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How DCP Midstream Professionals Can Develop Value and Legacy in Estate Planning

Healthcare Provider Update: DCP Midstream Healthcare Provider Information DCP Midstream, a prominent company in the energy sector, typically provides its employees with access to comprehensive healthcare services. They collaborate with various insurance carriers to offer health plans that often include options for medical, dental, and vision coverage, tailored to the needs of their workforce. Anticipated Healthcare Cost Increases for DCP Midstream in 2026 In 2026, DCP Midstream employees may face notable increases in healthcare costs, driven primarily by anticipated premium hikes within the Affordable Care Act (ACA) marketplaces. Projections indicate that some states could experience premium increases exceeding 60%, with a national average expected to rise by around 18%. The expiration of enhanced federal subsidies could severely impact affordability, leading to an estimated 75% increase in out-of-pocket premium costs for many employees. With significant pressures from rising medical expenses and higher insurer rates, DCP Midstream's workforce should prepare for potentially impactful changes to their healthcare expenditures next year. Click here to learn more

In this third installment of our series on estate planning, we focus on the strategic use of closely held business interests for lifetime gifting, exemplified through a detailed case study of actual scenarios. This is crucial for DCP Midstream professionals contemplating the future of their business segments and the financial well-being of their successors.

Imagine a DCP Midstream professionals who estimates their business unit might sell for around $100 million based on industry revenues, despite never having a professional valuation. Our case study explores different estate planning tactics to maximize financial returns based on this estimation.

Scenario Analysis: Strategic Estate Planning Options

Option 1: No Advance Planning

In a straightforward scenario where the executive sells the business unit for the anticipated $100 million without prior estate planning, they would net $70 million after considering a 30% income tax rate. With a $13 million gift/estate tax exemption retained until death, a substantial estate tax liability would leave approximately $47.2 million for their heirs.

Option 2: Valuation-Based Gifting with a Later Sale

An alternative for the executive might involve gifting a 20% stake in the business to their children prior to a sale. Post-valuation by a specialist, the business is worth $85 million, not $100 million. The valuation discounts the gifted portion by 25% due to lack of control and marketability, significantly lowering the taxable value. This strategic gifting increases the amount transferred to heirs to $47.7 million when the business is later sold at the expected $100 million.

Option 3: Using a Grantor Trust for Gifting

Taking sophistication further, the executive could transfer a 20% stake of the business into an irrevocable grantor trust, benefiting themselves without the need to pay additional gift taxes while covering the trust’s income tax obligations. This method shelters more assets from the 40% estate tax, allowing heirs to inherit about $50.1 million, showcasing the effectiveness of grantor trusts in estate planning.

Option 4: Dual Spousal Gifting to a Grantor Trust

If the DCP Midstream professional is married, they could utilize their combined $26 million exemption before the sale by transferring a 40% stake to a grantor trust. This dual-exemption approach greatly diminishes the taxable estate value at death, resulting in a significant $58.2 million passing to their descendants.

Consequences and Key Considerations

These hypothetical scenarios underscore the importance of proactive estate planning for DCP Midstream professionals, especially when managing substantial business assets. Each strategy offers unique benefits in asset protection and tax savings. However, the potential increase in net proceeds from investments and changes in federal gift and estate tax exemptions should also be considered, along with state-specific taxes which can vary.

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Future discussions in this series will cover optimal methods to document these transfers and meet all legal and regulatory requirements, ensuring the integrity of the estate planning process. By understanding and leveraging these strategic options, business owners can significantly enhance the financial legacy they leave, contributing to the prosperity of future generations.

An often-overlooked aspect of estate planning for business owners over 60 is the use of life insurance within a trust to cover estate taxes. This strategy can prevent the need to liquidate business assets, ensuring the continuity and integrity of the business for future generations. According to a 2023 study by the National Association of Insurance Commissioners, this approach can substantially reduce the taxable estate while providing liquidity during critical times, aligning with strategic estate planning goals.

DCP Midstream professionals can benefit from our comprehensive guide on lifetime gifting using closely held business interests for strategic estate planning. Learn how trusts and valuation discounts can significantly enhance the financial legacy left to heirs, with detailed examples and tax implications provided. This article is essential for any planning for retirement, offering insights into maximizing asset transfers to minimize tax liabilities and ensure family prosperity.

Navigating estate planning with corporate holdings is akin to managing a sophisticated sailing regatta. Just as a skilled sailor uses precise instruments and charts to optimize their course, a business owner must employ accurate valuation tools and strategic gifting tactics to navigate the complex waters of tax regulations and market conditions. Early planning ensures that the full value of their life's work is seamlessly transferred to the next generation, minimizing tax burdens and enhancing financial stability.

What is the primary purpose of DCP Midstream's 401(k) Savings Plan?

The primary purpose of DCP Midstream's 401(k) Savings Plan is to help employees save for retirement by allowing them to contribute a portion of their salary on a tax-deferred basis.

How can employees enroll in DCP Midstream's 401(k) Savings Plan?

Employees can enroll in DCP Midstream's 401(k) Savings Plan through the company's benefits portal during the open enrollment period or within 30 days of their hire date.

What types of contributions can employees make to DCP Midstream's 401(k) Savings Plan?

Employees can make pre-tax contributions, Roth (after-tax) contributions, and, in some cases, catch-up contributions if they are age 50 or older to DCP Midstream's 401(k) Savings Plan.

Does DCP Midstream offer a matching contribution for the 401(k) Savings Plan?

Yes, DCP Midstream offers a matching contribution to the 401(k) Savings Plan, which helps employees maximize their retirement savings.

What is the vesting schedule for DCP Midstream's matching contributions?

The vesting schedule for DCP Midstream's matching contributions typically follows a graded vesting schedule, where employees become fully vested after a certain number of years of service.

Can employees take loans from their 401(k) Savings Plan at DCP Midstream?

Yes, DCP Midstream allows employees to take loans from their 401(k) Savings Plan, subject to specific terms and conditions outlined in the plan documents.

What investment options are available in DCP Midstream's 401(k) Savings Plan?

DCP Midstream's 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and company stock, allowing employees to diversify their portfolios.

How often can employees change their contributions to DCP Midstream's 401(k) Savings Plan?

Employees can change their contributions to DCP Midstream's 401(k) Savings Plan at any time throughout the year, subject to payroll processing timelines.

What is the minimum contribution percentage for DCP Midstream's 401(k) Savings Plan?

DCP Midstream typically requires a minimum contribution percentage, which is outlined in the plan documents, but employees are encouraged to contribute more if possible.

Are there any fees associated with DCP Midstream's 401(k) Savings Plan?

Yes, there may be fees associated with managing DCP Midstream's 401(k) Savings Plan, which are disclosed in the plan's fee disclosure statement.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

DCP Midstream offers comprehensive retirement benefits, including both a 401(k) plan and a pension plan, to its employees for the years 2022, 2023, and 2024. The company's 401(k) plan includes catch-up contributions for employees aged 50 and above, allowing them to contribute an additional $6,500 on top of the regular annual limit, which is $22,500 for 2023. This feature helps employees nearing retirement to bolster their savings (Home Page) (Benefits Law Advisor). DCP Midstream's pension plan, on the other hand, is based on a formula that typically factors in years of service and final average salary, although specific details about the plan's structure, such as the exact percentage per year of service, were not explicitly provided. The company's pension plan is often referred to in conjunction with its overall deferred compensation strategy (Home Page) (Benefits Law Advisor). Years of service and age qualifications for both the 401(k) and pension plan are structured to incentivize long-term commitment. For instance, the pension benefits generally become more significant as an employee's years of service increase, although exact thresholds are specified in internal corporate documents

In early 2024, DCP Midstream announced a major restructuring plan including a workforce reduction of about 10% and a review of benefit programs and 401k plans.

DCP Midstream offers stock options and Restricted Stock Units (RSUs) to eligible employees as part of their compensation package. In 2022, DCP Midstream provided stock options with vesting schedules based on performance metrics and tenure. For 2023, the company expanded its RSU program, granting units based on individual performance and company milestones.

DCP Midstream provides a range of health benefits, including Health Savings Accounts (HSAs) and various medical insurance options. Employees have access to a PPO (Preferred Provider Organization) plan as well as high-deductible health plans that allow them to pair with HSAs. DCP contributes to HSAs, and employees can choose among different coverage levels, including dental and vision insurance. Acronyms commonly used include HSA (Health Savings Account), PPO (Preferred Provider Organization), and FSA (Flexible Spending Account). Employees have noted that costs can be on the higher side for insurance coverage but appreciate the variety of options. DCP Midstream has also made wellness a priority by offering wellness-focused medical plans, which include preventive care and access to resources for mental health and physical well-being. Recent reviews emphasize that the company continues to provide comprehensive benefits despite market fluctuations. DCP Midstream also encourages participation in their wellness programs, often promoting the importance of maintaining physical and mental health through these benefits