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David A. Kossak, C.E.P. William A. Gibbs, III Gilbert McLemore Janet A. Shirley D  A  V  I  D  A.  K  O  S  S  A  K  P  R ...
David A. Kossak, CEP, RFC <ul><li>Graduate of the University of Southern California </li></ul><ul><li>Certified Estate Pla...
Scheduled Appointment Date:_______________ Time: _____________ ADVANCED ESTATE PLANNING SEMINAR CONFIDENTIAL REGISTRATION ...
Estate Tax Unified Credit Exemption Levels HR 1836 and after the Sunset Provisions
Maximum Estate Tax Rates HR 1836 and after the Sunset Provisions 50 49 48 47 46 45 44 43 55 55 55 55 55 55 55 55 55 55
History of Estate Tax  (Vampire Tax) <ul><li>The first estate tax was enacted in 1797 was repealed in 1802 </li></ul><ul><...
What Happens To a Dollar at Your Death? $.18 $.18 $.18 Is it fair that the  IRS  receives more than each of  your children...
How much will your grandchildren receive from the next dollar?
.175 NET TO GRANDCHILDREN (.175) Generation Skipping Tax (50%) …… .35 Net To Children ……………………… (.29) Estate Tax (46%) ………...
The estate and GST taxes are Paying the Tax due within 9 months after the date of the decedent's death... Please write the...
“I WANT YOU!”
“I WANT YOUR MONEY!”
44 PAGES LONG! Source:   IRS Form 706 Form 706 (Rev. August 1993) Department of the Treasury Internal Revenue Service Unit...
$ 9,780,194 NET ESTATE $17,124,988 TOTAL COSTS $26,905,182 GROSS ESTATE Rockefeller gave away $531,000,000 during his life...
$4,103,216 NET ESTATE $8,672,315 TOTAL COSTS $12,775,531 GROSS ESTATE Cash in Estate  - $1,347,886 DEBTS AFTER DEATH $8,67...
Do You Know the  Difference Between . . . Tax Avoidance & Tax Evasion?
10 Years   in   Leavenworth
What Are The  Legal Ways To Eliminate All  Estate Taxes Today?
The Legal Ways to Eliminate All Estate Taxes Today…   1. GIVE IT TO  CHARITY 2.  SPEND   IT ALL 3.  EXPATRIATE  AND LIVE F...
Estate Planning Solutions Revocable Living Trust Credit Shelter Trust Living Will QTIP  Trust Asset Titling Powers of Atto...
The Typical Estate Plan 80%   OF ALL INHERITANCES  ARE SQUANDERED WITHIN THREE YEARS $1,380,000 Estate Tax $5,000,000 $724...
Estate Planning Solutions Revocable Living Trust Credit Shelter Trust Living Will QTIP  Trust Asset Titling Powers of Atto...
Estate Planning Solutions ADVANCED Qualified Personal Residence Trust Family Foundation Trust Zero Estate Tax Plan The Fam...
Estate Planning Solutions ADVANCED Qualified Personal Residence Trust Charitable Remainder Trust Charitable Life Insurance...
The Four Most Important Words in Estate Planning Gifting Discounting Leverage Control
Qualified Personal Residence Trust <ul><li>No estate taxes </li></ul><ul><li>Gift home at a discount </li></ul><ul><li>Ret...
How Does a QPRT Work? <ul><li>Place the home in the trust for a period of years </li></ul><ul><li>Retain use of the home w...
QPRT <ul><li>Client Age 65 </li></ul><ul><li>Home Value $500,000 </li></ul><ul><li>Term of Trust 15 years </li></ul><ul><l...
QPRT Example Client Age 70/75 Home Value $500,000 Term of Trust 10 years Growth Rate   4% Home Value in 10 Years $740,122 ...
Grantor Retained Annuity Trust $226,840 PRESENT VALUE GIFT G RANTOR Age 65 $1,000,000 GRAT 15  YR  T RUST 10% I NCOME C HI...
The Family Legacy Trust  ™ The Most Important Estate Planning Tool Family Wealth  Creation Trust 5 in 1 Tax Free Inheritan...
Comparison of the Family Legacy Trust™  and a Typical Irrevocable Trust  TYPICAL IRREVOCABLE TRUST  FAMILY LEGACY TRUST TM...
The Family Legacy Trust™ <ul><li>Trust assets can be used to help replace estate taxes </li></ul><ul><li>Avoids estate and...
The Family Legacy Trust™ Joint Donor Trust $11,000 annual gifts (per child and grandchild) or  $1,000,000 exemption $1,120...
The Family Legacy Trust™ Joint Donor Trust Trust grows to $3,000,000 by the  time you die $11,000 annual gifts (per child ...
The Family Legacy Trust ™ Joint Donor Trust Trust grows to $3,000,000 by the time you die Trustee Child #2 $1,000,000 Trus...
The Family Legacy Trust ™ Personal Access Version Trust Creators Wife Trustee Husband Limited access to  trust assets Trus...
Family Legacy Trust™ and a Typical Irrevocable Trust Comparison <ul><li>Trust assets of $3,000,000 </li></ul><ul><li>Assum...
Typical Irrevocable Trust Family Legacy Trust ™ Children’s Inheritance $3,000,000 Grandchildren’s Inheritance $4, 865,096 ...
Life Insurance Rescue Plan Source: Bragg Life Tables for 2000, 1991, 1986 Changes In Mortality Rates
Changes In Mortality Rates - 49% Female, age 80, non-smoker - 46% Female, age 50, non-smoker - 50% Male, age 80, non-smoke...
Life Insurance Rescue Plan Family Receives Death Benefit Income , Capital Gains  and Estate Tax-Free Gift Annuity Payments...
Life Insurance Rescue Plan Family Receives Death Benefit Income , Capital Gains  and Estate Tax-Free Gift Annuity Payments...
Annuities How are tax deferred annuities as a wealth preservation tool?
“GREAT”
Your Current Annuity <ul><li>Subject to double taxation, estate tax and income tax equaling up to 60% or more  </li></ul><...
Current Annuity at Your Death 61% Percent Lost to Taxes Estate Tax 50% Income Tax 11% Net To Family 39%
Annuity Rescue Plan <ul><li>Eliminate estate tax on existing annuities  </li></ul><ul><li>Leverage your existing annuity v...
Annuity Rescue Plan How It Works <ul><li>1035 tax free exchange existing annuity into an immediate annuity that pays a gua...
Annuity Rescue Plan O RIGINAL  I NVESTMENT $100,000 C URRENT  V ALUE $250,000
Annuity Rescue Plan Comparison at Death $902,500 GAIN TO FAMILY
“ There is no such thing as a perfect child ... but there are perfect grandchildren”
Section 529 Plans
<ul><li>College </li></ul><ul><li>Cost of college tuition when you were in school? </li></ul><ul><li>Cost to attend colleg...
Section 529 Plans <ul><li>Parents & Grandparents who want to: </li></ul><ul><ul><li>Efficiently get money out of their est...
Accelerated Gift Tax Treatment <ul><li>Qualify for a special and unique gift tax exclusion: </li></ul><ul><li>FIVE-YEAR AC...
The Power of Gifting $5,000,000 taxable estate Grandpa & Grandma Filing Jointly Child $110K Child $110K Child $110K Child ...
<ul><li>Under the Section 529 Plan what is paid for as qualified expenses? </li></ul><ul><li>Books </li></ul><ul><li>Fees ...
Flexible Beneficiary Designation <ul><li>Change to: </li></ul><ul><li>Another &quot;family member&quot; </li></ul><ul><li>...
Comparison of Options *This is accelerating 5 years of annual gifts. ** Under current law, after 2010, earnings will be ta...
What happens if my child or grandchild  doesn’t go to college? <ul><li>10% penalty on earnings for non-qualified distribut...
529 Plan: Features and Benefits <ul><li>Tax Advantages </li></ul><ul><ul><li>Income tax-free </li></ul></ul><ul><ul><li>Es...
Thanks Grandpa!
 
 
S olutions to Negative Practices <ul><li>Ask for references </li></ul><ul><li>Contact Governmental agencies </li></ul><ul>...
Charitable Planning Techniques
Charitable Remainder Trust How It Works Donor’s Retain Income Family Legacy Trust ™ Wealth Replacement Charitable Remainde...
To create a CRT or to not create a CRT, WHY NOT CONSIDER IT?   Appreciated Asset Capital Gains Tax Net Asset Income Income...
Comparison of Options
Zero Estate Tax Plan Potential With a Charitable Remainder Trust Estate $5,000,000 CHARITABLE REMAINDER UNITRUST $1,000,00...
Zero Estate Tax Plan Potential  With a Private Foundation Trust <ul><li>Potentially pay no estate or income tax at your de...
Zero Estate Tax Plan Potential With a Private Foundation Trust Estate $7,000,000 Private  Foundation $3,000,000 Basic Tax ...
Zero Estate Tax Plan Potential Comparison IRS $460,000 C HILDREN $4,540,000 Private  Foundation $1,000,000 Children $6,000...
 
What Are The Three Alternatives For Gifting? <ul><li>No Gift </li></ul><ul><li>Gift each year and invest </li></ul><ul><li...
What Are The Three Best Assets To Invest In The Family Legacy Trust? Tax Free Bonds Growth Stocks Life Insurance
The Family Legacy Trust™ $40,000 P ER  Y EAR  F OR  A H USBAND  A ND  W IFE  A GES  65 A ND  63 $239,012 $558,865 $986,901...
Family Legacy Trust™ Income   At Your Death   $3,250,000 Children  over 30 years   $9,750,000 Grandchildren  over 30 years...
Five Ways To Pay a $1,000,000 Estate Tax Life insurance figures are based on current assumptions and may vary *These are h...
Annual Funding Needed To Pay $1,000,000 Tax 60/58 70/68 80/78 $16,000 $40,000 $73,000 $9,840 $9,040 $37,360 $1,000,000 20 ...
Sample Second-To Die Comparisons 1,000,000 Death Benefit Figures are based on current assumptions and may vary
Case Studies Mr. & Mrs. Smith Age 70/64 Income  IRA $38,167 M.B. $25,000 Ann. $25,000 $88,167 $1,825,000 Net to IRS $4,925...
$37,500 $50,000 $152,667 $38,167 IRA $7,000 $20,000 Annuity L.R.P. M.B . CRT Income $0 Net to IRS $6,080,549 Net to Heirs ...
You Can Make More Money  By Saving Estate Taxes  Than You Can By Making More Money
The Best Money Manager in the World Can Not Even Come Close  to Equaling the Rate  of Return of an  A DVANCED  E STATE  P ...
.175 NET TO GRANDCHILDREN (.175) Generation Skipping Tax (50%) …… .35 Net To Children ……………………… (.29) Estate Tax (46%) ………...
Why do people not plan? Seminars Books Radio & Television
The fear of taxation is not nearly as great as the fear of running out of money
We Offer A Personal Consultation <ul><li>Review your existing estate plan </li></ul><ul><li>Calculate you estimated estate...
If you think this is a little complex, there is a simpler approach.....
Pay the  Tax!
The estate tax is like a … 5100 point drop in the Dow!
Scheduled Appointment Date:_______________ Time: _____________ ADVANCED ESTATE PLANNING SEMINAR CONFIDENTIAL REGISTRATION ...
T HANK  Y OU  F OR  A TTENDING ! Please be sure to  schedule your free  personal consultation  before leaving today!
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2006 Year End Seminar

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  • Transcript of "2006 Year End Seminar"

    1. 1. David A. Kossak, C.E.P. William A. Gibbs, III Gilbert McLemore Janet A. Shirley D A V I D A. K O S S A K P R E S E N T S
    2. 2. David A. Kossak, CEP, RFC <ul><li>Graduate of the University of Southern California </li></ul><ul><li>Certified Estate Planner </li></ul><ul><li>Registered Financial Consultant </li></ul><ul><li>24 years of experience in estate planning </li></ul><ul><li>Member of the Institute of Estate Planning </li></ul><ul><li>Contributing writer, Times Union Prime Time Section </li></ul><ul><li>Member of MDRT’s Top of the Table (top 959 Life Underwriters in the world) </li></ul><ul><li>Registered representative Carillon Investments </li></ul><ul><li>David represents over 2,000 clients nationwide </li></ul><ul><li>Member of International Who’s Who of Professionals </li></ul><ul><li>Nationally recognized speaker and published author </li></ul><ul><li>Serves on University of North Florida Osprey Board, Member at Large </li></ul><ul><li>Has raised millions of dollars for various charities through endowment and current gifts </li></ul>
    3. 3. Scheduled Appointment Date:_______________ Time: _____________ ADVANCED ESTATE PLANNING SEMINAR CONFIDENTIAL REGISTRATION FORM PROGRAMS THAT INTEREST ME I WOULD RATE THIS SEMINAR  IRA Family Trust  Insurance Review  Long Term Care Insurance  529 Plans  Wills & Trust Review  Charitable Remainder Trust  Insured Estate Plan  Life Insurance Rescue Plan  Qualified Personal Residence Trust  Annuity Rescue Plan  Zero Estate Plan  Family Legacy Trust™  I AM NOT INTERESTED IN SCHEDULING AN APPOINTMENT AT THIS TIME  I AM INTERESTED IN SCHEDULING AN APPOINTMENT IN THE NEAR FUTURE  I WOULD LIKE TO SCHEDULE AN APPOINTMENT AT THIS TIME COMMENTS:  GOOD  FAIR  EXCELLENT  OVER $10,000,000  $2,000,000 - $4,000,000  $4,000,000 - $10,000,000  UNDER $2,000,000 ESTIMATED NET WORTH:   Newspaper  Client Referral HOW DID YOU HEAR ABOUT US? (Please check all that apply.) SEMINAR LOCATION WORK PHONE # PHONE # WORK PHONE HOME PHONE PRIMARY ADDRESS AGE SPOUSE AGE NAME  The Legacy IRA™
    4. 4. Estate Tax Unified Credit Exemption Levels HR 1836 and after the Sunset Provisions
    5. 5. Maximum Estate Tax Rates HR 1836 and after the Sunset Provisions 50 49 48 47 46 45 44 43 55 55 55 55 55 55 55 55 55 55
    6. 6. History of Estate Tax (Vampire Tax) <ul><li>The first estate tax was enacted in 1797 was repealed in 1802 </li></ul><ul><li>The second estate tax became law in 1862 to help pay for the Civil War. It was repealed in 1870 </li></ul><ul><li>The third estate tax was mainly to finance the Spanish American War and was repealed in 1902 </li></ul><ul><li>Today’s tax was enacted in 1916 </li></ul>
    7. 7. What Happens To a Dollar at Your Death? $.18 $.18 $.18 Is it fair that the IRS receives more than each of your children? $.46 to the IRS Children *There is an applicable exclusion amount. In 2005 it is $2 million, increasing to $3.5 million in 2009. Estate Tax is repealed in 2010 but scheduled to return in 2011 with a $1 million exclusion. •• There is an applicable exclusion amount. Also, notate that the 2nd million is taxed at a rate lower than 46%.
    8. 8. How much will your grandchildren receive from the next dollar?
    9. 9. .175 NET TO GRANDCHILDREN (.175) Generation Skipping Tax (50%) …… .35 Net To Children ……………………… (.29) Estate Tax (46%) ……………………. Income Tax (36%) …………………… Current Earnings …………………….. . 64 (.36) $1.00 82.5% Shrinkage
    10. 10. The estate and GST taxes are Paying the Tax due within 9 months after the date of the decedent's death... Please write the decedent's name, social security number and &quot;Form 706&quot; on the check to assist in posting it to the proper account. Make the check payable to the Internal Revenue Service. Source: Instructions for Form 706
    11. 11. “I WANT YOU!”
    12. 12. “I WANT YOUR MONEY!”
    13. 13. 44 PAGES LONG! Source: IRS Form 706 Form 706 (Rev. August 1993) Department of the Treasury Internal Revenue Service United States Estate (and Generation-Skipping Transfer) Tax Return Estate of a citizen or resident of the United States (see separate instructions). To be filed for decedents dying after October 8, 1990. For Paperwork Reduction Act Notice, see page 1 of the Instructions. Total Gross Estate (from Recapitulation p.3) Total allowable deductions (from p.3 item 20) Taxable Estate (subtract line 2 line 1) Adjusted taxable gifts (total taxable gifts from Section 2503) made by decedent after 1976 Add lines 3 and 4.................................. Decedent's first name Domicile at time of death Name of Executor Executor's social security # Decedent's first name Year domicile established Executor's address (number and street including apartment or suite) 1b 3b 6b Name and location of court where the estate was probated 1 2 3 4 5 1a 3a 6a 6c 7a
    14. 14. $ 9,780,194 NET ESTATE $17,124,988 TOTAL COSTS $26,905,182 GROSS ESTATE Rockefeller gave away $531,000,000 during his lifetime for educational, religious and charitable purposes. $17,124,988 TOTAL COSTS 12,245,000 *Federal Estate Tax 4,385,644 New York Estate Tax 75,000 Executor's Fee 200,000 Attorney’s Fee 85,996 Administration Expense $133,348 Debts SETTLEMENT COSTS OVER 64% SHRINKAGE * No marital deduction John D. Rockefeller, Sr. Founder, Standard Oil Co., Industrialist & Philanthropist Pocantico Hills, Tarrytown, New York
    15. 15. $4,103,216 NET ESTATE $8,672,315 TOTAL COSTS $12,775,531 GROSS ESTATE Cash in Estate - $1,347,886 DEBTS AFTER DEATH $8,672,315 TOTAL COSTS 6,042,272 *Federal Estate Tax 1,603,810 New York Estate Tax 450,000 Executor's Fee 300,000 Attorney’s Fee 259,287 Administration Expense $16,946 Debts DEBTS BEFORE DEATH SETTLEMENT COSTS *No marital deduction; no surviving spouse. Charitable bequests more than $600,000 Alta Rockefeller Prentice Last Surviving Child of John D Rockefeller, Sr. New York, New York OVER 68% SHRINKAGE
    16. 16. Do You Know the Difference Between . . . Tax Avoidance & Tax Evasion?
    17. 17. 10 Years in Leavenworth
    18. 18. What Are The Legal Ways To Eliminate All Estate Taxes Today?
    19. 19. The Legal Ways to Eliminate All Estate Taxes Today… 1. GIVE IT TO CHARITY 2. SPEND IT ALL 3. EXPATRIATE AND LIVE FOR 10 YEARS
    20. 20. Estate Planning Solutions Revocable Living Trust Credit Shelter Trust Living Will QTIP Trust Asset Titling Powers of Attorney BASIC
    21. 21. The Typical Estate Plan 80% OF ALL INHERITANCES ARE SQUANDERED WITHIN THREE YEARS $1,380,000 Estate Tax $5,000,000 $724,000 $2,896,000 Squandered $3,620,000 Source & Date: LA Times 1999
    22. 22. Estate Planning Solutions Revocable Living Trust Credit Shelter Trust Living Will QTIP Trust Asset Titling Powers of Attorney Irrevocable Trust Annual Gifts Life Insurance BASIC
    23. 23. Estate Planning Solutions ADVANCED Qualified Personal Residence Trust Family Foundation Trust Zero Estate Tax Plan The Family Legacy Trust TM Annuity Rescue Plan Life Insurance Rescue Plan BASIC Revocable Living Trust Credit Shelter Trust Living Will QTIP Trust Asset Titling Powers of Attorney Irrevocable Trust Annual Gifts Life Insurance
    24. 24. Estate Planning Solutions ADVANCED Qualified Personal Residence Trust Charitable Remainder Trust Charitable Life Insurance Plan Zero Estate Tax Plan The Family Legacy Trust TM Annuity Rescue Plan Life Insurance Rescue Plan 529 Plans The Legacy IRA Donor of Valor BASIC Revocable Living Trust Credit Shelter Trust Living Will QTIP Trust Asset Titling Powers of Attorney Irrevocable Trust Annual Gifts Life Insurance
    25. 25. The Four Most Important Words in Estate Planning Gifting Discounting Leverage Control
    26. 26. Qualified Personal Residence Trust <ul><li>No estate taxes </li></ul><ul><li>Gift home at a discount </li></ul><ul><li>Retain use of home </li></ul><ul><li>Leverage your unified credit </li></ul><ul><li>No estate tax on future appreciation </li></ul>IRS
    27. 27. How Does a QPRT Work? <ul><li>Place the home in the trust for a period of years </li></ul><ul><li>Retain use of the home while trust is in existence </li></ul><ul><li>Receive valuation discounts </li></ul><ul><li>Must outlive the term of the trust </li></ul><ul><li>Pay rent at fair market value </li></ul>
    28. 28. QPRT <ul><li>Client Age 65 </li></ul><ul><li>Home Value $500,000 </li></ul><ul><li>Term of Trust 15 years </li></ul><ul><li>Growth Rate 4% </li></ul><ul><li>Home Value in 15 Years $900,472 </li></ul><ul><li>Discounted Value $134,515 </li></ul>Example $352,340 Potential Tax Savings
    29. 29. QPRT Example Client Age 70/75 Home Value $500,000 Term of Trust 10 years Growth Rate 4% Home Value in 10 Years $740,122 Discounted Value $247,813 $226,461 Potential Tax Savings
    30. 30. Grantor Retained Annuity Trust $226,840 PRESENT VALUE GIFT G RANTOR Age 65 $1,000,000 GRAT 15 YR T RUST 10% I NCOME C HILDREN OR T RUST GRAT $447,922 Total Savings $1,500,000 Income Received
    31. 31. The Family Legacy Trust ™ The Most Important Estate Planning Tool Family Wealth Creation Trust 5 in 1 Tax Free Inheritance Trust Generation Skipping Trust Estate Tax Funding Trust Asset Protection Trust
    32. 32. Comparison of the Family Legacy Trust™ and a Typical Irrevocable Trust TYPICAL IRREVOCABLE TRUST FAMILY LEGACY TRUST TM <ul><li>No Federal estate tax </li></ul><ul><li>Trust assets can be used to pay estate tax </li></ul><ul><li>Beneficiary may be trustee </li></ul><ul><li>No Federal estate tax </li></ul><ul><li>Trust assets can be used to pay estate tax </li></ul><ul><li>Beneficiary may be trustee </li></ul><ul><li>No generation-skipping tax </li></ul><ul><li>Estate tax protection for beneficiary </li></ul><ul><li>Divorce & Creditor protection </li></ul><ul><li>Amendable and Revocable by trustee </li></ul><ul><li>Divides into separate trusts </li></ul><ul><li>Leverages GST exemption </li></ul><ul><li>Trust assets are accessible </li></ul><ul><li>Your name can be perpetual </li></ul><ul><li>Incentive Clause </li></ul><ul><li>Pass on your family’s values </li></ul>
    33. 33. The Family Legacy Trust™ <ul><li>Trust assets can be used to help replace estate taxes </li></ul><ul><li>Avoids estate and generation-skipping taxes </li></ul><ul><li>Creates potential additional wealth for family </li></ul><ul><li>Trust assets can be used to help pay for education </li></ul><ul><li>Assets are protected from creditors and divorces </li></ul><ul><li>Trust assets can be accessible by spouse/family </li></ul><ul><li>Trust continues for maximum period permitted by law for 360 years in the State of Florida </li></ul><ul><li>Each donor can currently contribute up to $1,120,000 to minimize estate tax for multiple generations increasing to $3,500,000/2009 </li></ul>
    34. 34. The Family Legacy Trust™ Joint Donor Trust $11,000 annual gifts (per child and grandchild) or $1,000,000 exemption $1,120,000 per donor GST Trust Creators Husband & Wife Trustee Children or Professional
    35. 35. The Family Legacy Trust™ Joint Donor Trust Trust grows to $3,000,000 by the time you die $11,000 annual gifts (per child and grandchild) or $1,000,000 exemption $1,120,000 per donor GST Trust Creators Husband & Wife Trustee Children or Professional
    36. 36. The Family Legacy Trust ™ Joint Donor Trust Trust grows to $3,000,000 by the time you die Trustee Child #2 $1,000,000 Trustee Child #1 $1,000,000 Trustee Child #3 $1,000,000 NO TAX Trust Creators Husband & Wife Trustee Children or Professional NO TAX NO TAX Great Grandchildren Great Grandchildren Great Grandchildren Grandchildren Grandchildren Grandchildren
    37. 37. The Family Legacy Trust ™ Personal Access Version Trust Creators Wife Trustee Husband Limited access to trust assets Trust grows to $3,000,000 by the time you die NO TAX NO TAX NO TAX Trustee Child #2 $1,000,000 Trustee Child #1 $1,000,000 Trustee Child #3 $1,000,000 Great Grandchildren Great Grandchildren Great Grandchildren Grandchildren Grandchildren Grandchildren
    38. 38. Family Legacy Trust™ and a Typical Irrevocable Trust Comparison <ul><li>Trust assets of $3,000,000 </li></ul><ul><li>Assumed growth after distributions to beneficiaries is 4% annually </li></ul><ul><li>One generation = 30 years </li></ul><ul><li>Federal Estate Tax = 46% </li></ul>
    39. 39. Typical Irrevocable Trust Family Legacy Trust ™ Children’s Inheritance $3,000,000 Grandchildren’s Inheritance $4, 865,096 Great-Grandchildren’s Inheritance $7,889,722 Grandchildren’s Inheritance $9,730,193 Great-Grandchildren’s Inheritance $31,558,884 TAXED TAXED NO TAX NO TAX * Over 90 years not 360 years $23,669,162 Increased Wealth to Heirs Children’s Inheritance $3,000,000
    40. 40. Life Insurance Rescue Plan Source: Bragg Life Tables for 2000, 1991, 1986 Changes In Mortality Rates
    41. 41. Changes In Mortality Rates - 49% Female, age 80, non-smoker - 46% Female, age 50, non-smoker - 50% Male, age 80, non-smoker - 49% Male, age 50, non-smoker 2005 vs. 1986 Source: Bragg Life Tables for 2000, 1991, 1986
    42. 42. Life Insurance Rescue Plan Family Receives Death Benefit Income , Capital Gains and Estate Tax-Free Gift Annuity Payments FLT Old Life In .Policy Second -to-Die Immediate Annuity IRC 1035
    43. 43. Life Insurance Rescue Plan Family Receives Death Benefit Income , Capital Gains and Estate Tax-Free Gift Annuity Payments Gain to the family $550,000 No out of pocket expense FLT $650,000 Male Age 82 Female Age 79 $30,000 Income IRC 1035 $200K DB $150K CV
    44. 44. Annuities How are tax deferred annuities as a wealth preservation tool?
    45. 45. “GREAT”
    46. 46. Your Current Annuity <ul><li>Subject to double taxation, estate tax and income tax equaling up to 60% or more </li></ul><ul><li>All withdrawals are taxed as ordinary income </li></ul><ul><li>No step up in basis at death </li></ul><ul><li>If the annuity is left alone to grow the problem compounds </li></ul>
    47. 47. Current Annuity at Your Death 61% Percent Lost to Taxes Estate Tax 50% Income Tax 11% Net To Family 39%
    48. 48. Annuity Rescue Plan <ul><li>Eliminate estate tax on existing annuities </li></ul><ul><li>Leverage your existing annuity values </li></ul><ul><li>Avoid gift tax </li></ul><ul><li>Dramatically increase the net after tax annuity benefit </li></ul>
    49. 49. Annuity Rescue Plan How It Works <ul><li>1035 tax free exchange existing annuity into an immediate annuity that pays a guaranteed lifetime income </li></ul><ul><li>Gift the annual annuity payment to a Family Legacy Trust </li></ul><ul><li>Purchase a low premium joint or single life insurance policy </li></ul>
    50. 50. Annuity Rescue Plan O RIGINAL I NVESTMENT $100,000 C URRENT V ALUE $250,000
    51. 51. Annuity Rescue Plan Comparison at Death $902,500 GAIN TO FAMILY
    52. 52. “ There is no such thing as a perfect child ... but there are perfect grandchildren”
    53. 53. Section 529 Plans
    54. 54. <ul><li>College </li></ul><ul><li>Cost of college tuition when you were in school? </li></ul><ul><li>Cost to attend college today? </li></ul>Average cost included four-years of tuition as well as room and board for the 2000-2001 school year. Projected costs assume a 5% inflation rate per year (based on future predictions). $81,536 $216,990 2020 $33,880 $90,164 2000 Public Private Year Projected cost for a four-year college education: <ul><li>How many of you are concerned for their children or grandchildren’s college today? </li></ul><ul><li>Most parents say that saving for their children’s college education is their # 1 priority. </li></ul>
    55. 55. Section 529 Plans <ul><li>Parents & Grandparents who want to: </li></ul><ul><ul><li>Efficiently get money out of their estate </li></ul></ul><ul><ul><li>Still maintain control over their assets </li></ul></ul><ul><ul><li>Significantly contribute to their grandchildren’s education </li></ul></ul>
    56. 56. Accelerated Gift Tax Treatment <ul><li>Qualify for a special and unique gift tax exclusion: </li></ul><ul><li>FIVE-YEAR ACCELERATION: </li></ul><ul><ul><li>$55,000 per beneficiary (free of gift taxes) </li></ul></ul><ul><ul><li>$110,000 per beneficiary (if married filing jointly) </li></ul></ul><ul><li>Once you make this maximum gift, however, you cannot make any other gifts to that beneficiary for five years </li></ul><ul><li>Alternatively: </li></ul><ul><ul><li>$11,000 per beneficiary </li></ul></ul><ul><ul><li>$22,000 per beneficiary (if married filing jointly) </li></ul></ul>
    57. 57. The Power of Gifting $5,000,000 taxable estate Grandpa & Grandma Filing Jointly Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Son & Wife Son & Wife Daughter & Husband $880,000 in assets removed, saving over $440,000 in estate taxes PLUS APPRECIATION!
    58. 58. <ul><li>Under the Section 529 Plan what is paid for as qualified expenses? </li></ul><ul><li>Books </li></ul><ul><li>Fees </li></ul><ul><li>Room & Board </li></ul><ul><li>Supplies </li></ul><ul><li>Tuition </li></ul><ul><li>This includes 2-year and 4-year undergraduate programs, technical schools, plus graduate and professional schools within the United States </li></ul>
    59. 59. Flexible Beneficiary Designation <ul><li>Change to: </li></ul><ul><li>Another &quot;family member&quot; </li></ul><ul><li>Child </li></ul><ul><li>Adult </li></ul><ul><li>Yourself </li></ul><ul><li>You can change beneficiaries at any time without penalty </li></ul>
    60. 60. Comparison of Options *This is accelerating 5 years of annual gifts. ** Under current law, after 2010, earnings will be taxable when distributed even if for qualified expenses. Yes Product Specific No Yes Change of Beneficiaries Owner of Account Owner of Account Transfer to child at legal age Owner of Account Ownership / Control Tax-Free for Qual. Expenses** Taxable to Owner Taxable (Kiddie Tax) Tax-Free for Qual. Expenses Account Earnings $55,000* None $11,000 $2,000 Max Annual Contribution None None None Limits apply AGI Limit Section 529 Plan Taxable Inv . UGMA /UTMA Coverdell Education Savings Account
    61. 61. What happens if my child or grandchild doesn’t go to college? <ul><li>10% penalty on earnings for non-qualified distributions </li></ul><ul><li>You get back: </li></ul><ul><li>100% of your initial investment </li></ul><ul><li>90% of your earnings plus tax </li></ul>
    62. 62. 529 Plan: Features and Benefits <ul><li>Tax Advantages </li></ul><ul><ul><li>Income tax-free </li></ul></ul><ul><ul><li>Estate tax-free </li></ul></ul><ul><ul><li>Gift tax-free </li></ul></ul><ul><ul><li>Earnings grow tax-deferred </li></ul></ul><ul><li>Control </li></ul><ul><ul><li>Availability </li></ul></ul><ul><ul><li>Flexibility </li></ul></ul><ul><li>Investment Choices </li></ul><ul><ul><li>Mutual Funds </li></ul></ul>
    63. 63. Thanks Grandpa!
    64. 66. S olutions to Negative Practices <ul><li>Ask for references </li></ul><ul><li>Contact Governmental agencies </li></ul><ul><li>Ask to see your financial planners portfolio </li></ul><ul><li>Ask about his or hers financial history, ie… Bankruptcies </li></ul><ul><li>Ask to see a current 3 rd party financial statement </li></ul><ul><li>Make sure he/she owns the same investments that they are recommending </li></ul><ul><li>Don’t assume if they work for a large firm they are honest, remember how many large investment firms have changed their names </li></ul><ul><li>Remember, if it sounds to good it is! </li></ul>
    65. 67. Charitable Planning Techniques
    66. 68. Charitable Remainder Trust How It Works Donor’s Retain Income Family Legacy Trust ™ Wealth Replacement Charitable Remainder Trust FAMILY CHARITY Tax Savings DONOR
    67. 69. To create a CRT or to not create a CRT, WHY NOT CONSIDER IT? Appreciated Asset Capital Gains Tax Net Asset Income Income Tax (36%) Net Income Life Insurance Life Insurance Premium Net Income Estate Tax Net to Children Net to Charity Your Choice Retain Asset Sell Asset Use a CRT Assumptions: Appreciated asset is Corporate stock generating 7% dividend yield. * 7% rate of return. ** Savings on income tax used to offset insurance premium. $165,930 income tax deduction, resulting in a $66,400 tax saving. $1,000,000 $ 0 $1,000,000 $ 70,000 $ 25,200 $ 44,800 $ 44,800 $ 460,000 $ 540,000 $ 0 $1,000,000 $ 200,000 $ 800,000 $ 56,000 $ 20,160 $ 35,840 $ 35,840 $ 368,000 $ 422,000 $ 0 $1,000,000 $ 0 $1,000,000 $ 70,000* $ 13,800** $ 56,200 $1,000,000 $ 8,280** $ 47,920 $ 0 $1,000,000 $1,000,000 Do not create a Charitable Remainder Trust
    68. 70. Comparison of Options
    69. 71. Zero Estate Tax Plan Potential With a Charitable Remainder Trust Estate $5,000,000 CHARITABLE REMAINDER UNITRUST $1,000,000 BASIC TAX EFFICIENT PLAN $4,000,000* FAMILY LEGACY TRUST ™ WITH INSURANCE $1,000,000 <ul><li>INCOME TAX </li></ul><ul><li>DEDUCTION </li></ul><ul><li>NO CAPITAL </li></ul><ul><li>GAINS TAX </li></ul><ul><li>INCOME FOR LIFE </li></ul>CHARITY $1,000,000 CHILDREN $5,000,000 IRS $ 0 * This figure is based on HR1836 as of January 1, 2002
    70. 72. Zero Estate Tax Plan Potential With a Private Foundation Trust <ul><li>Potentially pay no estate or income tax at your death </li></ul><ul><li>Carries your name in perpetuity </li></ul><ul><li>Heirs enjoy the self-esteem and public notoriety that comes from benefiting charity </li></ul><ul><li>Heirs can receive reasonable salaries for their services as employees of the foundation </li></ul><ul><li>Continues the joy of giving for multiple generations </li></ul><ul><li>Keep control of your assets during lifetime </li></ul>
    71. 73. Zero Estate Tax Plan Potential With a Private Foundation Trust Estate $7,000,000 Private Foundation $3,000,000 Basic Tax Efficient Plan $4,000,000* Children $7,000,000 IRS $ 0 IRA $2,000,000 Non-IRA Assets $5,000,000 Family Legacy Trust ™ With Insurance $3,000,000 Distributions $31,000 After Tax (1.2%) * This figure is based on HR1836 as of January 1, 2002
    72. 74. Zero Estate Tax Plan Potential Comparison IRS $460,000 C HILDREN $4,540,000 Private Foundation $1,000,000 Children $6,000,000 $5,000,000 ESTATE Z ERO E STATE T AX P LAN All life insurance figures are based on a male age 65, a female age 63 and current assumptions N O P LAN
    73. 76. What Are The Three Alternatives For Gifting? <ul><li>No Gift </li></ul><ul><li>Gift each year and invest </li></ul><ul><li>Gift each year and insure </li></ul>
    74. 77. What Are The Three Best Assets To Invest In The Family Legacy Trust? Tax Free Bonds Growth Stocks Life Insurance
    75. 78. The Family Legacy Trust™ $40,000 P ER Y EAR F OR A H USBAND A ND W IFE A GES 65 A ND 63 $239,012 $558,865 $986,901 $1,559,709 INVESTMENT AT 10% LESS INCOME TAXES FAMILY LEGACY TRUST TM $2,326,255 AGE INVESTMENT AT 10% LESS INCOME AND ESTATE TAXES NO GIFT 90 70 75 80 85 $251,489 $444,105 $701,869 $1,046,815 $107,556 $3,250,000 $3,250,000 $3,250,000 $3,250,000 $3,250,000 FAMILY LEGACY TRUST TM LIFE INSURANCE
    76. 79. Family Legacy Trust™ Income At Your Death $3,250,000 Children over 30 years $9,750,000 Grandchildren over 30 years $9,750,000 Great grandchildren over 30 years $9,750,000 Total Benefits $32,500,000
    77. 80. Five Ways To Pay a $1,000,000 Estate Tax Life insurance figures are based on current assumptions and may vary *These are hypothetical premium amounts that do no reflect the premiums of a particular product & they are just being used to help the reader understand the concept.
    78. 81. Annual Funding Needed To Pay $1,000,000 Tax 60/58 70/68 80/78 $16,000 $40,000 $73,000 $9,840 $9,040 $37,360 $1,000,000 20 year Survivorship (makeup provision) $1,000,000 Guaranteed Death Benefit Investment (10% Before Tax) Male/Female Assumed Age $1,983 $7,565 $25,111 *These are hypothetical premium amounts that do no reflect the premiums of a particular product & they are just being used to help the reader understand the concept.
    79. 82. Sample Second-To Die Comparisons 1,000,000 Death Benefit Figures are based on current assumptions and may vary
    80. 83. Case Studies Mr. & Mrs. Smith Age 70/64 Income IRA $38,167 M.B. $25,000 Ann. $25,000 $88,167 $1,825,000 Net to IRS $4,925,000 Net to Heirs $460,000 Income Tax $100,000 Capital Gains $1,265,000 Estate Tax $2, 750,000 Taxable Estate $4,000,000 U.C. $6,750,000 Total Estate $50,000 $500,000 Raw Land $1,000,000 Life Insurance $1,500,000 IRA $250,000 $750,000 Annuities $750,000 Muni-Bonds $250,000 $500,000 Vacation Home $200,000 $1,750,000 Home Cost Basis Value
    81. 84. $37,500 $50,000 $152,667 $38,167 IRA $7,000 $20,000 Annuity L.R.P. M.B . CRT Income $0 Net to IRS $6,080,549 Net to Heirs $100,000 Net to Charity $0 Capital Gains $0 Estate Tax $0 Taxable Estate $4,000,000 -$1,228,904 U.C. $2,315,512 Total Estate $750,000 Muni-Bond $1,000,000 Ø Annuity Rescue Plan $1,000,000 $2,000,000 Legacy IRA & Stretch $750,000 Ø Life Ins. Rescue Plan Ø CRT (Raw Land) $273,090 $ 740,122 Q.P.R.T. 10yrs. $955,814 $ 2, 590,427 Q.P.R.T. 10 yrs. Heirs Estate Value
    82. 85. You Can Make More Money By Saving Estate Taxes Than You Can By Making More Money
    83. 86. The Best Money Manager in the World Can Not Even Come Close to Equaling the Rate of Return of an A DVANCED E STATE P LAN
    84. 87. .175 NET TO GRANDCHILDREN (.175) Generation Skipping Tax (50%) …… .35 Net To Children ……………………… (.29) Estate Tax (46%) ……………………. Income Tax (36%) …………………… Current Earnings …………………….. . 64 (.36) $1.00 82.5% Shrinkage
    85. 88. Why do people not plan? Seminars Books Radio & Television
    86. 89. The fear of taxation is not nearly as great as the fear of running out of money
    87. 90. We Offer A Personal Consultation <ul><li>Review your existing estate plan </li></ul><ul><li>Calculate you estimated estate and IRA taxes </li></ul><ul><li>Make understandable recommendations to help reduce or eliminate your estate taxes </li></ul><ul><li>We will send you a letter detailing our estate planning recommendations </li></ul><ul><li>Your first appointment will be held in our office with David Kossak </li></ul><ul><li>We will work with your existing advisors or recommend new ones </li></ul><ul><li>A list of references and government agencies will be provided to you </li></ul><ul><li>We will give you a full explanation of our fees </li></ul><ul><li>There is no charge for your first appointment if you set the appointment today </li></ul><ul><li>There are 3 requirements for our first appointment: </li></ul><ul><ul><li>Leave your check book at home </li></ul></ul><ul><ul><li>Complete a 3 page questionnaire </li></ul></ul><ul><ul><li>Be nice </li></ul></ul><ul><li>Everyone who schedules an appointment today will receive “Living and Learning” at your scheduled appointment </li></ul>
    88. 91. If you think this is a little complex, there is a simpler approach.....
    89. 92. Pay the Tax!
    90. 93. The estate tax is like a … 5100 point drop in the Dow!
    91. 94. Scheduled Appointment Date:_______________ Time: _____________ ADVANCED ESTATE PLANNING SEMINAR CONFIDENTIAL REGISTRATION FORM PROGRAMS THAT INTEREST ME I WOULD RATE THIS SEMINAR  IRA Family Trust  Insurance Review  Long Term Care Insurance  529 Plans  Wills & Trust Review  Charitable Remainder Trust  Insured Estate Plan  Life Insurance Rescue Plan  Qualified Personal Residence Trust  Annuity Rescue Plan  Zero Estate Plan  Family Legacy Trust™  I AM NOT INTERESTED IN SCHEDULING AN APPOINTMENT AT THIS TIME  I AM INTERESTED IN SCHEDULING AN APPOINTMENT IN THE NEAR FUTURE  I WOULD LIKE TO SCHEDULE AN APPOINTMENT AT THIS TIME COMMENTS:  GOOD  FAIR  EXCELLENT  OVER $10,000,000  $2,000,000 - $4,000,000  $4,000,000 - $10,000,000  UNDER $2,000,000 ESTIMATED NET WORTH:  Client  Newspaper/television  Client Referral HOW DID YOU HEAR ABOUT US? (Please check all that apply.) SEMINAR LOCATION WORK PHONE # PHONE # WORK PHONE HOME PHONE PRIMARY ADDRESS AGE SPOUSE AGE NAME  The Legacy IRA™
    92. 95. T HANK Y OU F OR A TTENDING ! Please be sure to schedule your free personal consultation before leaving today!

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