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John has most of his wealth tied up in a successful advertising agency. As he nears retirement age, he is seeking to liquidate the business, however, he has a few concerns on his mind that keep him up at night.
John is worried about the tax implications that would result from the sale. How much of the proceeds will he have to pay in taxes? He also wants to leave a lasting, charitable legacy to his community, in which he has been active for the past 40 years. And, finally, he wants to confirm that he and his wife will have an income stream sufficient to support their desired lifestyle throughout their retirement years.
Working with John’s legal and tax advisors to address his concerns, a PNC Wealth Strategist and Investment Advisor suggested a Charitable Remainder Trust (CRT), funded by gifts of stock in the agency.
Once the sale of John’s agency is complete, PNC would invest the sale proceeds in a customized investment portfolio, designed to produce income that will be distributed from the CRT to John and his wife.
The couple will use some of that income to make cash gifts to a wealth replacement Irrevocable Life Insurance Trust (ILIT), which will pay life insurance premiums on a policy on the lives of John and his wife owned by the ILIT.
When John and his wife pass away, the ILIT will distribute the life insurance proceeds to John’s heirs. The remaining assets in the CRT will be distributed to a designated charity.
This solution helps John accomplish his charitable objectives, while preserving income for his lifetime and saving substantially on income and estate taxes.
As a client of PNC Wealth Management®, you’ll have access to an experienced PNC Wealth Strategist who can help identify and articulate financial, tax, estate planning, insurance and philanthropic issues. They will assist you in identifying your financial goals and create strategies to keep you on track.
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This story represents a hypothetical scenario and is intended for illustrative purposes; the person described is fictional and not an actual client, but the scenario is intended to reflect a typical and/or previously experienced situation. Actual client experiences and outcomes may vary and future performance or success is not guaranteed.
The PNC Financial Services Group, Inc. (“PNC”) uses the marketing name PNC Wealth Management® to provide investment and wealth management, fiduciary services, FDIC-insured banking products and services, and lending of funds through its subsidiary, PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and to provide specific fiduciary and agency services through its subsidiary, PNC Delaware Trust Company or PNC Ohio Trust Company. Securities products, brokerage services, and managed account advisory services are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and member of FINRA and SIPC. Insurance products may be provided through PNC Insurance Services, LLC, a licensed insurance agency affiliate of PNC, or through licensed insurance agencies that are not affiliated with PNC; in either case a licensed insurance affiliate may receive compensation if you choose to purchase insurance through these programs. A decision to purchase insurance will not affect the cost or availability of other products or services from PNC or its affiliates. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC does not provide services in any jurisdiction in which it is not authorized to conduct business. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”). Investment management and related products and services provided to a “municipal entity” or “obligated person” regarding “proceeds of municipal securities” (as such terms are defined in the Act) will be provided by PNC Capital Advisors, LLC, a wholly-owned subsidiary of PNC Bank and SEC registered investment adviser.
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