Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor. Life insurance and annuity products are issued by AXA Equitable Life Insurance Company (NY, NY). Variable products are co-distributed by AXA Advisors, LLC and AXA Distributors, LLC. AXA Equitable, AXA Advisors, and AXA Distributors are affiliated companies and do not provide legal or tax advice.
Today’s Workshop Objectives
Dispel 15 common planning misconceptions
Learn the truth about your planning options
Get information on what you can do to better enhance and protect your assets
Space for taking notes and listing “to do’s”
“Planning Checklist” helps you assess your needs
Valuable resource; bring to one-on-one meeting with your financial professional
GE-41640 (10/07) Preserve more of your hard earned assets
Estate plans are only for wealthy people.
Realize your worth – create a plan
Preserve more of what you've earned for those you care about
Truth… = An estate worthy of planning and protection Cash Real Estate Employee benefits Investments Life insurance Pension Profit sharing IRA 401(k) = An estate worthy of planning and protection
My will ensures that my estate will be distributed exactly as I wish.
Simply drafting a will may not be enough
An invalid or incomplete will could leave your estate in probate for years
Supplement your will with estate planning strategies:
Use life insurance in an irrevocable trust
Assets are permanently removed from your estate and not subject to current estate taxes
I don’t need to worry about estate planning since everything is going to my spouse when I die.
Leaving everything to your spouse could cost your heirs large amounts in estate taxes
Utilize the Unified Tax Credit.
Under the Economic Growth and Tax Relief Reconciliation Act of 2001, numerous changes to the federal estate and gift taxes are scheduled to take effect between 2002 and 2010. These include repeal of the estate tax for the year 2010 although gift taxes on lifetime transfers would continue in effect. 2001 estate and gift tax law would be reinstated for year 2011 and thereafter. Therefore, the Act provides several years of lower rates and higher exemptions followed by one year of repeal for 2010.
Truth… Total Estate $5,000,000 Surviving Spouse $5,000,000 Federal Estate Tax $1,635,000 Net to Heirs $3,365,000 Net to heirs without using the Unified Credit Net to heirs with Unified Credit Planning Total Estate $5,000,000 Surviving Spouse $3,500,000 Federal Estate Tax $450,000 Net to Heirs $4,550,000 By-Pass Trust $2,000,000 $900,000 Federal Tax Savings
GE-41640 (10/07) Protecting yourself and your loved ones
I have life insurance through my job. I don’t need any more.
Group life insurance offers minimal and restrictive coverage
Secure your family’s future with life insurance that offers more:
Many life insurance policies provide you with the customized coverage your family needs
Unlike group term insurance, it can also serve as a versatile tool to address other needs
My medical insurance will cover any unexpected illnesses that come my way.
1 in 2 people will require long-term care 1
Average annual cost for nursing home care is almost $66,000 2
Medical insurance, Medicare won’t cover costs
Long-term care insurance:
Protect your assets
Preserve an estate for heirs
Quality medical care
Preserve your independence
Truth… 1 www.ltcweb.org, 2007 statistics. 2 Congressional Budget Office. Financing Long-Term Care for the Elderly , April 2005.
My company’s group disability insurance is all I need. Besides, I doubt I will ever become disabled.
1 in 4 people between 35-65 will be unable to work for more than 90 days due to an illness or injury. 1
Truth… Source: Field Guide to Estate Planning, Business Planning & Employee Benefits, National Underwriter, 2007. 1 Society of Actuaries, 2002.
Group disability coverage is limited
Social security qualifications are strict
Individual long-term disability insurance:
Protect your assets, retirement savings and child’s college fund
GE-41640 (10/07) Smart choices, smart investors
My portfolio will grow if I invest in proven “winners.”
You may be able to avoid traditional “in-retirement” conservative investments and enhance your estate
I “max out” the contributions to my 401(k) so I’m all set for retirement.
A 401(k) is much more than a savings account
Offers investment options
Requires strategic planning
Maximize your retirement funds – choose investments wisely
Consider the allocation of your contributions
I don’t need a retirement plan because my successful business will fund all of my retirement needs.
Relying on your business to ensure your personal financial security is risky
Will your business still be a success after you retire?
Are you overestimating its worth?
Strategic planning protects both your business and personal finances
Implement a business continuation plan
Take advantage of financial vehicles available to you
Truth… Business Personal
When I retire, I’ll just sell all my assets and collect the money. The order in which I do it doesn’t matter.
Timing and sequencing are important to avoid additional taxes and penalties
Ex: Most pensions, 401(k)s and annuities impose strict penalties on early withdrawals
Create a planning strategy for retirement
A 20 year retirement?
Evaluate short and long-term needs
Identify assets for liquidation
GE-41640 (10/07) Preparing for the future
I can easily pay for my child’s college tuition because I started an Education IRA.
With a $2,000 annual limit, it may not be enough
529 Plans are designed to help families save for future college costs and reap special tax benefits 4
1. Tuition, fees and room and board. Does not include books and personal expenses. Individual college information provided by collegeboard.com. Costs, dates, policies and programs are subject to change. 2. For in state-students. 3. Assuming 6% annual inflation rate in each of the four years of college. 4. If you are investing in a 529 plan outside your state of residence, you may lose available state tax benefits. Make sure you understand your state tax laws to get the most from your plan. 529 plans are subject to enrollment, maintenance, administration/management fees and expenses. 529 plans are subject to fluctuation in value and market rise, including loss of principal. Investors should consider the investment objectives, risks, charges, and expenses of 529 plans carefully before purchasing. More information about 529 plans can be found in the issuer’s official statement. Please read the official statement carefully before investing. SAMPLING OF COLLEGES 2007 EXPENSES 1,2 4-YEAR TOTAL 3 Harvard University $45,620 $199,570 Duke University $45,452 $198,833 University of Notre Dame $44,477 $194,567 Wake Forest University $43,830 $191,535 Rice University $39,150 $171,264 University of California-Berkeley $19,728 $86,298 Howard University $20,996 $91,846 University of Maryland $16,823 $73,591 University of Florida $9,796 $42,852
A 30-year mortgage will take 30 years to pay off.
Not if you make 13 payments a year
Truth… This example is a hypothetical intended for illustrative purposes only. THE EFFECT OF ONE EXTRA PAYMENT PER YEAR 13 payments a year 12 payments a year End of Mortgage Period: 24 Years Beginning of mortgage, June 2004. Assuming a mortgage of $250,000 at an interest rate of 6%. Still owe $85,156 End of Mortgage Period: 30 Years Oct. 2028 May 2034
Save in the short and long-term
Save in taxes and mortgage interest
Own home sooner
Free up more money
The best gift I can give to charity is money.
By giving cash to a charity, you are missing a chance to save on income taxes and give more money to the charity
Give an appreciated capital asset instead
Deduct the value as a charitable gift without paying income tax on the appreciation
Charity will acquire the full value of the contribution
Charity can cash in stock for market value or invest it to make more money
Truth… Cash or Cash Equivalents (Cash, T-bills, CDs) You gift cash You receive a $1,000 tax deduction Charitable organization receives $1,000
Truth… Appreciable Assets (Stocks, Bonds, Mutual Funds Shares, Other Securities) You gift shares Charitable organization receives $1,500 in mutual funds (Can sell or reinvest) Not subject to capital gains tax Shares appreciate to full market value of $1,500 You purchase $1,000 worth of an investment Typically, you get a $1,500 tax deduction (without paying income tax on the $500 appreciation) Assumes maximum annual limit on income tax deduction allowable for charitable contributions is not yet met.
have a will?
balance the investment of your 401(k)?
have a 529 Plan for your child?
have a marital trust?
have long-term care insurance?
gift appreciated assets to a charity instead of cash?
Complete the Planning Checklist – it will help you determine if you are missing opportunities to help you better control your finances
The truth – the most important tool you need in planning for your financial future
The right information can help you make smart decisions
Do it yourself
Work with others
Work with us
Don’t procrastinate; timing is important
Where do you want to go from here?
Please complete evaluation form and hand it in before you leave
Schedule time to meet for a personal consultation
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Not Insured by Any Federal Government Agency
Not Guaranteed by the Bank (or Savings Association)