At IREXA, LLC, we are not product providers, we are solution providers. We look at how we can improve tax savings with every action we advise. Real estate is one member of the non – traded alternative asset class we use to provide opportunities to reduce taxes and enhance after tax yield, wealth preservation. The hardest thing to explain to a client about our services is that at a base level we are product agnostic. We can speak about products, however, our best results are achieved when we fully understand our client’s needs. From that understanding, we develop solutions that use real estate, non-traded alternatives, and insurance in an integrated manner to meet the client’s stated needs as we understand them. We call our method Strategic Tax Mitigation™. For example, in a recent consultation a high net worth individual had inherited property in the middle of the country. The property was worthless until they found oil. He received an offer on the property, the net price of which was $9,000,000. As the seller, he was interested in deferring his taxable gain. He explained that he and his wife had already gifted the entire amount that they could to his children from the proceeds. Instead of a $9 million gain, he had created a $4,500,000 tax liability for his heirs. Using the following assumptions:
  1. The couple’s income of $1,500,000 was increased by $540,000 following the acquisition of the 1031 replacement property, for a total annual income of $2,040,000.
  2. The couple is in their 70s.
We proposed this solution:
  1. By using a Charitable Contribution of a Conservation Easement to offset ordinary income, the estimated annual tax savings was approximately $181,000.
  2. The $181,000 tax savings was used to purchase a Second-to-Die, Indexed Universal Life insurance policy. The policy had a death benefit of approximately $10,000,000.00.
  3. The insurance policy was structured as an Irrevocable Life Insurance Trust ILIT to take the policy proceeds outside of their estate. This created an additional gift tax on the premium.
The net result was that for nominal costs to the couple, their heirs could receive sufficient proceeds to offset the original estate tax liability as well as leaving them with an additional $5,500,000 that could be used to offset further growth in the parent’s estate. It is worth looking at all avenues of potential tax savings because each person’s situation is different. At IREXA, we offer a complimentary analysis and comprehensive tax mitigation strategy to every accredited investor.  What have you got to save?
Disclosures: Actual performance will vary and may be more or less favorable than shown. Underwriting classes and criteria will vary with each carrier. Products’ specific features and the client’s use of those features will impact long-term policy performance. It is important that you consider your client’s goals and objectives carefully and discuss them at length before recommending any life insurance product. Values for all policies may contain guaranteed and non-guaranteed elements, including but not limited to current interest rate and current cost of insurance rates. This is not an estimate of future performance. Companies use different methods and setting these rates and there will be variations in their values and meanings. Products actual features and benefits, loads and charges will vary from company to company and will impact the values shown. IREXA® Financial Services / Wealth Strategies collaborates with CPAs, attorneys, and other tax planning professionals to assist clients with tax mitigation strategies. IREXA® and Great Point Capital, LLC are not tax professionals or attorneys. IREXA® only provides client tax mitigation strategies through, and with the approval of, the client’s professional counsel. Securities offered through Great Point Capital, LLC, Member FINRA/SIPC, 200 W Jackson Blvd #1000, Chicago, IL 60606, telephone (312) 356-4872. IREXA® is not affiliated with Great Point Capital, LLC.
Using the Tax Code to Your Advantage for Wealth Preservation
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