Meet the Client
CLIENT: Our client is a manufacturer of ammunition products that it sells to consumers, retailers, and ammunition wholesalers across the country. In 2019, the company reported total income of $4,851,881 and net income of $375,937. For 2020, the client anticipates substantial growth with projected revenues and net income of $6 million and $1.02 million, respectively.
OWNERSHIP: Presently, the company is organized as an LLC taxed as a partnership. It is owned 50/50 by a husband and wife, and the business operates on a portion of their personal residence.
WHAT OUR CLIENT WANTED: Our client’s central goal was to develop an entity structure to protect their growing business and personal assets. In addition, the owners lacked any estate planning, leaving their sizable estate exposed to potential estate and probate tax liability. This was of particular concern because of the client’s extensive collection of personal firearms, which warranted separate estate planning.
HOW WE MET THEIR EXPECTATIONS: First, a comprehensive holding company structure was recommended to provide broad asset protection for the clients while minimizing their tax burdens. The owners were also encouraged to partition their real estate into separate parcels for residential and commercial use. In doing so, the owners will avoid personal liability for claims or judgments related to the business and vice versa. Next, the owners can reduce their estate taxes up to 40 percent and prevent unnecessary probate fees with our complete estate planning recommendations. Notably, we were able to recommend a unique estate planning device to ease administration of the owner’s large Title II firearm collection to maintain privacy of the owner’s collection and ensure disposition within his wishes. In addition to asset protection and estate planning benefits, implementation of TAVAS’ recommended entity structure and tax strategies will also result in significant tax savings for the client. In the first year alone, the clients will save $112,585.