I've found a new way to eliminate taxes at death and it should be illegal...but it's not

Good morning to all you insurance dwellers.

First off, I want to thank all those who came out to meet me earlier this week in Toronto for some drinks. It was so great to see so many of you.

I’m already planning my next trip to Toronto, which should be in early December. After the last one went so well, I’ll keep you all in the loop for the next meet-up.

I’m horrible at taking pictures, and I forgot to snap one. I’ll do that next time, for sure.

On another note, I was watching an excellent lecture on Winston Churchill, and one of his biographers called him “a man of destiny”.

I didn’t know this, but Winston Churchill should not have been alive during World War 2.

First off, he was born 2 months premature (which isn’t a big problem these days), but he was born in 1874. Then at 10 he was stabbed multiple times. At 11, he survived pneumonia. Almost drowned in Lake Geneva. Was involved in 3 car accidents and 4 plane crashes.

This all happened during peacetime.

He fought in WW1 and did something like 60 trench raids. And, then in WW2, he would sit at the top of the building when the German’s were doing their air raids.

This is a man who should not have survived. But he did. And, he thought that the only reason God would allow him to survive is that he was “meant to”.

This is precisely the reason why he never surrendered to the Germans with his famous:

It was a great line, but he felt that he had to do it. He was put here to defend Europe from the German invasion.

People think differently about Churchill today, but you can’t deny his resolve, especially in the face of all the people who told him to do the opposite.

I’m reminded of this quote and his actions these days in talking with Advisors. I talk a lot about large insurance sales, and big referrals in these letters each and every week. But, I would be remiss if I didn’t mention the blood and turmoil and loss and anguish that our business entails.

It is in these moments that I want you to think about Churchill. Everyone around him was saying surrender to the Germans. There was no way to win the war. The fighting would stop. Life would go back to normal.

And he said, no we will fight. We will fight them everywhere.

He said this when there was not even a glimmer of hope that they could win. The Americans weren’t even in the war yet. He just believed that they could win.

And, this is what I want you to believe in.

When the business isn’t going the right way for you. Or, it’s been a struggle lately. I want you to remember these words and the actions of people like Churchill:

Light always finds a way in.

Now, onto a much more positive note.

I’ve recently heard about a strategy that I’ve never heard articulated in my 14 years in this fine business of ours.

It’s called the donate private shares strategy.

If you’re like me and you’ve never heard of this, don’t fret.

Let’s say we have a business owner who has a shares worth $10M and an estate freeze has already been completed (to make it easy for us).

One of the transactions the estate can implement is to donate the preferred shares (probably the skinny prefs [to make things more complicated for you]) to a charity.

When the estate donates those private shares, the charity will issue a tax receipt to reduce the tax bill (probably to $0). Now, charities don’t want private shares, they want cash.

So, you’ll also want to have a corporate life insurance policy pay to the corp. Then, the corp uses the proceeds of the life insurance policy to redeem the shares back from the charity and they accomplish this transaction as a taxable dividend.

Which is just brilliant, because charities don’t pay taxes. This way, the corp keeps the full CDA credit.

Usually our strategy is to use life insurance to pay a tax bill. In this transaction, we actually eliminate the tax bill and get a brand spanking new CDA credit to use for other purposes. Now, there is still a cost for the insurance policy, but it is much less than the tax bill. And, while I didn’t see this used, I’m sure you could implement an IFA if the client really wanted to do that.

Geez, sometimes what you don’t know about estate planning can astound you. But, that’s a topic for another day.

Here’s a great article on how it works (sans insurance here):

Here’s another one from GGFL:

And a great article by fellow Insurance Igniter subscriber Mark Halpern:

In closing, there are a ton of ideas out there. You need to simply fight to stay in the business and fight to thrive in the business.

See you next week,

Andrew