A Plan develops

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anuary 15, 2010

“Hello, Mr. Jenkins, how are you today, did you bring with you that financial statement?”

“Yup, sure did” replied Jack Jenkins, Sr. to the estate planning lawyer, Mr. Thaddeus Dobbins.

“Before I show it to you, is everything I tell you confidential?” Jack inquired. “Of course, anything you tell me is as sacrosanct as if you told it to your priest”, the lawyer responded.

As the lawyer looked at the financial statement he made some ‘hmm’ noises. After about two minutes, he looked up at Jack, Sr. “I’ve got good news and I’ve got bad news. First the good news, if you die this year, you won’t owe any estate taxes. The bad news is that you have to die this year or you will get hammered. There is a moratorium on estate taxes this year, but next year you will owe estate taxes on everything above $1.0 Million. You do get a closely held business exclusion instead of $1.5 Million, but big deal. So, you need to look into some estate planning. Given your recent DWI arrest, insurance companies would rate you for life insurance, so a life insurance trust is not an option (and it would be expensive at your age anyway). How charitably minded are you?” Lawyer Dobbins asked. “I, of course, have some great feelings for the University of Alabama, and wouldn’t mind leaving them something.” There is something called a Charitable Lead Trust. In theory, you give a chunk of your estate for a number of years to the charity and at the end of that term it goes to your family. For example, let’s say that you give $100,000,000 of your estate to such a trust, and it paid two percent to the University of Alabama every year for 20 years. You would get a tax deduction of $32,322,300. About 1/3 tax deduction. If you gave 4% per year to the University, it would total about 54,000,000 in deductions. But this would mean that the assets need to generate at least 4% per year in income.”

“Can that include rental income?” Jack asked, sheepishly. “Of course and quite frankly given that fact that you own the land that your dealerships sit on, that might be a good plan for the land which is pretty valuable.” Dobbins replied. “Yeah, the rents are already about 4%, net” he added. “The catch is that the rents would have to equal 4% of the net fair market value of the land, each year.” Dobbins responded. “So, if the land over 20 years increases to say $200,000,000, the rents would have to double over that time frame which could cause some cash flow issues for the dealerships, but also would possibly lower their value for estate tax purposes if we made the leases read that way now”, Dobbins added smartly.

Bar chat

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January 5, 2010.

“Hey, Jerry how are you doing?” Jack, Senior exclaimed. “I’m doing great you sorry SOB. How’s Junior doing?” Jerry replied. “Pretty good I guess, he got his wick wet with some babe, he met here the other night”. “Well we aims to please around here”, answered Jerry. “Give me a bourbon and soda, hell I’ve got a driver.” Big Jack smile. They talked for awhile. “Jerry, I had someone try and cut my brakes the other night, New Year’s night while I was in New Orleans. I hate to ask, but I want to be sure that Junior was here on New Year’s night during the Houston – Notre Dame game.” “New Year’s night, you said?” Jerry asked. “Yup”. “Well, that’s a problem, I wasn’t here New Year’s night. New Year’s eve sucked all the energy out of me, so I stayed home that night and I had a new manager on duty that I just hired last week who probably wouldn’t know Junior, but I’ll ask”, Jerry replied. “Thanks, man, he probably was here, but this just has me a bit scared. Some SOB wanted me dead.”

A cut what?

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January 2, 2010.

Jack, Sr., hopped into his turbo charged Muscle. He headed north toward Minton. He was moving along at about 65 miles per hour. He decided to exit and drain the lizard. When he put on the blinker to turn right, his foot automatically started to touch the brake pedal which immediately hit the floor, no brakes. “Oh, shit”, he thought. He took his foot off the accelerator and let his car drift and slowly pulled onto the Emergency lane. How was he going to explain this to the cop. Then he noticed his satellite vehicle emergency device. He hit the red button and a nice lady came on. “How can I help you” she asked. “I need a tow truck out here, my brakes failed”, Senior replied. “Anyone hurt?” she politely asked. “No, just need a tow”. “We’ll send one in five minutes to your location which is showing on our computers.”

Hank Melbourne and his tow truck arrived shortly thereafter and towed Senior to the dealership in town. The mechanic looked at the car and saw the problem. “Someone sure messed with your vehicle”, he said sardonically. “What do you mean?” Jack asked fearfully. “Pretty amateur job, they punctured it with like a pen knife”, the mechanic replied. “When do you think it happened. You say you left New Orleans, it probably happened there. Some punk kid probably wanting to get a thrill.” “Could it have happened before I left for New Orleans from Montgomery?” Jack asked. “Nah, too far” the mechanic answered.

Later that day, a pleasant voice said over the phone “Jack Jenkins Motors, may I help you?” Jack liked that young woman who answered the phone at the dealership. He’d have to give her a raise, he thought to himself. “This is Big Jack, is Junior in?” “No, sir, he said he was up late last night watching football and would be sleeping in late today.” “Thanks, darlin’,” Senior replied. Jack, Sr. dialed “Junior’s home phone, it rang a couple of times and a sleepy sounding Jack, Jr. answered the phone. “Hullo”. “Junior, this is your dad, I damn near got killed this morning on the Interstate”. “What?”, Junior asked. “I damn near got killed heading home from New Orleans”, Jack, Sr. repeated. “Hhow?” Junior asked. “Brakes failed on the Interstate and I was able to roll oft the road. But had there been an emergency, I’d have been toast.” “Are you getting them fixed?” Junior asked. “Yeah, I’m at the garage right now. Someone punctured the line with a pen knife. Son, what were you doing last night?” “Dad, do you think I’d do something that chicken sh… to cut your brake line? If you need to know, I went to Jerry’s Bar to watch the game with some friends, met a hot looking chick in a Houston jersey who was quite drunk and quite willing and went her place. And yes I had my raincoats with me. I left her place at about 4 a.m. and got home around 5 a.m. and I’m pretty tired right now”, Junior responded in an obviously irritated tone. “Sorry, son, this just shook me up.” “I understand Dad, once you get your car fixed, let me know when to meet you at Hardee’s, and I’ll be there.”

An Interesting New Year’s Eve

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December 31, 2009.

“Dad, your driver’s sick and can’t take drive you to New Orleans tonight for the Sugar Bowl tomorrow. I think there’s a bus from Montgomery to New Orleans that gets in about noon.” “Son, are you crazy? I gotta get to New Orleans tonight. There is some first class hootie there, and I ain’t gonna miss it. Why don’t you drive me?”

Junior rolled his eyes, “because its New Year’s Eve, we have our annual tax sale, where we offer to pay their taxes next year if they buy this year. It’s always a huge sale day for us, and we have year end close out on the books. You remember those. I’ll make you a deal, I’ll drive you to the Mississippi state line and then you can drive and I’ll get back somehow.” “Sounds like a deal”, Senior responded.

Later that day, Junior stopped the car at a Hardees and handed the keys to his father. “Don’t get stopped, or you’ll spend New Year’s in a Mississippi jail”, he smiled. “It’s the old double nickel til we get to New Orleans. I’m staying at the Hilton.”

After waiving goodbye, Junior picked up the telephone and called Lomax Car Rentals. “Pick me up at Hardees”.