How To Build with RazorPlan:
Review the Current Situation Scenario for an outline of Diane’s current situation. Based on her situation without corporate insurance, using the Cash Flow Chart in RazorPlan you can clearly see that she has adequate investment assets to meet her first goal of spending $100,000 / year after-tax.
The Financial Assets Chart also indicates that the after-tax value of her estate meets her second goal to leave each of her siblings $1,000,000 ($6,000,000 in total). This assumes that the corporation will be wound-up in the first year after here death using a post-mortem planning strategy of Loss Carry Back to eliminate any double taxation of her corporate assets.
However, even though Diane will have significant assets remaining in her corporation, she cannot achieve her third goal to spend up to $30,000 each year on travel to age 75.
Implement A Corporate IRP Strategy
If Diane purchases a Whole Life corporate owned policy for $1,500,000 using a 10 pay premium of $113,580 funded from corporate investments, and using the Corporate IRP Strategy to borrow $60,000 each year starting at age 75 indexed to inflation, she can spend an additional $36,000 each year on travel.
Even with the $30,000 increased spending for 20 years, due to the tax advantages of the Corporate IRP Strategy, Diane can also achieve her goal to leave a $6,000,000 estate.
Although you can’t eat your cake and have it too, with the right planning you can spend your money and leave an estate too.
What other recommendations can be applied to help Diane increase her travel budget even more and leave a $6,000,000 estate? You can create any number of new scenarios to test out your solutions and create a plan that will work for them.