February 2013 HNW Case Study


Jerry and Susan Carter are both 63. They own and operate a very profitable manufacturing business in a small town. Jerry and Susan spend about $650,000 a year, giving generously to family ($200,000/yr.) and their favorite charitable causes ($150,000/yr.). Although the business provides significant taxable income of over $5M a year, Jerry and Susan have been re-investing excess cash back into the business to keep it thriving through the latest recession. With assets totaling over $60M, a growing business and an income tax bill surpassing $2M/yr., their estate tax and income tax exposure is quickly increasing.

The primary planning goals are to:

Provide for the financial security of the surviving spouse.

Maintain Carter Manufacturing as a viable company in their hometown after they exit the business.Maintain their customary lifestyle and gifting. This should take approx. $650,000 annually after taxes.

Eliminate or reduce estate taxes.

Maintain adequate gifting to their children and grandchildren. Their main priority is providing funds for their grandchildren’s educations.

Maximize the inheritance they leave to their children and grandchildren.

Establish a family foundation for lifetime and future family charitable giving.

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