a Tax Exempt Unitrust to sell the business to the equity firm.

With this unitrust, the clients were able to avoid paying $750,000 in capital gain taxes on the $3 million stock sale. They also received a $300,000 income tax deduction immediately, saving approximately $120,000 of actual personal income tax. The trust was designed to delay paying taxable annual income until the client's desired retirement.

Next, we assisted the company in creating a pension plan which reduces both corporate and personal income taxes annually. The plan has several components which allowed us to contribute almost $600,000 into the plan, with more than 80% of the contribution going directly to the owners. This will save nearly $210,000 in personal income taxes annually.

A buy/sell agreement was then established to protect each of the partners and their spouses in case of death, disability or termination.

Lastly, we created a legacy trust that would not only reduce the size of their taxable estate, but would create estate tax savings today of about $6 million. The estate taxes are eliminated through an offsetting charitable deduction created at the second death and fully amendable until then. Although philanthropy was not the client's objective, the tax benefits associated with these strategies enabled the client to receive significant tax savings both today and for many years to come.

Total Estimated Tax Savings: $7,080,000
Ordinary Income Tax:
Capital Gain Tax:
Estate Tax:


Neither NEXT Financial Group, Inc. nor its representatives offer tax or legal advice.  Please consult your tax or legal professional before taking any action



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