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Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
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Anderson Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning

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Jeff is 75 and Theresa is 72. Jeff recently retired from an executive position in a public company. As a result of his retirement he exercised over $45M in stock options and has 5 more years of …

Jeff is 75 and Theresa is 72. Jeff recently retired from an executive position in a public company. As a result of his retirement he exercised over $45M in stock options and has 5 more years of deferred compensation payments. Jeff has also sold his 50% interest in his Corporation and the note payments are providing significant income for the next 9 years.

Jeff and Theresa have annual living expense desires of $725,000, with the available income to more than meet this need. Jeff’s deferred compensation payments average more than $2M/yr. for the next 5 years; his annual pension payments are $660k/yr. (inflating); and he also has note payments totaling $360k/yr. for the next 9 years from the buyout of his Corporation interests. These sources of income are in addition to an investment portfolio that generates more than $1.7M/yr. in income and various oil/gas ventures that generate over $100k/yr. in income. With annual income totaling over $5M/yr. for the family, they have the luxury of accumulating a very significant cash flow surplus each year.

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  • 1. InKnowVision’s Monthly HNW Webinar Series Case Study Webinar ©2012. InKnowVision LLC. All rights reserved. www.inknowvision.com
  • 2. FAMILY WEALTH GOAL ACHIEVER™ - INITIAL PREPARED FOR: JEFF AND THERESA ANDERSON February 1, 2012 DRAFT FOR DISCUSSION PURPOSES ONLY PRESENTED BY Scott Hamilton InKnowVision, LLC 715 Enterprise Dr. Oak Brook, IL 60523 scott@ikvllc.com (630) 596-5090Copyright 2012 InKnowVision, LLC
  • 3. PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - RECOMMENDED JEFF AND THERESA ANDERSONThe highlighted tools are those we have determined are most suited to achieving your goals and objectives. Charitable Family Limited Grantor Retained Charitable Lead Remainder Uni- 412(e) Private Annuity SCIN Partnership Annuity Trust Annuity Trust Trust Qualified Personal Sale for Installment Series Limited GDOT Owned Life Family LLC TCLAT Flip CRT Residence Trust Note Liability Company Insurance Beneficiary Preferred Limited Corporate Premium Finance Defective Inheritors 529 Plans Gifting ILIT partnership Recapitalization Trust (BDIT) Anderson Family Annuity Walton GRAT Charitable Life Estate NIMCRUT Asset Protection SPIA/Life Arbitrage Foundation Withdrawal Charitable Bequest Revocable Living InternationalSPIA/Life in a CLAT of $10M to Family Trusts, DPAs and Crummey Powers Dynasty Trust GDOT VUL Foundation POAs International Supporting IRA to Charity Gift Annuity Remainder Sales Life Estates Business Risk LLC/CRTs Organizations Management Charitable Succession Defined Benefit Qualified Plan Bargain Sales Risk Management Remainder Annuity ESOP Planning Planning Plans Limited Partnership TrustGreen equals a new Blue equals a social Yellow equals an planning tool for capital or existing planning family charitable tool tool Page 2
  • 4. JEFF AND THERESA ANDERSONLIFETIME SPENDING AND LIQUIDITY Page 3
  • 5. PERSONAL LIVING EXPENSES vs. AVAILABLE CASH FLOW JEFF AND THERESA ANDERSON $6,000,000 $5,000,000 Deferred Comp payments end in 2016 $4,000,000 $3,000,000 - $2,000,000 $1,000,000 $- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Proposed Living Expenses Proposed Annual Cash FlowIllustration compares your living expenses under the proposed plan as against your annual cash flow available. Page 4
  • 6. YOUR LIQUID ASSETS - CURRENT PLAN VS. PROPOSED PLAN JEFF AND THERESA ANDERSON $220,000,000 $200,000,000 $180,000,000 $160,000,000 The liquidity gap is created through valuation adjustments and a freeze $140,000,000 on the value of assets inside of your estate with the notes from sale $120,000,000 - $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Readily Liquid Assets - Proposed Liquidity Available from GDOT Notes - Proposed Current Liquid AssetsThis illustration reflects the amount of liquid assets available to you during life under the current plan assumptions as against the proposed planassumptions. Liquid assets include cash, securities, bonds (corporate and municipal), annuities and retirement funds. Due to the nature of the assetsinvolved in the Trust transaction there is liquidity available during life from the Trust notes. Page 5
  • 7. JEFF AND THERESA ANDERSONINCREASE INHERITANCEAND REDUCE ESTATE TAX Page 6
  • 8. COMPARISON OF PLAN RESULTS - PLAN YEAR 2012 JEFF AND THERESA ANDERSON Existing Plan Proposed Plan Advantage Estate Value $ 97,373,504 $ 81,325,584 Total Benefits to Family $ 62,325,076 $ 114,627,062 $ 52,301,985 Family Charity $ 15,687,087 $ 15,687,087 $ - Estate and Income Tax $ 28,277,506 $ 24,998,429 $ 3,279,076This chart assumes that you both die this year and compares the results of the current plan with the proposed plan. Page 7
  • 9. COMPARISON OF PLAN RESULTS - PLAN YEAR 2031 JEFF AND THERESA ANDERSON Existing Plan Proposed Plan Advantage Estate Value $ 233,163,934 $ 132,306,482 Total Benefits to Family $ 105,490,474 $ 171,375,204 $ 65,884,730 Family Charity $ 19,816,617 $ 19,816,617 $ - Estate and Income Tax $ 122,087,556 $ 67,334,516 $ 54,753,039 Present Value of total to Heirs $60,159,743 $97,732,884 Discount rate for PV calculation 3.00%This chart assumes that you both die at life expectancy and compares the results of the current plan with the proposed plan.The present value of the total passing to heirs is our attempt to put inheritance into todays dollars to provide perspective.We are using an inflation rate of 3% to calculate the present value numbers. Page 8
  • 10. ASSETS PASSING TO YOUR FAMILY - CURRENT VS. PROPOSED JEFF AND THERESA ANDERSON $180,000,000 $160,000,000 $140,000,000 $120,000,000 - $100,000,000 $80,000,000 $60,000,000 $40,000,000 nt 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 re 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 ur C Current Plan Proposed PlanThis chart compares the amount of your assets that will pass to heirs after estate taxes and costs of implementation in the current plan as against theproposed plan. Page 9
  • 11. INTRODUCTION TO THE PLAN STRATEGIES ROADMAP JEFF AND THERESA ANDERSONThe following section of the plan contains a step by step roadmap for each of the strategies that we are recommending.You will notice that the strategies are often interdependent; that is, in order for one strategy to be successful, you mustcomplete another strategy as well. It is the integration of each of these strategies that allows you to most efficientlyaccomplish your goals.Also keep in mind that there is often more than one way to get from point A to point B. This is true in wealth transferplanning. If a particular strategy or combination of strategies is not acceptable to you, we may be able to reach the desiredresult in a less efficient but perhaps more acceptable way.The following pages are a conceptual road map only, there are numerous details contained in each strategy that are notdetailed in the overall plan that follows. Page 10
  • 12. CREATE AND FUND A FAMILY LIMITED PARTNERSHIP JEFF AND THERESA ANDERSON Jeff and Theresa create a limited partnership and a management LLC. They receive limited partnership shares and LLC receives GP shares. The new entity is organized to develop new investments, protect family members, streamline business succession planning, create a gifting mechanism and provide centralized management of investments. JEFF & THERESA FAMILY LIMITED PARTNERSHIPLP & LLC interests are split between Jeff & Theresa LLC GP SHARES LP SHARES 1% 99% Page 11
  • 13. CREATE AND FUND A FAMILY LIMITED PARTNERSHIP JEFF AND THERESA ANDERSON Jeff and Theresa transfer $37,622,700 of assets to the limited partnership.JEFF & THERESA FAMILY LIMITED PARTNERSHIP $37,622,700 Detail of Assets Transferred Securities Acct. 34,282,700 Corp Sale Note (50%) ** 3,240,000 Energy Investment 100,000 Total Assets Contributed 37,622,700 Page 12
  • 14. HAVE THE LIMITED PARTNERSHIP SHARES APPRAISED JEFF AND THERESA ANDERSON Jeff and Theresa hire an appraiser to value the limited partnership shares that they own. The appraiser will value the shares taking all of the following into account: ▪ Liquidity of the shares ▪ Transferability of the shares ▪ Degree of control that accompanies ownership of the shares ▪ The assets owned by the partnership JEFF & THERESA Appraisal FAMILY LIMITED PARTNERSHIP Valuation adjustmentAppraised value of LP shares is $30,098,160 assumed to be 20% Inside value of assets is $37,622,700 The appraisal value of the LP units is assumed for illustration purposes only. Note: Business appraisal is not an exact science. The IRS does not like valuation adjustments. A well regarded appraiser should be retained to value the interests being sold. Page 13
  • 15. BUSINESS PURPOSE JEFF AND THERESA ANDERSONThe Family entity must have a legitimate business purpose for being organized and these purposes should be well documented. Legitimate business purposes examples are asfollows:a. To Make a Profit – The primary reason for creating this Entity is to make a profit.b. To Increase Wealth – This Entity will provide an effective legal vehicle to increase the wealth of the Members and their families.c. To Provide Centralized Management of Investments – This Entity is designed to hold investment assets and allow for centralized management of those assets.d. To Manage and Develop Real Estate – This Entity will provide the legal vehicle to effectively manage and/or develop any real estate owned or acquired by the Company.e. To Avoid Two Layers of Taxation on Profits – This Entity provides flexibility in business planning not available to the Members through trusts, corporations, or other businessentities.f. To Make Gifts Without Fractionalizing Assets – This Entity establishes a method by which annual gifts may be made without fractionalizing family assets.g. To Make Gifts Without Causing a Loss of Incentive – This Entity provides a method of ownership which allows gifts to be made to children and other beneficiaries withoutcausing a loss of productivity or the incentive to strive to do well.h. To Control Cash Flow to Members – This Entity provides a structure by which the Manager can control the assets and the cash flow to Members to achieve the legitimatepurposes of the Company.i. To Provide a Buy-Sell Arrangement – This Entity provides an orderly buy-sell arrangement between the members of the families that own membership interests to keep theownership of Company assets in those families.j. To Resolve Disputes Privately – This Entity provides for mediation and binding arbitration in disputes by Members that is intended to prevent expensive and embarrassingpublic litigation of private family business matters.k. To Require the Losers of Disputes to Pay the Dispute Costs – This Entity requires the loser in any dispute to pay for the costs of the dispute.l. To Restrict the Right of Non-Members to Acquire Interests – This Entity restricts the right of non-Members to acquire interests in Company assets.m. To Prevent Transfers of Membership Interests Because of Failed Marriages – This Entity prevents the transfer of a family member’s interest in the Company because of a failedmarriage.n. To Prevent Commingling of the Assets of Gift Recipients – This Entity creates a method of ownership that will prevent gifts made to family members from being commingledwith assets owned by others.o. To Make it Difficult to Withdraw – The restrictions in this Operating Agreement make it difficult for any of the parties to withdraw from the Company once they become aMember.p. To Protect Members from the Company’s Creditor Claims – This Entity limits the liability of Members from the Company’s creditors and further limits the liability of Membersholding particular Series of the Company from liability associated with other Series of the Company.q. To Provide Asset Protection for Members – This Entity protects the family resource base from the claims of future creditors of Members.The entity may conduct any lawful business and investment activity permitted under the laws of the State and/or country of organization in which it may have a business orinvestment interest.The entity may own, acquire, manage, develop, operate, sell, exchange, finance, refinance, lease and otherwise deal with real estate, personal property and any type of businessas the Manager may from time to time deem to be in the best interest of the entity.The entity may engage in any other activities that are related or incidental to the foregoing purposes. Page 14
  • 16. CREATE GRANTOR DEEMED OWNER TRUSTS JEFF AND THERESA ANDERSON Jeff and Theresa create individual grantor deemed owner trusts (GDOT). The Trusts can be drafted to provide asset protection and long term estate tax savings through the use of dynasty trust provisions. JEFF JEFFs GDOT THERESA THERESAs GDOT HEIRS Theresa may be a discretionary beneficiary of Jeffs TrustNote: Jeff may also be a discretionary beneficiary of Theresas trust. Attention should be paid to avoid reciprocal trust doctrine. Page 15
  • 17. GIFT TO GRANTOR DEEMED OWNER TRUST JEFF AND THERESA ANDERSONJeff and Theresa each make a gift of $3,250,000 in cash/securities to their individual GDOT. This gift is designed to give each trusteconomic substance and maximize their available lifetime exemption. JEFF JEFFs GDOT $3,250,000 THERESA $3,250,000 THERESAs GDOTNote: After 2012, the exemption may be reduced back down to $1M. This locks in the use of the $5M exemption. Page 16
  • 18. SELL PARTNERSHIP SHARES TO EACH GDOT JEFF AND THERESA ANDERSON Jeff and Theresa sell their limited partnership shares to their individual GDOTs for an installment note. Sell their combined limited partnership shares worth JEFF & THERESA $30,098,160 GDOTsJeff and Theresa own an installment note The GDOTs own LP shares worth after the sale Installment note with a $30,098,160 after the sale value of $30,098,160 that provides annual payments of $791,582The sale price is based on the assumed value of the assetssold. HEIRS Receive assets in the future according to*Note payments are assumed to be interest only at Jan. terms of the trust2012 long term AFR of 2.63%.** The note can be re-financed or paid off during the term of the note. Page 17
  • 19. PURCHASE LIFE INSURANCE IN THE GDOT JEFF AND THERESA ANDERSON The GDOT Trustees purchase second-to-die life insurance with the assets of the two GDOTs. Premium in the amount of $1,175,000 is scheduled to be GDOTs paid for all years with assets of LIFE INSURANCE the GDOTs. Own Life Insurance $50,000,000Policy Benefits:- Used as wealth replacement, it can allow increased charitable giving that reduces or eliminatesestate taxes but ensures a significant inheritance for your heirs- Policy has a good tax-free return on investment (see IRR page)- Increased inheritance in trust for heirs- Over time, annual premiums paid into this vehicle (which is income and estate tax free) willreduce the income taxes from other investment assets subject to income taxesThe premium is based on certain assumptions. This is for illustration purposes only. Actual insurance numbers can only bedetermined by applying for insurance. Page 18
  • 20. INTERNAL RATE OF RETURN ON LIFE INSURANCE JEFF AND THERESA ANDERSONJEFFS AGE THERESAS AGE YEAR PREMIUM DEATH BENEFIT IRR 75 72 2012 1,175,000 50,000,000 4155.32% 76 73 2013 1,175,000 50,000,000 504.24% 77 74 2014 1,175,000 50,000,000 210.14% 78 75 2015 1,175,000 50,000,000 122.27% 79 76 2016 1,175,000 50,000,000 82.48% 80 77 2017 1,175,000 50,000,000 60.39% 81 78 2018 1,175,000 50,000,000 46.55% 82 79 2019 1,175,000 50,000,000 37.16% 83 80 2020 1,175,000 50,000,000 30.44% 84 81 2021 1,175,000 50,000,000 25.41% 85 82 2022 1,175,000 50,000,000 21.52% 86 83 2023 1,175,000 50,000,000 18.45% 87 84 2024 1,175,000 50,000,000 15.96% 88 85 2025 1,175,000 50,000,000 13.92% 89 86 2026 1,175,000 50,000,000 12.21% 90 87 2027 1,175,000 50,000,000 10.77% 91 88 2028 1,175,000 50,000,000 9.54% 92 89 2029 1,175,000 50,000,000 8.48% 93 90 2030 1,175,000 50,000,000 7.55% 94 91 2031 1,175,000 50,000,000 6.74% 95 92 2032 1,175,000 50,000,000 6.03% 96 93 2033 1,175,000 50,000,000 5.40% 97 94 2034 1,175,000 50,000,000 4.84% 98 95 2035 1,175,000 50,000,000 4.33% Page 19
  • 21. COMPARISON OF POTENTIAL PLAN RESULTS - PLAN YEAR 2022 JEFF AND THERESA ANDERSON Existing Plan Proposed Plan A Proposed Plan B ** Proposed Plan C**Heirs Receive Immediately $ 69,439,755 $ 129,450,502 $ 107,056,032 $ 86,844,710 Deferred Inheritance** $ - $ - $ 14,878,130 $ 29,756,259 Total Benefits to Family $ 69,439,755 $ 129,450,502 $ 121,934,162 $ 116,600,969 Family Charity $ 17,571,894 $ 17,571,894 $ 67,337,383 $ 112,705,210 Estate and Income Tax $ 78,617,525 $ 52,527,524 $ 25,156,505 $ -** Plans B & C use charitable techniques at death that decrease estate taxes and could provide a deferred inheritance.This chart assumes that you both die in 2022 and compares the results of the current plan with the proposed plan(s). Page 20
  • 22. DETAILED FINANCIAL ANALYSIS JEFF AND THERESA ANDERSON INTRODUCTIONThe following section of the plan contains all of the financial analysis used to show you where youstand with your current plan and what is possible with the proposed plan.All of the numbers are based on information provided by you or gleaned from statements and taxreturns. If numbers do not look correct, please let us know so that we can make appropriatechanges.Assumed growth and yield numbers are all listed on the Net Worth pages contained in these sections. Page 21
  • 23. DETAILED FINANCIAL ANALYSIS JEFF AND THERESA ANDERSON CURRENT PLAN FINANCIALSIn the Current Plan Section you will find a Net Worth Statement and a detailed cash flow and assetvalue projection analysis. Page 22
  • 24. CURRENT NET WORTH STATEMENT JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTHCASH AND EQUIVALENTS Cash Acct 250,000 250,000 - 500,000 0.0% 0.0% Cash Acct 100,000 100,000 - 200,000 0.0% 0.0% Cash Acct 464,000 464,000 - 928,000 0.0% 0.0% Cash Acct 400,000 400,000 - 800,000 0.0% 0.0% Total of Cash and Equivalents 1,214,000 1,214,000 - 2,428,000 0.0% 0.0%INVESTMENT ASSETS Securities Acct. 9,442,850 9,442,850 - 18,885,700 3.0% 4.0% Securities Acct. 1,004,550 1,004,550 - 2,009,100 0.0% 5.0% Securities Acct. 516,150 516,150 - 1,032,300 0.0% 5.0% Securities Acct. - 1,010,000 - 1,010,000 0.0% 5.0% Securities Acct. 505,500 505,500 - 1,011,000 0.0% 5.0% Securities Acct. 28,172 28,172 - 56,343 0.0% 5.0% Securities Acct. 17,141,350 17,141,350 - 34,282,700 3.0% 4.0% Securities Acct. 2,448,050 2,448,050 - 4,896,100 3.0% 4.0% Total of Investment Assets 31,086,622 32,096,622 - 63,183,243 2.8% 4.1% Page 23
  • 25. CURRENT NET WORTH STATEMENT (Page 2) JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTHOTHER INVESTMENTS Corp Sale Note (50%) ** 3,240,000 - - 3,240,000 0.0% 0.0% LLC Investment 1 1,824,000 - - 1,824,000 0.0% 3.0% LLC Investment 2 1,126,000 - - 1,126,000 0.0% 3.0% LLC Investment 2 1,051,000 - - 1,051,000 0.0% 3.0% LLC Investment 3 750,000 - - 750,000 0.0% 3.0% LLC Investment 4 640,000 - - 640,000 0.0% 3.0% LLC Investment 5 633,000 - - 633,000 0.0% 3.0% Oil & Gas Ventures 300,000 - - 300,000 0.0% 3.0% LLC Investment 6 270,000 - - 270,000 0.0% 3.0% LLC Investment 7 225,000 - - 225,000 0.0% 3.0% LLC Investment 8 210,000 - - 210,000 0.0% 3.0% LLC Investment 9 200,000 - - 200,000 0.0% 3.0% LLC Investment 10 50,000 - - 50,000 0.0% 3.0% Energy Investment 100,000 - - 100,000 120.0% 0.0% Total of Other Investments 10,619,000 - - 10,619,000 1.1% 2.1%** Value reflects the remaining 9 years of payments due from buyout.EMPLOYEE BENEFITS Corp Outstanding Stock Options 353,300 - - 353,300 0.0% 5.0% Other Stock Options 260,200 - - 260,200 0.0% 5.0% Total Employee Benefits 613,500 - - 613,500 0.0% 5.0% Page 24
  • 26. CURRENT NET WORTH STATEMENT (Page 3) JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTHRETIREMENT PLANS/IRAs SEP/IRA 54,400 - 54,400 0.0% 5.0% IRA - 25,000 25,000 0.0% 5.0% 401(k) 4,555,000 - 4,555,000 0.0% 5.0% Total Retirement Plans 4,609,400 25,000 4,634,400 0.0% 5.0%RESIDENTIAL REAL ESTATE 123 Main St. 2,387,500 2,387,500 - 4,775,000 0.0% 0.0% 2nd Residence (QPRT) 1,000,000 1,000,000 - 2,000,000 0.0% 2.0% Vacation Homes 1,000,000 1,000,000 - 2,000,000 0.0% 2.0% Europe Home 500,000 500,000 - 1,000,000 0.0% 2.0% Lake Home 32,500 32,500 - 65,000 0.0% 2.0% Total of Personal Residences 4,920,000 4,920,000 - 9,840,000 0.0% 1.0%PERSONAL PROPERTY Collections/Art/Jewelry 250,000 250,000 - 500,000 0.0% 0.0% Autos 50,000 50,000 - 100,000 0.0% 0.0% Furnishings 200,000 200,000 - 400,000 0.0% 0.0% Total of Personal Property 500,000 500,000 - 1,000,000 0.0% 0.0%TOTAL ASSETS 53,562,522 38,755,622 - 92,318,143TOTAL LIABILITIES - - - -NET WORTH 53,562,522 38,755,622 - 92,318,143 Page 25
  • 27. SCHEDULE OF LIFE INSURANCE BENEFITS - CURRENT PLAN JEFF AND THERESA ANDERSON COMPANY INSURED POLICY # BENEFICIARY PREMIUM CASH VALUE DEATH BENEFITPolicies owned by JeffUL Policy 2nd to die # Children 41,806 - 2,064,053 Totals 41,806 - 2,064,053Policies owned by ILITUL Policy 2nd to die # ILIT 48,850 - 3,005,028 Totals 48,850 - 3,005,028 Page 26
  • 28. FINANCIAL ANALYSIS - EXISTING PLAN ASSET VALUE PROJECTIONS - EXISTING PLAN 613,500 613,500 644,175 676,384 710,203 906,419 1,156,846 2,000,000 2,036,572 2,077,303 2,118,849 2,161,226 2,386,169 2,634,523YEAR Current 2012 2013 2014 2015 2020 2025 2031Asset ValuesCash and cash equivalents 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000Investment Assets 63,183,243 68,296,961 73,403,462 78,890,220 84,786,054 113,416,288 147,976,189 204,188,541Other investments 10,619,000 10,458,650 10,313,723 10,165,815 10,014,866 9,212,261 10,199,235 11,524,160Employee Benefits 613,500 613,500 644,175 676,384 710,203 906,419 1,156,846 1,550,284Retirement plans/IRAs 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,541,768 4,079,678 3,077,245Personal residences 1 9,840,000 9,932,656 10,034,910 10,138,216 10,242,587 8,394,608 8,835,697 9,395,704Personal property 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Total assets in estate 92,318,143 97,373,504 102,489,239 107,976,939 113,863,613 139,899,343 175,675,646 233,163,934Combined net worth $ 92,318,143 $ 97,373,504 $ 102,489,239 $ 107,976,939 $ 113,863,613 $ 139,899,343 $ 175,675,646 $ 233,163,9341 Assumes the 2nd residence was put in a 15 yr. QPRT in 2004. Beginning in 2020, the residence is outside of Jeff & Theresas estate.In the event that there is a cash flow surplus, the surplus is added to the investment assets row by default.If there is a cash flow shortage (because of spending or gifting capital) then the shortage is treated as a reduction in investment assets. Page 27
  • 29. TAXABLE INCOME PROJECTIONS - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Sources of taxable incomeInvestment Assets 1,741,935 1,882,918 2,023,702 2,174,970 2,960,192 3,867,496 5,334,455Other investments 120,000 120,000 120,000 120,000 120,000 120,000 120,000Retirement plans/IRAs 202,260 210,954 219,915 230,315 281,618 330,440 359,295 1Deferred Compensation 1,989,119 2,128,357 2,277,342 2,436,756 - - - 2Corp Buyout 360,000 360,000 360,000 360,000 360,000 - -Social security income 35,431 35,431 35,431 35,431 35,431 35,431 35,431Pension income 660,000 669,900 679,949 690,148 743,485 800,945 875,787Gross income $ 5,108,745 $ 5,407,559 $ 5,716,338 $ 6,047,619 $ 4,500,726 $ 5,154,312 $ 6,724,9671 Deferred compensation payments are made until 2016.2 $30,000/month payments over the next 9 years. Page 28
  • 30. INCOME TAX PROJECTIONS - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Income tax EstimationAdjusted gross income:Dividend income (marketable sec.) 1,741,935 1,882,918 2,023,702 2,174,970 2,960,192 3,867,496 5,334,455Earned and other income 3,366,810 3,524,641 3,692,636 3,872,649 1,540,533 1,286,815 1,390,513 Adjusted gross income 5,108,745 5,407,559 5,716,338 6,047,619 4,500,726 5,154,312 6,724,967DeductionsReal estate tax 92,000 92,000 93,840 95,717 97,631 107,793 119,012 134,027Charitable gifts to Family Foundation 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000Charitable Deduction available 10,000 10,000 10,000 10,000 10,000 10,000 10,000Charitable Deduction allowed 10,000 10,000 10,000 10,000 10,000 10,000 10,000Total deductions 102,000 103,840 105,717 107,631 117,793 129,012 144,027Reductions - (83,072) (84,573) (86,105) (94,234) (103,209) (115,221)Deductions allowed 102,000 20,768 21,143 21,526 23,559 25,802 28,805Taxable income 5,006,745 5,386,791 5,695,195 6,026,093 4,477,167 5,128,509 6,696,162Federal income tax $ 1,373,113 $ 2,096,364 $ 2,218,491 $ 2,349,527 $ 1,736,153 $ 1,994,084 $ 2,614,875 Page 29
  • 31. CASH FLOW PROJECTIONS - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Sources of income for LifestyleNon-taxable Social Security Income 6,252 6,252 6,252 6,252 6,252 6,252 6,252Consumable income (taxable) 5,108,745 5,407,559 5,716,338 6,047,619 4,500,726 5,154,312 6,724,967Total income available for lifestyle 5,114,997 5,413,812 5,722,590 6,053,871 4,506,978 5,160,564 6,731,220Uses of CashLiving expenses 725,000 739,500 754,290 769,376 849,453 937,865 1,056,188Income tax 1,373,113 2,096,364 2,218,491 2,349,527 1,736,153 1,994,084 2,614,875Personally held insurance premiums 41,806 41,806 41,806 41,806 41,806 41,806 41,806Cash gifts to ILIT 48,850 48,850 48,850 48,850 48,850 48,850 48,850Cash gifts to family 158,000 158,000 158,000 158,000 158,000 158,000 158,000Cash gifts to Family Foundation 10,000 10,000 10,000 10,000 10,000 10,000 10,000Total uses of cash 2,356,769 3,094,520 3,231,437 3,377,559 2,844,262 3,190,605 3,929,719Surplus $ 2,758,228 $ 2,319,292 $ 2,491,153 $ 2,676,313 $ 1,662,717 $ 1,969,959 $ 2,801,501In the event that there is a cash flow surplus, the surplus is added to the investment assets row on the "Asset Value Projections" 3 pages earlier.If there is a cash flow shortage (spending or gifting capital) then the shortage is treated as a reduction in marketablesecurities row on the "Asset Value Projections" 3 pages earlier. Page 30
  • 32. FIRST ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Tax calculation on Jeffs deathCombined net worth 92,318,143 97,373,504 102,489,239 107,976,939 113,863,613 139,899,343 175,675,646 233,163,934Jeffs estimated estate 53,562,522 56,495,617 59,463,740 62,647,676 66,063,095 81,168,894 101,926,125 135,280,540Death benefit exceeding CV 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053Total gross estate 55,626,575 58,559,670 61,527,793 64,711,729 68,127,148 83,232,947 103,990,178 137,344,593Settlement expenses (303,133) (317,798) (332,639) (348,559) (365,636) (441,165) (544,951) (711,723)Joint, personal and IRA to Theresa (5,109,400) (5,118,687) (5,139,805) (5,153,067) (5,156,647) (5,017,267) (4,557,671) (3,560,645)Insurance passing to Theresa (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053)Outright or in trust to Theresa (44,750,726) (47,659,869) (53,991,296) (57,146,051) (60,540,812) (75,710,462) (96,823,503) (131,008,172)Taxable estate 3,399,263 3,399,263 - - - - - -Plus Jeffs lifetime taxable gifts 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737Tax base 5,120,000 5,120,000 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737Federal Estate Tax - - - - - - - -Distribution of Jeffs estateSettlement expenses 303,133 317,798 332,639 348,559 365,636 441,165 544,951 711,723To family trust 3,399,263 3,399,263 - - - - - -Joint, personal and IRA to Theresa 5,109,400 5,118,687 5,139,805 5,153,067 5,156,647 5,017,267 4,557,671 3,560,645Insurance passing to Theresa 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053Outright or in trust to Theresa 44,750,726 47,659,869 53,991,296 57,146,051 60,540,812 75,710,462 96,823,503 131,008,172Total $ 55,626,575 $ 58,559,670 $ 61,527,793 $ 64,711,729 $ 68,127,148 $ 83,232,947 $ 103,990,178 $ 137,344,593AssumptionsWe assume that Jeff dies first, followed immediately by Theresa.Taxes under "Distribution of First Estate" include estate and income taxes. Page 31
  • 33. SECOND ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Tax Calculation on Theresas deathTheresas assets 38,755,622 40,877,888 43,025,499 45,329,263 47,800,518 58,730,449 73,749,521 97,883,394Plus assets from Jeffs estate 51,924,179 54,842,608 61,195,154 64,363,171 67,761,512 82,791,782 103,445,227 136,632,870Theresas estimated estate 90,679,800 95,720,496 104,220,653 109,692,434 115,562,030 141,522,231 177,194,748 234,516,264Charitable Bequest (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000)Settlement expenses (931,798) (982,205) (1,067,207) (1,121,924) (1,180,620) (1,440,222) (1,796,947) (2,370,163)Theresas taxable estate 79,208,002 84,198,291 92,613,447 98,030,509 103,841,410 129,542,009 164,857,800 221,606,101Plus Theresas lifetime taxable gifts 1,714,582 1,714,582 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Tax base 80,922,584 85,912,873 93,613,447 99,030,509 104,841,410 130,542,009 165,857,800 222,606,101Federal Estate Tax 26,530,904 28,277,506 51,141,596 54,120,980 57,316,975 71,452,305 90,875,990 122,087,556Total Estate Tax Due 26,530,904 28,277,506 51,141,596 54,120,980 57,316,975 71,452,305 90,875,990 122,087,556Distribution of Theresas estateSettlement expenses 931,798 982,205 1,067,207 1,121,924 1,180,620 1,440,222 1,796,947 2,370,163Taxes 26,530,904 28,277,506 51,141,596 54,120,980 57,316,975 71,452,305 90,875,990 122,087,556Qualified plan to heirs 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,541,768 4,079,678 3,077,245Charitable Bequest 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000Residual estate to heirs 48,042,698 51,277,048 36,806,881 39,231,226 41,842,531 53,547,936 69,902,132 96,441,301Total $ 90,679,800 $ 95,720,496 $ 104,220,653 $ 109,692,434 $ 115,562,030 $ 141,522,231 $ 177,194,748 $ 234,516,264AssumptionsWe assume that Jeff dies first, followed immediately by Theresa.Taxes under "Distribution of Second Estate" include estate and income taxes. Page 32
  • 34. SUMMARY OF BENEFITS TO FAMILY - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Benefits to FamilyFamily trust 3,399,263 3,399,263 - - - - - -Residual estate 48,042,698 51,277,048 36,806,881 39,231,226 41,842,531 53,547,936 69,902,132 96,441,301Qualified plan assets 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,541,768 4,079,678 3,077,245QPRT - 2nd Residence 1 - - - - - 2,386,169 2,634,523 2,966,901Proceeds from ILIT 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028Total assets to heirs $ 59,081,389 $ 62,325,076 $ 44,476,879 $ 46,914,557 $ 49,529,462 $ 63,480,901 $ 79,621,361 $ 105,490,474Estate Taxes $ 26,530,904 $ 28,277,506 $ 51,141,596 $ 54,120,980 $ 57,316,975 $ 71,452,305 $ 90,875,990 $ 122,087,5561 Assumes the 2nd residence was put in a 15 yr. QPRT in 2004. Beginning in 2020, the residence is outside of Jeff & Theresas estate. Page 33
  • 35. ANDERSON FAMILY FOUNDATION DETAILS - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Anderson Family FoundationBeginning of Year Foundation Value 5,000,000 5,137,087 5,301,500 5,470,845 5,645,270 6,599,100 7,704,849 9,266,617Annual Contributions 10,000 10,000 10,000 10,000 10,000 10,000 10,000Amount passing to charity (EOY) 5,000,000 5,147,087 5,311,500 5,480,845 5,655,270 6,609,100 7,714,849 9,276,617Charitable Bequest** 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000Total to Charity 15,540,000 15,687,087 15,851,500 16,020,845 16,195,270 17,149,100 18,254,849 19,816,617** The Charitable Bequest includes $540,000 in bequests to various charitable organizations and $10,000,000 to the Anderson Family Foundation. Page 34
  • 36. DETAILS OF JEFFS QUALIFIED PLAN - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Jeffs Qualified PlansJeffs Age 75 76 77 78 83 88 94Theresas Age 72 73 74 75 80 85 91Minimum distribution factor 22.9 22.0 21.2 20.3 16.3 12.7 9.1Plan contributions - - - - - - -Plan balance 4,609,400 4,618,572 4,639,566 4,652,696 4,656,134 4,515,912 4,055,284 3,057,094Minimum distribution 201,284 209,935 218,847 229,197 280,230 328,762 357,346Preferred distribution - - - - - - -Actual distribution 201,284 209,935 218,847 229,197 280,230 328,762 357,346 Page 35
  • 37. DETAILS OF THERESAS QUALIFIED PLAN - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Theresas Qualified PlansTheresas Age 72 73 74 75 80 85 91Jeffs Age 75 76 77 78 83 88 94Minimum distribution factor 25.6 24.7 23.8 22.9 18.7 14.8 10.8Plan contributions - - - - - - -Plan balance 25,000 25,165 25,404 25,607 25,769 25,855 24,394 20,151Minimum distribution 977 1,019 1,067 1,118 1,387 1,678 1,949Preferred distribution - - - - - - -Actual distribution 977 1,019 1,067 1,118 1,387 1,678 1,949 Page 36
  • 38. DETAILED FINANCIAL ANALYSIS JEFF AND THERESA ANDERSON PROPOSED PLAN FINANCIALSIn the Proposed Plan Section you will find a balance sheet which reflects the repositioning of assetsas set out in the step by step roadmap in the proceeding section. You will also find detailed cashflow and asset projection information on each of the proposed planning strategies. Page 37
  • 39. NET WORTH STATEMENT AFTER PLAN IMPLEMENTATION JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTHCASH AND EQUIVALENTS Cash Acct 250,000 250,000 - 500,000 0.0% 0.0% Cash Acct 100,000 100,000 - 200,000 0.0% 0.0% Cash Acct 464,000 464,000 - 928,000 0.0% 0.0% Cash Acct 400,000 400,000 - 800,000 0.0% 0.0% Total of Cash and Equivalents 1,214,000 1,214,000 - 2,428,000 0.0% 0.0%INVESTMENT ASSETS Securities Acct. 9,442,850 9,442,850 - 18,885,700 3.0% 4.0% Securities Acct. 1,004,550 1,004,550 - 2,009,100 0.0% 5.0% Securities Acct. 516,150 516,150 - 1,032,300 0.0% 5.0% Securities Acct. - 1,010,000 - 1,010,000 0.0% 5.0% Securities Acct. 505,500 505,500 - 1,011,000 0.0% 5.0% Securities Acct. 28,172 28,172 - 56,343 0.0% 5.0% Securities Acct. 2,448,050 2,448,050 - 4,896,100 3.0% 4.0% Total of Investment Assets 13,945,272 14,955,272 - 28,900,543 2.5% 4.2% Page 38
  • 40. REVISED NET WORTH STATEMENT (Page 2) JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTHOTHER INVESTMENTS LLC Investment 1 1,824,000 - - 1,824,000 0.0% 3.0% LLC Investment 2 1,126,000 - - 1,126,000 0.0% 3.0% LLC Investment 2 1,051,000 - - 1,051,000 0.0% 3.0% LLC Investment 3 750,000 - - 750,000 0.0% 3.0% LLC Investment 4 640,000 - - 640,000 0.0% 3.0% LLC Investment 5 633,000 - - 633,000 0.0% 3.0% Oil & Gas Ventures 300,000 - - 300,000 0.0% 3.0% LLC Investment 6 270,000 - - 270,000 0.0% 3.0% LLC Investment 7 225,000 - - 225,000 0.0% 3.0% LLC Investment 8 210,000 - - 210,000 0.0% 3.0% LLC Investment 9 200,000 - - 200,000 0.0% 3.0% LLC Investment 10 50,000 - - 50,000 0.0% 3.0% Total of Other Investments 7,279,000 - - 7,279,000 0.0% 3.0%EMPLOYEE BENEFITS Corp Outstanding Stock Options 353,300 - - 353,300 0.0% 5.0% Other Stock Options 260,200 - - 260,200 0.0% 5.0% Total Employee Benefits 613,500 - - 613,500 0.0% 5.0%RETIREMENT PLANS/IRAs SEP/IRA 54,400 - 54,400 0.0% 5.0% IRA - 25,000 25,000 0.0% 5.0% 401(k) 4,555,000 - 4,555,000 0.0% 5.0% Total Retirement Plans 4,609,400 25,000 4,634,400 0.0% 5.0% Page 39
  • 41. REVISED NET WORTH STATEMENT (Page 3) JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTHRESIDENTIAL REAL ESTATE 123 Main St. 2,387,500 2,387,500 - 4,775,000 0.0% 0.0% 2nd Residence (QPRT) 1,000,000 1,000,000 - 2,000,000 0.0% 2.0% Vacation Homes 1,000,000 1,000,000 - 2,000,000 0.0% 2.0% Europe Home 500,000 500,000 - 1,000,000 0.0% 2.0% Lake Home 32,500 32,500 - 65,000 0.0% 2.0% Total of Personal Residences 4,920,000 4,920,000 - 9,840,000 0.0% 1.0%PERSONAL PROPERTY Collections/Art/Jewelry 250,000 250,000 - 500,000 0.0% 0.0% Autos 50,000 50,000 - 100,000 0.0% 0.0% Furnishings 200,000 200,000 - 400,000 0.0% 0.0% Total of Personal Property 500,000 500,000 - 1,000,000 0.0% 0.0%OTHER STRATEGY ASSETS GDOT Note 15,049,080 15,049,080 - 30,098,160 2.63% Total of Other Strategy Assets 15,049,080 15,049,080 - 30,098,160 2.63%TOTAL ASSETS 48,130,252 36,663,352 - 84,793,603TOTAL LIABILITIES - - - -NET WORTH 48,130,252 36,663,352 - 84,793,603 Page 40
  • 42. FINANCIAL ANALYSIS - PROPOSED PLAN ASSET VALUE PROJECTIONS - PROPOSED PLAN 613,500 613,500 644,175 676,384 710,203 906,419 1,156,846 2,000,000 2,036,572 2,077,303 2,118,849 2,161,226 2,386,169 2,634,523YEAR Current 2012 2013 2014 2015 2020 2025 2031Asset ValuesCash and cash equivalents 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000Investment assets** 22,400,543 25,130,959 27,549,941 30,175,589 33,025,373 43,207,687 54,618,881 71,643,368Other investments 7,279,000 7,478,572 7,702,929 7,934,017 8,172,037 9,473,631 10,982,535 13,113,721Employee Benefits 613,500 613,500 644,175 676,384 710,203 906,419 1,156,846 1,550,284Retirement plans/IRAs 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,541,768 4,079,678 3,077,245Personal residences 1 9,840,000 9,932,656 10,034,910 10,138,216 10,242,587 8,394,608 8,835,697 9,395,704Personal property 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Note from childrens GDOT 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160Total assets in estate 78,293,603 81,325,584 84,123,085 87,128,669 90,358,263 100,050,272 113,199,797 132,306,482Combined net worth $ 78,293,603 $ 81,325,584 $ 84,123,085 $ 87,128,669 $ 90,358,263 $ 100,050,272 $ 113,199,797 $ 132,306,4821 Assumes the 2nd residence was put in a 15 yr. QPRT in 2004. Beginning in 2020, the residence is outside of Jeff & Theresas estate.** Reduced by Seed Gift to GDOTIn the event that there is a cash flow surplus, the surplus is added to the investment assets row by default.If there is a cash flow shortage (because of spending or gifting capital) then the shortage is treated as a reduction in investment assets. Page 41
  • 43. TAXABLE INCOME PROJECTIONS - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Investment assets 552,992 620,396 680,112 744,930 1,020,230 1,287,320 1,691,889Investment assets - GDOT 1,223,481 1,260,296 1,303,919 1,350,596 1,637,812 1,992,697 2,594,227 1Deferred Compensation 1,989,119 2,128,357 2,277,342 2,436,756 - - -Retirement plans/IRAs 202,260 210,954 219,915 230,315 281,618 330,440 359,295Other taxable earnings - GDOT 480,000 480,000 480,000 480,000 480,000 120,000 120,000Social security income 35,431 35,431 35,431 35,431 35,431 35,431 35,431Pension income 660,000 669,900 679,949 690,148 743,485 800,945 875,787Gross income $ 5,143,283 $ 5,405,333 $ 5,676,667 $ 5,968,176 $ 4,198,576 $ 4,566,832 $ 5,676,6281 Deferred compensation payments are made until 2016. Page 42
  • 44. INCOME TAX PROJECTIONS - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Income Tax EstimationAdjusted gross income:Dividend income (Marketable Sec.) 1,776,473 1,880,692 1,984,031 2,095,526 2,658,042 3,280,016 4,286,116Earned and other income 3,366,810 3,524,641 3,692,636 3,872,649 1,540,533 1,286,815 1,390,513Adjusted gross income 5,143,283 5,405,333 5,676,667 5,968,176 4,198,576 4,566,832 5,676,628DeductionsReal Estate Tax 92,000 93,840 95,717 97,631 107,793 119,012 134,027Cash charitable gifts 10,000 10,000 10,000 10,000 10,000 10,000 10,000Charitable Deduction available 10,000 10,000 10,000 10,000 10,000 10,000 10,000Charitable Deduction allowed 10,000 10,000 10,000 10,000 10,000 10,000 10,000Total deductions 102,000 103,840 105,717 107,631 117,793 129,012 144,027Reductions - (83,072) (84,573) (86,105) (94,234) (103,209) (115,221)Deductions allowed 102,000 20,768 21,143 21,526 23,559 25,802 28,805Taxable income 5,041,283 5,384,565 5,655,524 5,946,649 4,175,017 4,541,029 5,647,823Federal income tax $ 1,378,294 $ 2,095,482 $ 2,202,782 $ 2,318,068 $ 1,616,501 $ 1,761,442 $ 2,199,732 Page 43
  • 45. CASH FLOW PROJECTIONS - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Sources of Income for LifestyleConsumable income (taxable) 3,439,802 3,665,038 3,892,748 4,137,580 2,080,764 2,454,135 2,962,402Non-taxable Social Security Income 6,252 6,252 6,252 6,252 6,252 6,252 6,252Distribution from Investment assets - - - - - - -Note Payment from GDOT 791,582 791,582 791,582 791,582 791,582 791,582 791,582Total income available for lifestyle 4,237,636 4,462,872 4,690,582 4,935,414 2,878,598 3,251,969 3,760,236Uses of CashLiving expenses 725,000 739,500 754,290 769,376 849,453 937,865 1,056,188Income tax 1,378,294 2,095,482 2,202,782 2,318,068 1,616,501 1,761,442 2,199,732Personally held insurance premiums 41,806 41,806 41,806 41,806 41,806 41,806 41,806Cash gifts to ILIT 48,850 48,850 48,850 48,850 48,850 48,850 48,850Cash gifts to family 158,000 158,000 158,000 158,000 158,000 158,000 158,000Cash gifts to charity 10,000 10,000 10,000 10,000 10,000 10,000 10,000Total uses of cash 2,361,950 3,093,638 3,215,728 3,346,099 2,724,610 2,957,963 3,514,576Surplus $ 1,875,686 $ 1,369,233 $ 1,474,854 $ 1,589,314 $ 153,987 $ 294,006 $ 245,660In the event that there is a cash flow surplus, the surplus is added to the investment assets row on the "Asset Value Projections" 3 pages earlier. Page 44
  • 46. FIRST ESTATE TAX ESTIMATION AND DISTRIBUTION - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Tax calculation on Jeffs deathCombined Net Worth 78,293,603 81,325,584 84,123,085 87,128,669 90,358,263 100,050,272 113,199,797 132,306,482Jeffs estimated estate 44,440,744 46,161,746 47,749,654 49,455,674 51,288,845 56,790,189 64,254,077 75,099,347Death benefit exceeding CV 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053Total gross estate 46,504,797 48,225,799 49,813,707 51,519,727 53,352,898 58,854,242 66,318,130 77,163,400Settlement expenses (257,524) (266,129) (274,069) (282,599) (291,764) (319,271) (356,591) (410,817)Joint, personal and IRA to Theresa (5,109,400) (5,118,687) (5,139,805) (5,153,067) (5,156,647) (5,017,267) (4,557,671) (3,560,645)Insurance passing to Theresa (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053)Outright or in trust to Theresa (38,924,557) (40,627,668) (42,335,781) (44,020,008) (45,840,433) (51,453,651) (59,339,816) (71,127,885)Taxable estate 149,263 149,263 - - - - - -Plus Jeffs lifetime taxable gifts 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737Tax base 5,120,000 5,120,000 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737Tentative Federal Estate Tax - - - - - - - -Distribution of First EstateSettlement expenses 257,524 266,129 274,069 282,599 291,764 319,271 356,591 410,817To family trust 149,263 149,263 - - - - - -Joint, personal and IRA to Theresa 5,109,400 5,118,687 5,139,805 5,153,067 5,156,647 5,017,267 4,557,671 3,560,645Insurance passing to Theresa 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053Outright or in trust to Theresa 38,924,557 40,627,668 42,335,781 44,020,008 45,840,433 51,453,651 59,339,816 71,127,885Total $ 46,504,797 $ 48,225,799 $ 49,813,707 $ 51,519,727 $ 53,352,898 $ 58,854,242 $ 66,318,130 $ 77,163,400AssumptionsWe assume that Jeff dies first, followed immediately by Theresa.Taxes under "Distribution of First Estate" include estate and income taxes, if any. Page 45
  • 47. SECOND ESTATE TAX ESTIMATION AND DISTRIBUTION - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Tax Calculation on Theresas deathTheresas assets 33,852,859 35,163,837 36,373,431 37,672,996 39,069,418 43,260,083 48,945,720 57,207,134Plus assets from Jeffs estate 46,098,010 47,810,407 49,539,639 51,237,128 53,061,133 58,534,971 65,961,539 76,752,583Theresas estimated estate 79,950,869 82,974,245 85,913,070 88,910,124 92,130,551 101,795,054 114,907,259 133,959,718Settlement expenses (824,509) (854,742) (884,131) (914,101) (946,306) (1,042,951) (1,174,073) (1,364,597)Existing Charitable Bequest (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000)Taxable estate 68,586,360 71,579,502 74,488,939 77,456,022 80,644,246 90,212,103 103,193,187 122,055,121Plus Theresas lifetime taxable gifts 4,964,582 4,964,582 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Tax base 73,550,942 76,544,084 75,488,939 78,456,022 81,644,246 91,212,103 104,193,187 123,055,121Federal Estate Tax 23,950,830 24,998,429 41,173,116 42,805,012 44,558,535 49,820,857 56,960,453 67,334,516Distribution of Second EstateSettlement expenses 824,509 854,742 884,131 914,101 946,306 1,042,951 1,174,073 1,364,597Taxes 23,950,830 24,998,429 41,173,116 42,805,012 44,558,535 49,820,857 56,960,453 67,334,516Qualified plan to heirs 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,541,768 4,079,678 3,077,245Other gifts to charity 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000Residual estate to heirs 40,001,131 41,937,336 28,650,853 29,972,707 31,403,807 35,849,479 42,153,056 51,643,359Total $ 79,950,869 $ 82,974,245 $ 85,913,070 $ 88,910,124 $ 92,130,551 $ 101,795,054 $ 114,907,259 $ 133,959,718AssumptionsWe assume that Jeff dies first, followed immediately by Theresa.Taxes under "Distribution of Second Estate" include estate and income taxes, if any. Page 46
  • 48. SUMMARY OF BENEFITS TO FAMILY - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Benefits to FamilyResidual estate 40,001,131 41,937,336 28,650,853 29,972,707 31,403,807 35,849,479 42,153,056 51,643,359Family trust 149,263 149,263 - - - - - -Excess FLP value 7,524,540 7,650,468 7,815,389 7,998,512 8,201,176 9,508,190 11,513,321 14,562,718Qualified plan assets 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,541,768 4,079,678 3,077,245Value of GDOT 6,500,000 7,241,230 8,170,417 9,183,190 10,285,336 17,422,374 27,714,790 46,119,953Life insurance proceeds GDOT 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000Existing QPRT - 2nd Residence 1 - - - - - 2,386,169 2,634,523 2,966,901Proceeds from ILIT 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028Total assets to heirs $ 111,814,362 $ 114,627,062 $ 102,306,657 $ 104,837,741 $ 107,577,250 $ 122,713,007 $ 141,100,396 $ 171,375,2041 Assumes the 2nd residence was put in a 15 yr. QPRT in 2004. Beginning in 2020, the residence is outside of Jeff & Theresas estate. Page 47
  • 49. FAMILY LIMITED PARTNERSHIP DETAILS - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Balance SheetLP Assets Investment Assets 34,282,700 35,272,339 36,456,947 37,732,562 39,105,879 47,440,952 57,466,605 72,713,589 Other Investments 3,340,000 2,980,000 2,620,000 2,260,000 1,900,000 100,000 100,000 100,000 Total 37,622,700 38,252,339 39,076,947 39,992,562 41,005,879 47,540,952 57,566,605 72,813,589Assets in FLP $ 37,622,700 $ 38,252,339 $ 39,076,947 $ 39,992,562 $ 41,005,879 $ 47,540,952 $ 57,566,605 $ 72,813,589Discounted value of FLP interests 30,098,160 30,601,871 31,261,557 31,994,049 32,804,703 38,032,762 46,053,284 58,250,871Difference between FLP asset valueand discounted LP value 7,524,540 7,650,468 7,815,389 7,998,512 8,201,176 9,508,190 11,513,321 14,562,718 Page 48
  • 50. FAMILY LIMITED PARTNERSHIP DETAILS - PROPOSED PLAN (Continued)Partnership Cash Flow Current 2012 2013 2014 2015 2020 2025 2031 Income Investment Assets 1,028,481 1,058,170 1,093,708 1,131,977 1,368,489 1,657,691 2,097,507 1 Corp Buyout Note Payments 360,000 360,000 360,000 360,000 360,000 - - Other Investments 120,000 120,000 120,000 120,000 120,000 120,000 120,000 Total Income 1,508,481 1,538,170 1,573,708 1,611,977 1,848,489 1,777,691 2,217,507 Expenses Net Income to Distribute 1,508,481 1,538,170 1,573,708 1,611,977 1,848,489 1,777,691 2,217,507LP Capital Distributed* 263,101 226,286 182,663 135,986 - - -* Note: Capital distributions, if any, are subtracted from the investment assets row on the prior page.Taxable Income Current 2012 2013 2014 2015 2020 2025 2031 Dividend income (Investment assets) 1,028,481 1,058,170 1,093,708 1,131,977 1,368,489 1,657,691 2,097,507 Other Investments 480,000 480,000 480,000 480,000 480,000 120,000 120,000 Taxable Income 1,508,481 1,538,170 1,573,708 1,611,977 1,848,489 1,777,691 2,217,507 Page 49
  • 51. GRANTOR DEEMED OWNER TRUST DETAILS - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031GDOT Balance SheetLP Units 30,098,160 30,601,871 31,261,557 31,994,049 32,804,703 38,032,762 46,053,284 58,250,871Seed Gift 6,500,000 6,737,519 7,007,020 7,287,301 7,578,793 9,220,761 11,218,465 14,194,937Reinvested excess cash flow - - - - - 267,011 541,201 3,772,305Note payable to Jeff and Theresa (30,098,160) (30,098,160) (30,098,160) (30,098,160) (30,098,160) (30,098,160) (30,098,160) (30,098,160)Net equity $ 6,500,000 $ 7,241,230 $ 8,170,417 $ 9,183,190 $ 10,285,336 $ 17,422,374 $ 27,714,790 $ 46,119,953GDOT Income Tax EstimationTaxable dividends from FLP 1,028,481 1,058,170 1,093,708 1,131,977 1,368,489 1,657,691 2,097,507Other Investments 480,000 480,000 480,000 480,000 480,000 120,000 120,000Earnings from reinvestment acct./Seed Gift 195,000 202,126 210,211 218,619 269,323 335,006 496,719Total earnings 1,703,481 1,740,296 1,783,919 1,830,596 2,117,812 2,112,697 2,714,227GDOT Cash FlowCapital Distribution from LP 263,101 226,286 182,663 135,986 - - -Cash flow from LP units 1,508,481 1,538,170 1,573,708 1,611,977 1,848,489 1,777,691 2,217,507Cash flow from reinvestment acct./Seed Gift 195,000 202,126 210,211 218,619 269,323 335,006 496,719Installment Note payments to Jeff and Theresa (791,582) (791,582) (791,582) (791,582) (791,582) (791,582) (791,582)Insurance Premium (1,175,000) (1,175,000) (1,175,000) (1,175,000) (1,175,000) (1,175,000) (1,175,000)Cash flow to reinvest - - - - 151,231 146,115 747,645Note: Capital distributions, if any, are subtracted from the marketable securities row on the FLP balance sheet.GDOT InsuranceNet death benefit 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000Premium 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000GDOT NoteOutstanding note balance 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160Interest payment 791,582 791,582 791,582 791,582 791,582 791,582 791,582 Page 50
  • 52. IRREVOCABLE LIFE INSURANCE TRUST DETAILS - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Cash gift to current ILIT 48,850 48,850 48,850 48,850 48,850 48,850 48,850 48,850Total outlay to ILITs 48,850 48,850 48,850 48,850 48,850 48,850 48,850 48,850Death benefit from current ILIT 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028Total potential death benefit $ 3,005,028 $ 3,005,028 $ 3,005,028 $ 3,005,028 $ 3,005,028 $ 3,005,028 $ 3,005,028 $ 3,005,028 Page 51
  • 53. ANDERSON FAMILY FOUNDATION DETAILS - EXISTING PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Anderson Family FoundationBeginning of Year Foundation Value 5,000,000 5,137,087 5,301,500 5,470,845 5,645,270 6,599,100 7,704,849 9,266,617Annual Contributions 10,000 10,000 10,000 10,000 10,000 10,000 10,000Amount passing to charity (EOY) 5,000,000 5,147,087 5,311,500 5,480,845 5,655,270 6,609,100 7,714,849 9,276,617 Page 52
  • 54. BENEFITS TO ANDERSON FAMILY CHARITY - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Anderson Family Foundation - Existing 5,000,000 5,147,087 5,311,500 5,480,845 5,655,270 6,609,100 7,714,849 9,276,617Existing Charitable Bequest** 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000Total benefits to family charity $ 15,540,000 $ 15,687,087 $ 15,851,500 $ 16,020,845 $ 16,195,270 $ 17,149,100 $ 18,254,849 $ 19,816,617** The Charitable Bequest includes $540,000 in bequests to various charitable organizations and $10,000,000 to the Anderson Family Foundation. Page 53
  • 55. DETAILS OF JEFFS QUALIFIED PLAN - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Jeffs Qualified PlansJeffs age 75 76 77 78 83 88 94Theresas age 72 73 74 75 80 85 91Minimum distribution factor 22.9 22.0 21.2 20.3 16.3 12.7 9.1Securities in plans 4,609,400 4,618,572 4,639,566 4,652,696 4,656,134 4,515,912 4,055,284 3,057,094Plan balance during life 4,609,400 4,618,572 4,639,566 4,652,696 4,656,134 4,515,912 4,055,284 3,057,094Plan balance at death of survivor 4,609,400 4,618,572 4,639,566 4,652,696 4,656,134 4,515,912 4,055,284 3,057,094Minimum distribution 201,284 209,935 218,847 229,197 280,230 328,762 357,346Actual distribution 201,284 209,935 218,847 229,197 280,230 328,762 357,346 Page 54
  • 56. DETAILS OF THERESAS QUALIFIED PLAN - PROPOSED PLANYEAR Current 2012 2013 2014 2015 2020 2025 2031Theresas Qualified PlansTheresas age 72 73 74 75 80 85 91Jeffs age 75 76 77 78 83 88 94Minimum distribution factor 25.6 24.7 23.8 22.9 18.7 14.8 10.8Securities in plans 25,000 25,165 25,404 25,607 25,769 25,855 24,394 20,151Plan contributions - - - - - - -Plan balance during life 25,000 25,165 25,404 25,607 25,769 25,855 24,394 20,151Plan balance at death of survivor 25,000 25,165 25,404 25,607 25,769 25,855 24,394 20,151Minimum distribution 977 1,019 1,067 1,118 1,387 1,678 1,949Preferred distribution - - - - - - -Actual distribution 977 1,019 1,067 1,118 1,387 1,678 1,949 Page 55
  • 57. FAMILY INFORMATION JEFF AND THERESA ANDERSON CLIENTS Jeff Anderson Date of Birth March 8, 1937 Theresa Anderson Date of Birth February 5, 1940 123 Main St. CHILDREN CHILDS NAMEGeorge Anderson Alyssa Anderson Jack Anderson GRANDCHILDREN NAMEWilliam Anderson Jackie Anderson Jeffrey AndersonAshley Anderson Gloria Anderson Page 56
  • 58. PLAN ASSUMPTIONS JEFF AND THERESA ANDERSONThe plan is based on numerous assumptions. Important among these are the yield and growth assumptionscontained on the balance sheet in the Financial Analysis section. Other important assumptions are contained onthis Plan Assumptions page. Tax Rate Assumptions State Income Tax Rate No state income tax State Inheritance - Estate Tax No state estate tax Tax on IRD Unless a qualified plan is given to charity, we assume the beneficiary designations are changed to provide for a stretch out distribution. 7520 Rates Highest rate 1.5% December, 2012 Current rate 1.4% January, 2012 Lowest rate 1.4% January, 2012 Long Term AFR Rate 2.6% January, 2012 Lifestyle Need Assumptions Net annual outlay for Jeff and Theresas lifestyle needs, not including gifts or income taxes $725,000 Annual cost of living increase used in the plan 2% Settlement and Administrative Expenses Fixed estate settlement costs $25,000 Variable estate settlement costs, 1st death 0.50% (of assets) Variable estate settlement costs, 2nd death 1.00% (of assets) Page 57
  • 59. DISCLAIMER AND DISCLOSURE JEFF AND THERESA ANDERSONInKnowVision, LLC does not give accounting or investment advice to its clients. The effectiveness of any of the strategies described willdepend on your individual situation and on a number of complex factors.You should consult with your other advisors on the accounting and investment implications of the proposed strategies before any strategyis implemented.Any discussion in this presentation relating to tax, accounting, investments, regulatory, or legal matters is based on our understanding as ofthe date of this presentation. Rules in these areas are constantly changing and are open to varying interpretations.Assumption Issues The plan involves numerous assumptions. While we believe that these assumptions are reasonable, it is important tounderstand that it is a virtual certainty that the actual results will differ from those illustrated. Returns on investment and performance offinancial products can cause the results to vary. Changes in tax, trust or property laws can cause plan results to vary. Plan implementationthat differs from that described in the plan will cause the results to vary. Provision of state law may cause the plan results to vary.Tax Opinions The IRS has recently issued new rules for tax practitioners regarding covered opinions, reliance opinions and marketedopinions. While this is an arcane area, suffice it to say that these opinions are often obtained by taxpayers for purposes of avoidingpenalties. These opinions are obtained at substantial cost and after substantial legal analysis. If you believe that such an opinion would behelpful to you prior to entering into any of the transactions outlined in this plan, you should feel free do so.Be advised that nothing in this analysis should be construed by you, your advisors or any one else as a covered opinion, reliance opinion,marketed opinion or any other type of opinion regarding any of the transactions or outcomes outlined in this plan. Page 58

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