Invariably, the client brings up two critical and related operational problems: “How do I keep my top executives?” (The headhunters — usually working for a competitor — are always circling.) And “How do I attract new quality people?”

No, the problem is not new. It’s been a problem in the past and, more than likely, will get worse in the future as the bidding war for talented people escalates. What to do?

Almost 20 years ago, after struggling with the problem for about a year, we decided to develop an organized plan to find the answers. We interviewed our few client/owners who did not have the two problems; we also interviewed their key management people.

Then came the hard part: getting permission to interview the key people at clients that were suffering with the problem.

What quickly became clear was that almost 100 percent of the best key people had the soul of an entrepreneur. But for various reasons they did not want to strike our on their own or couldn’t (usually because they could not raise the required capital).

The answer turned out to be simple: “Mimic ownership” — give ‘em the same challenges as an owner and, if successful, most of the rewards.

Additional interviews just kept reconfirming the original answers. The top (non-owner) executives wanted four core benefits of ownership: (1) A piece of the action (a share of company profits); (2) get paid when they are sick or become disabled; (3) receive adequate retirement pay when its time to leave the company; (4) and a death benefit for their family (“Like my piece of the equity if I get hit by a bus” is the way most executives put it.)

Over the years we have created hundreds of contracts (the technical name is a nonqualified deferred compensation agreement; the non-technical name is a golden handcuff agreement) that attract and keep the kind of people you want in your organization.

Let’s take a closer look at each of the four desired benefits:

A piece of the action — Typically, this is a percentage of the yearly profits in excess of specific dollar amounts. Often, the percentage grows as the businessand profits grow.

For example, Sam Eager will get 3 percent of all before-tax profits in excess of $200,000 and up to $300,000; 5 percent from $300,000, to $400,000; and 8 percent over $400,000. Suppose the amount for a particular year is $24,000. Usually, Sam will get about one-third ($8,000) in cash and the balance ($16,000) is deferred.

The deferred portion is invested for Sam’s benefit. When does Sam get the deferred portion and the accumulated earnings on this portion (usually called the side fund)? When he becomes disabled, dies or reaches retirement age (the age is usually set around 58 for younger key employees and in the 65-age range for older key people).

When the key employee becomes entitled to collect the side fund (say it is $500,000), it usually is paid out in equal annual installments (say 10 years) or $50,000 per year plus the additional investment earnings for that year.

Disability — The employee gets paid when sick or disabled — whether for a day or for a lifetime. This benefit is covered by long-term disability insurance. It is essential that “disability” is defined “word for word” in your agreement the same as the word is defined in the disability insurance contract.

Retirement — The side fund (described above) supplements any regular retirement program (like a 401(k) or profit-sharing plan). Typically, the executive is allowed to direct the investment of the side fund, which remains an asset of the employer.

Following are the tax consequences of the arrangement: The side fund earnings are taxable to the employer. When the employee receives a distribution, the company gets a deduction for the exact amount distributed and the employee must report the identical amount as taxable income.

If the employee leaves for any reason-except because of disability, death or retirement-the entire side fund is forfeited by the employee and remains the property of the company. Hence, the name, “Golden handcuffs.”

A set amount of money at death — When an owner dies, the family can sell the business (assuming it is not transferred to the kids). A similar benefit (really a death benefit) should be given to the employee. Of course, this benefit should be insurance funded.

We have been doing these non-qualified plans for years. Done right, they work. Often, when an owner does not have a family member to pass the business to, the side fund serves as the down payment by one or more of the key people to buy the business from the owner.

Two warnings: (1) This article does not attempt to cover every detail and the endless variations for tailoring an agreement that is perfect for your company. Always work with an experienced advisor. Years of experience has proved that the right agreement will make your good people even better. (2) But sadly, there is no agreement we have ever seen that will make a bad employee even a little bit better.

In a way, this getting-and-keeping good people is a frustrating subject. The reason is that we have never been able to develop a cookie cutter solution. Yes, the four core benefits are almost always the same or similar.

—

Irv Blackman is a certified public accountant who lives part-time on Marco Island and specializes in estate planning, business succession and asset protection.

The problem is not new. It’s part of the past and, more than likely, will get worse in the future as the bidding war for talented people escalates. What to do?

Nearly 20 years ago, after struggling with the problem for about a year, we decided to develop an organized plan to find the answers. We interviewed our few client/owners who did not have the two problems; we also interviewed their key management people. Then came the hard part: getting permission to interview the key people at clients that were suffering with the problem.

What quickly became clear was that almost 100 percent of the best key people had the soul of an entrepreneur. But for various reasons they did not want to strike our on their own or couldn’t (usually because they could not raise the required capital).

The answer turned out to be simple: Mimic ownership. Give them the same challenges as an owner and, if successful, most of the rewards. Additional interviews just kept reconfirming the original answers.

The top (non-owner) executives wanted four core benefits of ownership: (1) A piece of the action (a share of company profits); (2) get paid when they are sick or become disabled; (3) receive adequate retirement pay when its time to leave the company; (4) and a death benefit for their family (“Like my piece of the equity if I get hit by a bus” is the way most executives put it).

Over the years we have created hundreds of contracts (the technical name is a nonqualified deferred compensation agreement; the non-technical name is a golden handcuff agreement) that attracts and keeps the kind of people you want in your organization.

Let’s take a closer look at each of the four desired benefits:

A piece of the action — Typically, this is a percentage of the yearly profits in excess of specific dollar amounts. Often, the percentage grows as the business and profits grow. For example, Sam Eager will get three percent of all before-tax profits in excess of $200,000 and up to $300,000; five percent from $300,000, to $400,000; and eight percent over $400,000. Suppose the amount for a particular year is $24,000. Usually, Sam will get about one-third ($8,000) in cash and the balance ($16,000) is deferred. The deferred portion is invested for Sam’s benefit. When does Sam get the deferred portion and the accumulated earnings on this portion (usually called the side fund)? When he becomes disabled, dies or reaches retirement age (the age is usually set around 58 for younger key employees and in the 65-age range for older key people). When the key employee becomes entitled to collect the side fund (say it is $500,000), it usually is paid out in equal annual installments (say 10 years) or $50,000 per year plus the additional investment earnings for that year.

Disability — The employee gets paid when sick or disabled — whether for a day or for a lifetime. This benefit is covered by long-term disability insurance. It’s essential that disability is defined word for word in your agreement the same as the word is defined in the disability insurance contract.

Retirement — The side fund (described in one above) supplements any regular retirement program (like a 401k or profit-sharing plan). Typically, the executive is allowed to direct the investment of the side-fund, which remains an asset of the employer. Following are the tax consequences of the arrangement: The side-fund earnings are taxable to the employer. When the employee receives a distribution, the company gets a deduction for the exact amount distributed and the employee must report the identical amount as taxable income. If the employee leaves for any reason — except because of disability, death or retirement — the entire side fund is forfeited by the employee and remains the property of the company. Hence, the name, golden handcuffs.

A set amount of money at death — When an owner dies, the family can sell the business (assuming it is not transferred to the kids). A similar benefit (really a death benefit) should be given to the employee. Of course, this benefit should be insurance funded.

We have been doing these non-qualified plans for years. Done right, they work. Often, when an owner does not have a family member to pass the business to, the side fund serves as the down payment by one or more of the key people to buy the business from the owner.

Two warnings: This article does not attempt to cover every detail and the endless variations for tailoring an agreement that is perfect for your company. Always, and we mean always work with an experienced advisor. Years of experience has proved that the right agreement will make your good people even better. But sadly, there is no agreement we have ever seen that will make a bad employee even a little bit better.

In a way this getting-and-keeping good people is a frustrating subject. The reason is that we have never been able to develop a cookie cutter solution. Yes, the four core benefits are almost always the same or similar. But the bells, whistles and unique requirements of each situation makes it impossible to write a complete report — much less a book — on the subject. But if you have a question call Irv Blackman at 239-417-9732. Let’s chat about your specific key employee situation and how to keep ’em.

You’ll like what you are about to read: How to actually make money while giving it away.

An important task for tax advisors (particularly those doing estate planning) is to make sure they have a clear understanding of each client’s goals. So, one of the questions yours truly (or my staff) would ask each client was (and still is), “Do you have charitable intent?” Most clients answered, “No” and that was that. For those that said, “Yes,” we had a large arsenal of tax-advantaged charitable strategies that would enrich not only charity, but substantially enrich our clients too. Every client always made an economic-after-tax-profit.

One day (about 10 years ago) we decided to dig a bit deeper when a client said, “No” to our charity question. Following are the two most important questions we asked, the answers and what (to our surprise) we learned.

First, a simple one word question: “Why?” (did you say “No”). About two out of every three clients responded with something like, “I don’t want to reduce the amount of my children’s and grandchildren’s inheritance.”

After learning this, it made good sense to follow with the next question. Actually two questions designed to get a ‘Yes.’ First, “Would you consider making a substantial gift to charity, if it would not reduce your heirs’ inheritance?” And if that didn’t do the trick, then second, “Would you make a large charitable gift if you could actually make an after-tax profit?” Then, almost all clients say “yes” or “show me how” or something similar.

The simple fact is that the tax law has two tax-free environments: charity and life insurance. Marry them and you are on the road to tax heaven. Let’s stay away from the technical stuff (like charitable remainder trusts and charitable lead trusts and their many ways to help you and charity) and look at two basic examples.

Suppose Joe and Mary (married and both age 65) buy a 15-year pay, $4 million second-to-die life insurance policy. The annual premium is $20,618 per $1 million payable for 15 years or a total of $1.237 million ($20,618 X 15 X 4). Joe and Mary set it up so their favorite charity is irrevocably the beneficiary of the policy.

Let’s take a look at the tax consequences of this charitable gesture by Joe and Mary. They are in a 40 percent income tax bracket (counting State and Federal combined), a 55 percent estate tax bracket (using 2011 rates).

First, let’s look at the estate tax picture: in a 55 percent estate tax bracket, the real story is that the IRS paid 55 percent of that $1.237 million. Since it’s gone, the IRS can’t tax it. So, the real out-of-pocket cost to Joe and Mary (after estate tax consideration) is only $557 thousand (45 percent of $1.237 million).

Second, let’s look at the income tax consequences of the transaction. In a 40 percent income tax bracket, Joe and Mary save $8,247 ($20,618 X 40%) each year as a charitable deduction.

Next, Joe and Mary buy $1.6 million of 15-year pay, second-to-die life insurance in an irrevocable life insurance trust (to keep the proceeds out of their estate). What’s the annual premium cost (only for 15 years)? You guessed it. Their annual $8,247 income tax savings.

Finally, let’s put it all together. Favorite charity will wind up with $4 million. Joe and Mary’s family will make over a cool $1 million ($1.6 insurance proceeds less the after tax cost-$557 thousand-of the premiums paid for the gift to charity).

Yes, it’s easy to “enrich your family (actually make a profit) and charity too.”

The above is only the tip of the iceberg. There are dozens of similar strategies to enrich your family while you enrich charity. This example (the one with the best leverage) is “premium financing” where $500,000 can be turned into $6.5 million for Joe and Mary and then shared with their favorite charity. Joe and Mary can divide the $6.5 million, $5 million to their family and $1.5 million to charity (or in any other ratio they desire). Now, $500,000 turned into $6.5 million. That’s tax and economic leverage!

Most of the time favorite charity is your own family foundation, that bears your name. By now you get the idea: if you (or your spouse or both) are lucky enough to be insurable, you can leverage small amounts of capital (a $500,000 investment or less, paid out in small amounts over many years) to mushroom into large tax-free amounts ($5 million or more). Divide your tax-free profits between your family and charity any way you desire.

Join the tax-free wealth-creating fun. For more information on how-to-do it for your family (and/or your favorite charity) send a copy of your personal financial statement to Irv Blackman, 3960 Deer Crossing Court, Unit #102, Naples, Florida 34114. Please include all phone numbers where you can be reached: work, home and cell.

Interesting quote, huh?

Most readers of this column call me with tax problems because they have attained wealth (no doubt they have and do keep score with money) and they don’t want to share that wealth with the IRS — perfectly normal. Yet, it’s amazing. Once the reader realizes that we really do know how to pass their wealth — all of it and intact — to their family, the conversation turns to other ways that they might keep score. Sure, they are delighted to find there are legal ways to totally win the estate tax game. But they readily admit that they don’t know how to deal with the other problems (other ways to keep score).

The other problems fall into the general category of little kids, little problems; big kids, big problems.

Stuff like which of my kids should run the business? How do I treat the kids fairly? What about the non-business kids?

What happens if one (or more) of my kids get divorced? How do I take care of my wife (the second one who is 15 years — or more — younger than the caller)? The callers tell me about family problems, business problems and/or assorted personal problems. To me every word is important, even though I’ve listened to so many tales of woe before. But, although similar, each problem has its own peculiar twists and turns.

Let’s face it — stuff happens. After years of solving wealth transfer problems, business succession (usually the business is at center stage) and estate planning problems, experience has taught me that solving only the money problems can never yield a perfect plan.

The human stuff — your spouse and kids support your plan — must be solved too.

What about your son-in-law or daughter-in-law? I know. It sounds like cornball. But if you really want to win the game of life after you have won the money game (really the easy part), you must attempt to solve the human part, the emotional stuff.

Here’s my suggestion to start the process. Make two lists: the money-problem list and the human-problem list.

Solve the money problems first (usually you are home free if you solve these three money problems:

• maintain your lifestyle — and your spouse’s — for as long as you live;

• transfer your business to the business kids — tax-free; and

• kill the estate tax.

Then, it’s easier to tackle the human-problem list. Interesting, many times solving the money problems also solve some (often all) of the human problems.

Finally, you must work with experienced professionals who know how to solve both problems: the money problems and the emotional human problems that come with accumulating wealth and trying to pass it on.

One more thing: Each piece of your plan must be part of a single comprehensive and integrated plan, all implemented at the same time. Piecemeal planning, based on my 50 years of experience, is a disaster that not only enriches the IRS, but fails to satisfy the normal human desires of a typical family and its business.

“If you use the right tax tools and techniques together with the right professionals (lawyer, insurance consultant and CPA), you can and will develop a plan to beat the IRS. Every time.

And legally.

“Unfortunately, the goal of the typical estate planner is to reduce estate taxes. Our goal is always the same: to eliminate taxes.

“There are three types of readers who call us for help: readers who (1) have an estate plan but need a second opinion; (2) have no plan; or (3) have been working on a plan for years and just can’t seem to get it done. Which type are you?

“We will do a business succession/estate plan (and any necessary valuation) for each reader. We will report back to you (through this column) how many readers responded, how many we could and could not help, and a summary of the tax tools and techniques used to help the readers.”

Here are the 2004 results. In all, 16 readers (more than we expected) responded; 15 were in either the first or second category and, of course, were easy to help using the tax techniques and strategies described in this column over the years.

A 61-year-old from Ohio — let’s call him Joe — fell into the second-opinion category.

Joe’s letter said in part: “I … enclosed all the information … you asked for. My current plan (it was two short wills and two long revocable trusts — one of each for Joe and for his wife, Mary) looks good … but somehow I don’t feel comfortable.”

Joe and Mary turned out to be a very interesting case, yet sadly, their plan contained some common estate-planning errors. Sure, their documents — wills and trusts — were nearly perfect. Problem is, they just didn’t work. Let’s see why.

Joe and Mary are worth slightly more than $7 million, plus Joe has a number of life insurance policies totaling $2.2 million on his life that name Mary as the beneficiary. The $7 million includes $1.8 million in Joe’s rollover IRA with Mary as beneficiary. The balance of the assets ($5.2 million) — Joe’s business, their residence, some real estate and other investments — are all held in joint tenancy by Joe and Mary.

The wills and trusts — 46 pages in total — were designed by a large law firm to pass Joe and Mary’s assets in a highly organized plan, first to the surviving spouse and then to their children and grandchildren. Because Joe is four years older than Mary, and women outlive men by about four years, it was assumed that Joe would pass on first.

OK, suppose Joe goes to heaven first. Everything, and we mean everything, would go directly to Mary. Joe’s trust would get nothing and be a worthless stack of paper.

This is why: As the named beneficiary, Mary would get the $2.2 million of insurance. For the same reason — being the named beneficiary — Mary gets the $1.8 million in the IRA.

What about the other assets, worth $5.2 million? All to Mary immediately — because property held in joint tenancy goes to the survivor.

It should be pointed out that if Mary dies the day after Joe, the tax bite would exceed $3.5 million (using 2011 estate tax rates) of the $9.2 million now owned by Mary. Their kids would net only about $5.7 million.

What’s the lesson to be learned from this second-opinion story? Standing alone, a will and a revocable trust — no matter how terrific — can never be a complete estate plan.

We used a number of strategies to change Joe and Mary’s estate plan:

• A qualified personal residence trust for the residences.

• An intentionally defective trust to transfer Joe’s business to the kids tax-free.

• An irrevocable life insurance trust for the insurance.

• A subtrust for the profit- sharing plan to pay for the additional life insurance needed.

• A family limited partnership to hold the balance (real estate and investments) of their assets.

• An organized future- gift-giving program to their children and grandchildren.

With minor changes, the original wills and trusts were left alone.

After the above strategies and completed plans are put in place, if Joe and Mary get hit by the same bus, the kids would net, after taxes, about $9.5 million. The longer Joe and Mary live, as the future- gifting program is implemented, the more tax-free dollars are transferred to the kids.

If you want to participate in the 2006 wealth transfer plan test, please send the following information to: Irv Blackman, Wealth Transfer Plan Test, Blackman Kallick Bartelstein LLP, 3960 Deer Crossing Court, unit 102, Naples, FL 34114.

• For your business: Your last year-end financial statement (all pages).

• Personal: A current personal financial statement for you and your spouse.

• A family tree: Your name and birthday. Same for your spouse, children, their spouses and your grandchildren.

• All phone numbers: Business, home and cell.

What’s our job? To create the right plan for you, your family and your business — and to coordinate and work with your professionals. If you have a question, call me at 417-9732.

OK, that’s our plan to help you do your plan — and do it right. Let’s hear from you.

After years of working in wealth transfer, business succession, estate planning and related areas, I changed my view of my clients’ philosophies.

Why? Experience!

You’ll like what you are about to read: How to actually make money while giving it away.

An important task for tax advisers, particularly those doing estate planning, is to make sure they have a clear understanding of each client’s goals. So, one of the questions my staff or I ask each client is: “Do you have charitable intent?” Most clients answer no, and that is that.

In years past when a client answered affirmatively, we had a large arsenal of tax-advantaged charitable strategies that would enrich not only charity, but our clients, too. Every client made an after-tax profit.

One day about 10 years ago, we decided to dig a bit deeper when a client answered negatively to our charity question.

Here are the two most important questions we asked, the answers we got, and to our surprise, what we learned.

• A simple one-word question: “Why?”

About two-thirds of clients responded with something like: “I don’t want to reduce the amount of my children’s and grandchildren’s inheritance.”

After we learned this, it made good sense to follow with the next question — actually two questions — designed to get a “yes”:

• First, “Would you consider making a substantial gift to charity, if it would not reduce your heirs’ inheritance?”

And if that didn’t do the trick, we asked: “Would you make a large charitable gift if you could actually make an after-tax profit?”

Now, almost all clients said “yes” or “show me how” or something similar.

The simple fact is that the tax law has two tax-free environments: charity and life insurance. Marry them and you are on the road to tax heaven.

Let’s stay away from the technical stuff, like charitable remainder trusts and charitable lead trusts and their many ways to help you and charity, and look at two basic examples.

Example 1

Suppose Joe and Mary, married and both 65, buy a 15-year-pay, $4 million second-to-die life insurance policy.

The annual premium is $20,618 per $1 million payable for 15 years, or a total of $1.237 million. Joe and Mary set it up so their favorite charity is irrevocably the beneficiary of the policy.

Let’s take a look at the tax consequences of this charitable gesture by Joe and Mary.

They are in a 40-percent income-tax bracket, counting state and federal combined, and a 55-percent estate-tax bracket, using 2011 rates.

First, let’s look at the estate-tax picture. In a 55-percent estate-tax bracket, the real story is that the IRS gets paid 55 percent of that $1.237 million.

Since it’s gone, the IRS can’t tax it. So, the real out-of-pocket cost to Joe and Mary (after estate tax consideration) is only $557,000 (45 percent of $1.237 million).

Second, let’s look at the income tax consequences of the transaction. In a 40-percent income-tax bracket, Joe and Mary save $8,247 ($20,618 times 40 percent) each year as a charitable deduction.

Next, Joe and Mary buy $1.6 million of 15-year pay, second-to-die life insurance in an irrevocable life insurance trust, to keep the proceeds out of their estate. What’s the annual premium cost for only 15 years? You guessed it — their annual $8,247 income tax savings.

Finally, let’s put it all together. Their favorite charity will wind up with $4 million. Their family will make more than a cool $1 million ($1.6 insurance proceeds less the $557,000 after-tax cost of the premiums paid for the gift to charity).

Example 2

The above is only the tip of the iceberg. There are dozens of similar strategies to enrich your family while you enrich charity.

This example and the one with the best leverage is “premium financing,” where $500,000 can be turned into $6.5 million for Joe and Mary and then shared with their favorite charity. Joe and Mary can divide the $6.5 million — $5 million to their family and $1.5 million to charity — or in any other ratio they desire.

Now, $500,000 is turned into $5.5 million. That’s tax and economic leverage!

Most of the time, your favorite charity is your own family foundation, which bears your name. By now you get the idea. If you, your spouse or both are lucky enough to be insurable, you can leverage small amounts of capital — an investment of $500,000 or less paid out in small amounts over many years — to mushroom into tax-free amounts of $5 million or more. Divide your tax-free profits between your family and charity any way you desire.

• “How do I keep my top executives?” (The headhunters — usually working for a competitor — are always circling.)

• “How do I attract new quality people?”

The problem is not new. It’s been a problem in the past and likely will get worse in the future as the bidding war for talented people escalates.

What to do?

Almost 20 years ago, after struggling with the problem for about a year, we decided to develop an organized plan to find the answers. We interviewed our few business-owning clients who did not have the two problems; we also interviewed their key management people. Then came the hard part: getting permission to interview the key people of clients who were suffering with the problem.

What quickly became clear was that almost 100 percent of the best key people had the souls of entrepreneurs. But for various reasons they did not want to strike out on their own or couldn’t — usually because they couldn’t raise the required capital.

Solving the top-executive problem turned out to be simple.

Mimic ownership — give ‘em the same challenges as an owner and, if they’re successful, most of the rewards.

Additional interviews just kept confirming the original solution.

The top non-owner executives wanted four core benefits of ownership:

• A piece of the action (a share of company profits).

• Getting paid when they were sick or became disabled.

• Receiving adequate retirement pay when it was time to leave the company.

• Death benefits for their family. Most executives put it this way, or in similar words: “Like my piece of the equity if I get hit by a bus.”

Over the years we have created hundreds of contracts — the technical name is a nonqualified deferred compensation agreement; the nontechnical name is a golden handcuff agreement — that attract and keep the kind of key people you want in your organization.

Let’s take a closer look at each of the four desired benefits:

A piece-of-the-action plan

Typically, this is a percentage of the profits in excess of a specific dollar amount. Often, the percentage grows as the business and profits grow.

For example, Sam Topgun will get 4 percent of all before-tax profits in excess of $200,000 per year. Profits in excess of $400,000 will be entitled to 6 percent.

Say the amount earned under the plan for year one, or any subsequent year, is $21,000. Usually, Sam will get about one-third ($7,000) in cash, and the balance ($14,000) is deferred. The deferred portion is invested for Sam’s benefit.

When does Sam get the deferred portion and the accumulated earnings (usually called the side fund)? When he becomes disabled, dies or reaches retirement age. The age is usually set around 58 for younger key employees and around 65 for older key people.

When the key employee becomes entitled to collect the side fund, it usually is paid out in equal annual installments. If the side fund is $500,000 and paid out over 10 years, the employee gets $50,000 per year plus the additional investment earnings for that year.

Disability

The employee gets paid when sick or disabled — whether for a day or for a lifetime. This benefit is covered by long-term disability insurance.

It is essential that disability is defined word for word in your agreement — the same as it is defined in the disability insurance contract.

Retirement

The side fund (described above) supplements any regular retirement program, like a 401(k) or profit-sharing plan.

Typically, the executive is allowed to direct the investment of the side fund, which remains an asset of the employer.

The tax consequences of the arrangement:

• The side-fund earnings are taxable to the employer.

• When the employee receives a distribution, the company gets a deduction for the exact amount distributed and the employee must report the identical amount as taxable income.

If the employee leaves for any reason — except for disability, death or retirement — the entire side fund is forfeited by the employee and remains the property of the company.

Hence, the name “golden handcuffs.”

A set amount of money at death

When an owner dies, the family can sell the business — assuming it is not transferred to the kids. A similar benefit, really a death benefit, should be given to the employee. Of course, this benefit should be insurance-funded.

We have been doing these nonqualified plans for years.

Done right, they work. Often, when an owner does not have a family member to pass the business to, the side fund serves as the down payment by one or more of the key people to buy the business from the owner.

Two warnings:

• This column does not attempt to cover every detail and the endless variations for tailoring an agreement that is perfect for your company. Always, and we mean always, work with an experienced adviser. Years of experience have proved that the right agreement will make your good people even better.

• Sadly, we have never seen an agreement that will make a bad employee even a little bit better.

In a way, getting and keeping good people is a frustrating subject. The reason: We have never been able to develop a cookie-cutter solution.

Yes, the four core benefits are almost always the same or similar. But the bells, whistles and unique requirements of each situation make it impossible to write a complete report — much less a book — on the subject.