One of the more exciting developments in the area of estate planning is the CAPITAL GAINS BYPASS TRUST. With this device, we can help you sell appreciated assets such as a business, real estate or securities with no capital gains tax. I would like to relay an example of a recent case:

John and Mary Jones came in to discuss selling their business. They wanted to sell their home and business in California and move back to the family home in the south and construct a new home for retirement. With all of the income tax to pay on the sale of the business and the home, it appeared that they could not afford to complete the projects planned in the south and have enough left to retire comfortably. The situation looked like they would need to work for about another ten years before they could realize their dream.

With the CAPITAL GAINS BYPASS TRUST they were able to retire. Here are the pertinent facts:

Sales price: $ 2,200,000

Cost basis: $ 600,000

Capital gain: $ 1,600,000

Tax at 30%: $ 480,000

With these facts in mind, here are the results:

INCOME TAX AND CASH FLOW RESULTS

OUTRIGHT SALE SALE IN TRUST

Sales proceeds:$ 2,200,000 $2,200,000

Capital Gain tax: $ 480,000

Net proceeds left: $1,720,000 $2,200,000

Annual income at 9%: $154,800 $198,000

INCREASE IN INCOME: $ 43,200

This gives Mr. and Mrs. Jones $3,600 more per month to retire on right now! In this case it made all the difference. They were able to escape the rat race ten years sooner than they had expected!

These trusts can:

• Sell assets tax free
• Increase income from low yield assets
• Reduce your estate tax
• Reduce creditor risks