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Nine out of 10 people who call me are married men. Eight out of 10 own all or part of a closely held business. But you’ll never guess how important women are when it comes to estate planning. Almost half the men admit their wives motivated them to call, and many times, the typical husband procrastinates when it comes to estate planning. Thus, his wife calls on their behalf. Mary, a typical business-owner’s wife, called and outlined her and her husband Joe’s estate concerns. Then, she told me about her family of three children (two of whom are in the business) and eight grandchildren. Sadly, none of her children could run the business, but two key employees (Jack and Jill) could.

The couple had three major concerns: 1) They wanted to maintain their lifestyle for as long as they live. 2) They wanted to keep Success Co. in the family even though none of their kids could manage the company. 3) They didn’t know what to do about Joe’s rollover IRA, which was down 40 percent because of the stock market nosedive, and their personal portfolio, which was down 35 percent.

Joe also had four questions: 1) How to avoid the estate tax on his net worth of $14 million; 2) How to transfer Success Co. to his kids without getting killed with taxes; 3) How to keep his two key employees so they could ultimately run Success Co.; and 4) How to control his wealth—particularly Success Co.—for his lifetime.

Now, if you own all or part of a closely held business, listen up. You are sure to see one or more of your own problems and, more importantly, the solution. Here are the various strategies we used to create Joe and Mary’s estate plan:

• Recapitalization. We replaced Joe’s (100-percent-owned) common stock in Success Co. with 100 shares of voting stock and 10,000 shares of nonvoting stock. This was a tax-free transaction.

• Control. Joe kept the 100 shares of voting stock and absolute control of Success Co.

• Intentionally Defective Trust (IDT). We sold the 10,000 shares of nonvoting stock to the IDT for $6 million (fair market value as determined by a professional appraiser) plus interest. Under a crazy tax law, the entire $6 million (as the note is paid, plus interest) is tax-free (no capital gains tax and no income tax) to Joe. When the $6 million is paid (in 6 to 8 years), the nonvoting stock will be distributed, tax-free, to the trust beneficiaries: their three kids.

• Death Benefit Agreement (DBA). A DBA is really a wage continuation plan. If and when Joe retires, Success Co. will continue his salary (about 80 percent) until his death. Then, the payments would continue to Mary until her death.

• Non-Qualified Deferred Compensation Plan (NQDCP). Often called a “phantom stock plan,” a NQDCP is a well-tested method to keep key employees (in this case, Jack and Jill) from leaving your company. Every plan is a bit different to make it a perfect fit for the endless variations required by closely held businesses. The most important part of the plan is that the key employee shares in the (hoped-for) increased profitability of the business by contract rather than by owning stock.

• Tax-Advantaged Life Insurance. Finding the dollars to pay premiums without digging into your own pocket is usually challenging. We did it for Joe and Mary in two ways: First, we used a retirement plan rescue. We used the funds in Joe’s rollover IRA to buy $3 million of second-to-die life insurance (on both Joe and Mary). Second, we used the IDT hold-back method. This strategy is cool. We hold back some of the note payments in the IDT and use these funds to pay the premiums on another $3 million of second-to-die insurance, which will go to the children tax-free. Ingenious!

• Family Limited Partnership. (FLIP). All of Joe’s investment assets, including income-producing real estate and his stock portfolio, were transferred to a FLIP. This lowered the value of these assets by $2 million for estate tax purposes.

• Gifting program. We immediately started a gifting program to the children and grandchildren: $12,000 each for Joe and Mary ($24,000 total) for 2008; rising to $13,000 per year (total of $26,000) starting in 2009.