James is 64, and a few years ago started up a Consulting Company (Consulting Corp) with his business partner Dave. They have acquired some lucrative contracts over the last couple of years, and after spending frugally his entire life, James is starting to enjoy his newly created wealth. James is divorced and makes alimony payments in the amount of $100,000/yr. on top of his $500,000/yr. in living expenses. Because the wealth and income generated by the company is recent, James has not accumulated much in the way of liquid assets yet, but the company value is significant and future profits look very promising.
The primary planning goals are to:
Make sure that he has sufficient funds to live on for the rest of his life (approx. $600,000/yr., including alimony, after taxes and gifts).
Reduce income taxes.
Maximize the inheritance that he leaves to his children and grandchildren. Consider passing his business interests to his children involved in the industry while providing an equal inheritance of non-business interests to those that are uninterested.
Assure that he has sufficient liquid assets available at his death to eliminate the forced liquidation of his business assets.
Eliminate or reduce estate taxes.
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