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Title: “How Entrepreneurs & Biz Owners Should Think About Estate Planning”
Guest: David Appel – Appel Advisors
Interviewer: Jeffrey Davis – MAGE LLC

Click here to read the transcript
Jeffrey (1s):
Hello, everybody. Welcome back to Radio Entrepreneurs, that we are constantly streaming stories everyday of entrepreneurship at the business leadership, a very important in this economy to understand how people are changing and adapting to this economy, you know, as our next guest has been on before, because he’s an award winning guest, a not for me, but a in general, a by his own peers, which he’ll talk about. And also I think with a economic changes going on a new tax laws, very relevant, a David Appel managing partner, Appeladvisors, welcome back David

David (39s):
Jeff for much appreciated.

Jeffrey (41s):
Ah, so David, first of all, you want to tell us about this wonderful award that you did receive you are quite unique to this process? No, so

David (48s):
I, I really appreciate that. Yeah. It recently in may I, we receive the, the Boston to a state planning councils, a excellence award, which recognizes a, somebody within the Boston, a state planning community around the state planning. And I was like, I was particularly proud by it a as it’s the, award’s been given out the last 30 years, but I’m only to fifth life insurance agent a to receive the award since 1990. So that meant a lot to me.

Jeffrey (1m 16s):
You also must be one of the youngest, correct. Okay.

David (1m 20s):
Yeah, somewhere that they’ve changed out a little bit. It used to be a kind of a career achievement award back in the day. And I think over the last four to five years, they’ve try to change that and not make it like a lifetime achievement award, but more of just a recognition. So the, the age has gone down a little bit, you know, a guy in the last five years, I would say,

Jeffrey (1m 41s):
Well, you know, we liked to say about your dad, but we lowered the bar for you.

David (1m 45s):
Exactly. That’s, that’s unique to me. So there is

Jeffrey (1m 49s):
A as a couple of, of things happening in the economy that you’re trying to help entrepreneurs or what you want to get in to them. Okay. Sure. I mean,

David (1m 57s):
You know, just some of the, some of the key points we’re dealing with, you know, right now, and, and, you know, it’s really, it’s coming up with Biden’s tax proposals since he’s become president. And it was talked about through the campaign, but he’s really looking to, you know, change up and bring down some of the exemptions and some of the amounts of money, ah, you know, talking about increasing in taxes and passing on higher taxes to the wealthy, which for a lot of successful entrepreneurs, it, so it plays into their a game, whether they are the entrepreneur or the private equity or venture capital partners that are backing them. And they just really need to think about wealth transfer as they move forward and proper planning, proper structure, you know, how they, how are they designate ownership on their shares, how they handle ownership of their company and, and think about, you know, themselves and the next generation, you know, when it comes to, when it comes to wealth transfer.

David (2m 50s):
And a lot of times we come in to the picture, ’cause people look to a life insurance at that stage to create a block of that can be used to help with the wealth transfer to the next generation. You

Jeffrey (3m 3s):
Know, a lot of entrepreneurs and a mutt saying there, right? They’ll say to me, I’m not ready yet. And the fact that a, these entrepreneurs don’t control the tax code or God’s wishes, if we are we’ll call it, that’s not a very good answer, is it?

David (3m 20s):
No, its not. And I, you know, I get sometimes that I don’t believe in life insurance. So I might have to remind them that its not a religion. Umm, you know, to, to, to believe in or not what, what are the key things? So Jeff, when it comes to this planning and I just talked to a client recently about that is that even if we know the tax codes are gonna change, I’ve been in this business for 28 years, I’ve seen exemptions go to zero for a period of time and you know, we can transfer an entire estate with no tax. We’ve seen the numbers as low as 600,000. And now we see an exemption for an individual as high as 11 million plus M they’re gonna change. But one of the positive things as a lot of the planing that we do in that stuff that we put into place, even if the tax codes change, this planning is still good for them.

David (4m 5s):
It still good for their family, still a good for their business’s. So it’s a, we know that the taxes and the, in the presidencies and, and the politicians are going to change over time. But if we put a solid plan into place, most of the time that plan is good, no matter what the tax code is,

Jeffrey (4m 20s):
You know what, my next question, it really has to do it. Then I brought it up with you before it. So, you know, it’s not a typical again for me in private business to see families without buy-sell agreements. And I was wondering what you think about things like that. I think it’s a big mistake when they’re not prepared for those things because you’re leaving everything that open to a fat a to family fighting. Yeah.

David (4m 43s):
We, we, we, you know, we see, we see a few things and there’s a, there’s a couple of key points when it comes to buy, sell agreements and you know, and then depending on the number of partners, you know, weather, you know, and people also have to realize that a buy sell, it was really, you know, what are the mistakes? I see it either. What is they have a legal document in place, but they’d never put insurance policies in place to, to actual do the buyout or are they have the insurance policies in place that don’t have the legal documents that go along with it, which was also a problem. So it really, they need to do both. And they really, depending on the business, need to think about it from my wife’s insurance and a disability standpoint, meeting that if the partner it becomes disabled and can’t work, it’s also just as important if the partner passed away and didn’t work.

David (5m 25s):
And then thinking about being in a relationship or being an, a business relationship with your partner spouse, which could also be a difficult situation. But when it comes to, when it comes to buy cell’s, you know, that they need to be putting into place or the legal document. It, so there’s actually a direction as to what happens to the insurance funds when they come in, they need to think about whether it besides the insurance, for the buy-out, the value of the shares. They should also be thinking about key person insurance at the same time, you know, meeting that like I recently met with gentleman who’s who is so key salesmen generated 80% of his sales of his revenue. That person should be insured.

David (6m 5s):
He is the back office guy. The salesman is generating 80% of the business. That means that it’s a big mistake at that guy is not a not insured for, for that individual. So yeah, I think, you know, you gotta, you gotta cross your T’s and dot your I’s when it comes to that. But you’re right. I mean to many times it’s left it open and it’s and its difficult or, you know, I’m, if you do, and I know that you deal with a lot of family businesses and I’m dealing with, with a real estate filmy right now to where are we did? We did a bunch of insurance that we did some stuff in the sun and the dat, because the suns really concern that once the dad dies dads, the one whose gotten the credit lines, daddy’s the one that has gotten the loan’s at the bank’s that is done, all that stuff. Can the sun pull that same?

David (6m 45s):
Wait with these bankers as, as dad did, maybe not. So he might need some capital when dad passes away to be able to continue to do stuff until he proves himself that he can get those same loan’s that his dad did. So,

Jeffrey (6m 58s):
So as far as we go in to 2021 20 to, we know we’re going to a lot of economic transition, is there anything else that you think the entrepreneurs need to be looking at right now?

David (7m 8s):
Well, you know, the, you know, one of the big things in Bidens tax plan is a, in a elimination of a step up in basis for Capitol the games and, you know, the capital gains tax as being so, so there, it’s kind of a double-edged sword right now with his proposal where, you know, right now a married couple can protect a, almost $23 million, you know, without having a federal estate tax on passing in a state to their family. If you, you, you are, he’s talking about with, with Trump’s law, that law sunsets in 2025. So that numbers are gonna come down to a, a, an inflation adjusted number, which is around five and a half a million. So may be a married couple can protect 11 million in a few years by it and proposals to bring it down to a three and a half per a couple or 70 million.

David (7m 53s):
So that’s the big change. So like I recently just did a plan was for somebody where I showed them today has a state tax liability is for and a half million and 2025, but 16 million. It quite Drupal’s in, in, in for years. So, you know, people really need to do that planning. And again, if they’re talking about exemptions coming down and the elimination of a step-up in basis for capital gains going up, there was a lot of taxes to be had, nevermind, you know, just straight on income taxes and things that are, that Biden’s proposed to change. So people just really need to start thinking about the planning and how they structure things going forward, going forward,

Jeffrey (8m 28s):
Strategize don’t react, I guess that’s the word of the day from you? A what we’ve been speaking with David Appel, a managing partner and Pell advisors. David, if someone’s looking for, you need some advice, someone to talk to about how to prepare for the future and today, how would they find you? Mmm.

David (8m 44s):
They can go right to our website, There’s a scheduled appointment button and there they can do that. They can send me an email or just give us a call at six one seven three three to 7,900.

Jeffrey (9m 2s):
And even more than that, going viral, David Appel, you can find him on the Radio Entrepreneurs website at and LinkedIn Radio Entrepreneurs, Spotify and Facebook, Twitter at Biz on the radio, Instagram, YouTube, iTunes, Google podcasts, and Stitcher. You didn’t, no, you are going to go viral from this. So a David, thanks for being on the show today. And as you know, always a pleasure to talk to you.

David (9m 28s):
Thank you. I appreciate it. It, it,

Jeffrey (9m 31s):
For my mind, everybody, this is Radio Entrepreneurs.

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