c. 2013 San Diego Real Estate and Estate Planning Law
Business Estate Plan Strategies

Business owners are often unaware of the many their
benefit.  These include creating a captive insurance
company, setting up key employee policies, utilizing life
insurance to create a family estate, among others.

1.  Join/Create a "captive insurance company" -
Businesses that incur substantial insurance costs may
join a select pool of businesses where the cost is
shared, the payments are deductible, and the premiums
paid grow tax free inside the pool.  These pools may
then fund distributions back to the company.  Over 400
of the top fortune 500 companies form these "captive"
insurance companies.  Thousands of business owners
now accumulate substantial pretax wealth through these
entities.  These captives may become a profit center for
the entire organization.

The primary reasons that private, middle market
companies form captive insurance companies include:
(1) to the lower the cost of insurance; (2) custom design
of insurance policies; (3) investment of company
reserves; (4) control of the claims process; and (5)
income tax, estate planning, and business succession
benefits.

Captives may be utilized to take on the large
deductibles of existing insurance coverage. It also may
be used for other large uninsured risks such as the loss
of key man, credit default, warranty, directors and
officers, errors and omissions, litigation defense,
construction defect, mold, earthquake, environmental,
and products liability.








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