Vol. 3   Issue 5 - May 2011  www.cannonfinancial.com

Planning Ideas - Who Needs a Credit Shelter Trust?

Main Content Inline Small   For years, a mainstay of most estate plans was the two trust approach. A credit shelter, or family trust was funded to the extent of the exemption equivalent generated by the estate tax credit. The balance of the estate was allocated to the marital trust. In some cases, the credit shelter trust was funded first with the residual going to the marital trust. In other cases, the marital trust was funded first with the residual going to the credit shelter trust. Some practitioners used a pecuniary formula for funding, others used a fractional approach.

   From a “big picture” perspective the end result was essentially the same—estate taxes were eliminated at the death of the first spouse through a combination of the estate tax exemption and the marital deduction, while at the same time the assets passing to the surviving spouse under the marital deduction were minimized. Read more


Practice Management - Niche Marketing: The Why and How in a Nutshell - Part 3

Main Content Inline Small   In our last two articles on Practice Management (Part 1, Part 2), we explored the benefits of niche marketing and discussed how to initiate a niche marketing plan. In general, by engaging in a niche marketing strategy you will be able to:
  • Concentrate your focus on fewer clients;
  • Provide a richer and more robust level of service;
  • Have the ability to standardize your process and methodology for running the inside of your business;
  • Increase client satisfaction and loyalty;
  • Function less as an investment counselor and more as a wealth manager; Read More


Taxes - Step 1, Step 2, Step 3

Main Content Inline Small   Here’s a common scenario - Mom and Pop form a family limited liability company (LLC) and contribute assets to the entity. In exchange for the transferred assets, Mom receives a fifty percent interest; Pop receives the same. A few days following creation of the entity and the contribution of assets thereto, Mom and Pop transfer the LLC interests to younger-generation family members, or trusts established on their behalf. Due to lack of control and restrictions on transferability of the LLC interests, a qualified appraiser concludes that valuation discounts of as much as 40 or 50 percent are available for federal gift tax purposes. Everyone lives happily ever after!

   It makes a great tale and a good example for illustrating how certain concepts work, but as any experienced Advisor knows, the devil is in the details. Read more


More Taxes - IRS Rules on Exchange of Business Life Insurance

   Businesses often acquire life insurance on owners and key employees for a variety of reasons. For example, a business might acquire life insurance to indemnify itself for loss of profits due to the death of a key person, to fund the purchase of a departing owner’s business interest, or to offset the cost of a non-qualified executive benefit program.

    Several tax benefits associated with life insurance tend to make it a preferred vehicle for addressing business needs. The tax benefits include the following: Read more