- The Story
David*, a successful entrepreneur, had accumulated substantial retained earnings in his holding company. However, he faced a financial challenge: he wanted to build a real estate portfolio while preserving liquidity and minimizing tax liabilities. Withdrawing funds personally would trigger significant taxes, while directly investing corporate capital into real estate would limit financial flexibility. Seeking an efficient way to scale his investments while securing his family’s future, David turned to Stone Owl.
Developing a strategic investment plan
To help David achieve his goals, Stone Owl devised a multi-layered strategy that leveraged corporate-owned life insurance as a tax-efficient capital pool. The key components of the plan included:
Instead of letting corporate earnings sit idle, David’s company purchased a high cash value whole life insurance policy. This provided a tax-sheltered growth within his hold co and a secure financial asset that could later be leveraged for real estate investments.
By utilizing the insurance policy’s cash value, David could access funds without depleting corporate reserves, allowing him to deploy capital strategically without disrupting business operations.
By implementing an IFA, the corporation paid the life insurance premiums, a lender provided a secured loan against the cash value of the policy, and David leveraged this line of credit to acquire real estate while preserving liquidity.
With structured financing in place, David acquired multiple properties without increasing his personal tax burden or reducing corporate flexibility.
Beyond investment growth, the life insurance policy provided income replacement for his wife in case of his passing, creating a built-in financial safety net.
A closer look at wealth preservation and growth
By leveraging a corporate-owned life insurance strategy, David successfully turned corporate savings into an expanding real estate portfolio while maintaining liquidity for future opportunities. His retained earnings continued to grow tax-sheltered, and the ability to borrow against the policy allowed for strategic investments without triggering unnecessary taxes.
The power of proactive financial planning
With the guidance of Stone Owl, David positioned himself for long-term financial success. By integrating tax-efficient borrowing, structured insurance strategies, and strategic real estate investments, he created a framework that benefits both his immediate investment needs and his family’s long-term security.
Today, David stands as a testament to how business owners can optimize corporate savings for wealth creation while ensuring financial stability. His case exemplifies the power of structured financial planning in transforming retained earnings into a diversified and growing real estate empire.
* We take our clients’ confidentiality seriously. While we’ve changed their names, the results are real.
