Using the Tax Code to Your Advantage for Wealth Preservation

 

At IREXA, LLC, we are not product providers, we are solution providers. We look at how we can improve tax savings with every action we advise. Real estate is one member of the non – traded alternative asset class we use to provide opportunities to reduce taxes and enhance after tax yield, wealth preservation.

The hardest thing to explain to a client about our services is that at a base level we are product agnostic. We can speak about products, however, our best results are achieved when we fully understand our client’s needs. From that understanding, we develop solutions that use real estate, non-traded alternatives, and insurance in an integrated manner to meet the client’s stated needs as we understand them. We call our method Strategic Tax Mitigation™.

For example, in a recent consultation a high net worth individual had inherited property in the middle of the country. The property was worthless until they found oil. He received an offer on the property, the net price of which was $9,000,000. As the seller, he was interested in deferring his taxable gain.

He explained that he and his wife had already gifted the entire amount that they could to his children from the proceeds. Instead of a $9 million gain, he had created a $4,500,000 tax liability for his heirs.

Using the following assumptions:

1     The couple’s income of $1,500,000 was increased by $540,000 following the acquisition of the 1031 replacement property, for a total annual income of $2,040,000.

2     The couple is in their 70s.

We proposed this solution:

1     By using a Charitable Contribution of a Conservation Easement to offset ordinary income, the estimated annual tax savings was approximately $181,000.

2     The $181,000 tax savings was used to purchase a Second-to-Die, Indexed Universal Life insurance policy. The policy had a death benefit of approximately $10,000,000.00.

3     The insurance policy was structured as an Irrevocable Life Insurance Trust ILIT to take the policy proceeds outside of their estate. This created an additional gift tax on the premium.

The net result was that for nominal costs to the couple, their heirs could receive sufficient proceeds to offset the original estate tax liability as well as leaving them with an additional $5,500,000 that could be used to offset further growth in the parent’s estate.

It is worth looking at all avenues of potential tax savings because each person’s situation is different. At IREXA, we offer a complimentary analysis and comprehensive tax mitigation strategy to every accredited investor.  What have you got to save?

 

 

Disclosures: Actual performance will vary and may be more or less favorable than shown. Underwriting classes and criteria will vary with each carrier. Products’ specific features and the client’s use of those features will impact long-term policy performance. It is important that you consider your client’s goals and objectives carefully and discuss them at length before recommending any life insurance product. Values for all policies may contain guaranteed and non-guaranteed elements, including but not limited to current interest rate and current cost of insurance rates. This is not an estimate of future performance. Companies use different methods and setting these rates and there will be variations in their values and meanings. Products actual features and benefits, loads and charges will vary from company to company and will impact the values shown.

IREXA Financial Services / Wealth Strategies collaborates with CPAs, attorneys, and other tax planning professionals to assist clients with tax mitigation strategies. IREXA, Sandlapper Securities,  and Sandlapper Wealth Management are not tax professionals or attorneys. IREXA only provides client tax mitigation strategies through, and with the approval of the client’s professional counsel.

 

Securities are offered through SANDLAPPER Securities, LLC (SLS), member FINRA/SIPC. Advisory services offered through Sandlapper Wealth Management LLC (SLS-WM) an SEC registered investment advisor, 800 East North St, 2nd Floor, Greenville, SC 29601, 864.679.4701. IREXA is unaffiliated with SANDLAPPER Securities, LLC and Sandlapper Wealth Management LLC. 

 

 

©2016 IREXA Financial Services | Wealth Strategies. All Rights Reserved. Privacy Policy

All investments involve risk. Outcomes are not guaranteed.

*IREXA Financial Services | Wealth Strategies, SANDLAPPER Securities, LLC and Sandlapper Wealth Management LLC do not provide legal or tax advice.

**Investing has risks; performance is not guaranteed. Securities offered through SANDLAPPER Securities, LLC (member FINRA/SIPC) and advisory services offered through Sandlapper Wealth Management, LLC an SEC Registered Investment Advisory Firm. Robert Boggess is an independent representative of SANDLAPPER Securities and independent advisory representative of Sandlapper Wealth Management. IREXA Financial Services/Wealth Strategies is not an affiliated company with the Sandlapper Companies or CPAAcademy.org. No offer to buy or sell securities is being made. Such offers may only be to qualified accredited investors via private placement memorandum. Neither Sandlapper nor IREXA are tax advisors. Prospective strategies and products used in any tax advantaged investment planning should be reviewed independently with your tax and legal advisors. Investments are not guaranteed or FDIC insured and risks may include but are not limited to complete loss of principal investment. Risks detailed in a private placement memorandum should be carefully reviewed, understood and considered before investment. Changes in the tax code and other regulatory revisions could have a negative impact upon strategies developed and recommendations made.

Risk Disclosure: Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss. NO OFFER OR SOLICITATION: The contents of this website: (i) do not constitute an offer of securities or a solicitation of an offer to buy of securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by IREXA Financial Services/Wealth Strategies, SANDLAPPER Securities, LLC, or any affiliate, or partner thereof (“Sandlapper”). IREXA Financial Services/Wealth Strategies does not warrant the accuracy or completeness of the information contained herein.

FINRA Broker Check: Check the background of this investment professional on FINRA BrokerCheck.