Bueller Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning

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Advanced Planning For the Ultra High Net Worth.The recordings for this program can be found at http://tinyurl.com/6yojnrt.

Learn more at www.inknowvision.com

The Family Wealth Goal Achiever™ is a plan design book (like a blueprint) that explains in easy to understand text and graphics the planning ideas being recommended by the planning team. It solves for high net worth tax planning, advanced estate planning, business transition planning, asset protection planning.

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Bueller Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning

  1. 1. InKnowVision’s Monthly HNW Webinar Series Case Study Webinar ©2012. InKnowVision LLC. All rights reserved. www.inknowvision.com
  2. 2. FAMILY WEALTH GOAL ACHIEVER™ - INITIAL PREPARED FOR: FERRIS AND BEATRICE BUELLER February 24, 2011 PRESENTED BY InKnowVision, LLC 715 Enterprise Drive Oak Brook, IL 60523 Scott@ikvllc.com Phone: 630-596-5090Copyright 2011 InKnowVision, LLC
  3. 3. YOUR GOALS AND OBJECTIVES FERRIS AND BEATRICE BUELLERMaintain our customary lifestyle. This should take about $600,000 annually after taxes and gifts.Provide for the financial security of the surviving spouse.Maintain adequate liquidity for emergencies and investment opportunities. We prefer to keep at least $1,000,000 incash and readily marketable securities.Assure we have sufficient liquid assets available at our deaths to eliminate the forced liquidation of our business orreal estate assets.Maximize the inheritance that we leave for our children and grandchildren.Reduce or eliminate our liability from Mid-Level Care.Provide a succession plan that will allow for a smooth transition to bring our daughters into Mid-Level Care.Provide a succession plan that will allow for a smooth transition to bring our daughters into Pizza Distributors.Provide a strategic methodology for current and future charitable giving.Reduce income taxes.Eliminate or reduce estate taxes. Page 2
  4. 4. FAMILY INFORMATION FERRIS AND BEATRICE BUELLER CLIENTS Ferris Bueller Date of Birth August 5, 1951 Beatrice Bueller Date of Birth February 6, 1953 123 Main CHILDREN CHILDS NAME DATE OF BIRTH SPOUSES NAMEJenny Bueller - Jones May 18, 1983 Davey Jones Megan Bueller April 27, 1986 Page 3
  5. 5. PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - CONSIDERED FERRIS AND BEATRICE BUELLERIn our planning process, we start with the universe of available planning tools. While this universe is constantly changing, the following chart outlinesmany of the available tools. We examine each of these strategies and discard those that are not suitable for meeting your goals and objectives. Charitable Family Limited Grantor Retained Charitable Lead Remainder Uni- 412(i) Private Annuity SCIN Partnership Annuity Trust Annuity Trust Trust Sale for Installment Series Limited GDOT Owned Life Family LLC TCLAT Loan to GDOT Flip CRT Note Liability Company Insurance Preferred Limited GDOT Distributions Corporate Premium Finance 529 Plans Gifting ILIT partnership for ILIT Premiums Recapitalization Charitable Life Walton GRAT Private Foundations NIMCRUT Annuity Withdrawal Asset Protection SPIA/Life Arbitrage Estate Revocable Living SPIA/Life in a Principal Protected International Trusts, DPAs and Crummey Powers Dynasty Trust GDOT CLAT Notes VUL POAs Supporting IRA/Annuity to Business Risk Gift Annuity Remainder Sales Life Estates LLC/CRTs Organizations Charity Management Charitable Defined Benefit Qualified Plan Bargain Sales Succession Planning Risk Management Remainder Annuity ESOP Planning Plans Limited Partnership Trust Page 4
  6. 6. PLAN ASSUMPTIONS FERRIS AND BEATRICE BUELLERThe plan is based on numerous assumptions. Important among these are the yield and growth assumptions contained onthe balance sheet in the Financial Analysis section. Other important assumptions are contained on this Plan Assumptionspage. Tax Rate Assumptions State Income Tax Rate 6% State Inheritance - Estate Tax No state estate tax 7520 Rates Highest rate 2.8% February, 2011 Current rate 2.8% February, 2011 Lowest rate 1.8% December, 2010 Long Term AFR Rate 4.2% February, 2011 Annual increase in Ferriss earned income 2% Number of years Ferriss income is expected to continue 10 Annual increase in Beatrices earned income 0% Number of years Beatrices income is expected to continue 10 Lifestyle Need Assumptions Net annual outlay for Ferris and Beatrices lifestyle needs, not including gifts or income taxes $600,000 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 5
  7. 7. COMPARISON OF PLAN RESULTS - PLAN YEAR 2011 FERRIS AND BEATRICE BUELLER Existing Plan Proposed Plan Advantage Estate Value $ 51,886,036 $ 36,223,066 Heirs Receive Immediately $ 44,693,185 $ 60,746,885 $ 16,053,699 Heirs Receive from Deferred Inheritance $ - $ 32,375,661 $ 32,375,661 Total Benefits to Family $ 44,693,185 $ 93,122,546 $ 48,429,361 Family Charity $ - $ 27,739,960 $ 27,739,960 Estate and Income Tax $ 14,522,481 $ - $ 14,522,481This chart assumes that you both die in 2011 and compares the results of the current plan with the proposed plan. Page 6
  8. 8. PROPOSED PLAN RESULTS - PLAN YEAR 2011 FERRIS AND BEATRICE BUELLER ESTATE OF FERRIS AND Date: December 31, 2011 BEATRICE BUELLER 1st National Bank● Goal - Maximize Inheritance Pay to the Our Heirs $93,122,546 order of Ninety Three Million One Hundred Twenty Two Thousand Five Hundred Forty Six Dollars and No Cents Dollars Memo Inheritance ESTATE OF FERRIS AND December 31, 2011 Date: BEATRICE BUELLER 1st National Bank Goal - Reduce Estate Taxes Pay to the order of Internal Revenue Service $0,000 No Dollars and No Cents Dollars Memo Estate and Income Taxes ESTATE OF FERRIS AND December 31, 2011 Date: BEATRICE BUELLER 1st National Bank Goal - Gift to Pay to the Charity $27,739,960 order of Charity Twenty Seven Million Seven Hundred Thirty Nine Thousand Nine Hundred Sixty Dollars and No Cents Dollars Memo Family Charities Page 7
  9. 9. PROPOSED PLAN RESULTS - PLAN YEAR 2039 FERRIS AND BEATRICE BUELLER ESTATE OF FERRIS AND Date: December 31, 2039 BEATRICE BUELLER 1st National Bank● Goal - Maximize Pay to the Our Heirs $252,700,834 Inheritance order of Two Hundred Fifty Two Million Seven Hundred Thousand Eight Hundred Thirty Four Dollars and No Cents Dollars Memo Inheritance ESTATE OF FERRIS AND Date: December 31, 2039 BEATRICE BUELLER 1st National Bank Goal - Reduce Estate Taxes Pay to the order of Internal Revenue Service $0,000 No Dollars and No Cents Dollars Memo Estate and Income Taxes ESTATE OF FERRIS AND Date: December 31, 2039 BEATRICE BUELLER 1st National Bank Goal - Gift Pay to the Charity $30,784,252to Charity order of Thirty Million Seven Hundred Eighty Four Thousand Two Hundred Fifty Two Dollars and No Cents Dollars Memo Family Charities Page 8
  10. 10. INTRODUCTION TO THE PLAN STRATEGIES ROADMAP FERRIS AND BEATRICE BUELLERThe 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 thedesired result 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 9
  11. 11. CORPORATE RE-CAPITALIZATION FERRIS AND BEATRICE BUELLERFerris and Beatrice recapitalize the existing corporate shares into voting and non-voting shares. Businesses To Be RecapitalizedMid-Level Care Corporation (100 sh) 11,122,006Pizza Distributors Co., Inc (20,000 sh) ** 23,500,000Total 34,622,006** We believe Pizza Distributors has already been recapitalized but will need to be reappraised. Page 10
  12. 12. HAVE THE NON-VOTING SHARES APPRAISED FERRIS AND BEATRICE BUELLERFerris and Beatrice hire an appraiser to value the non-voting shares. The appraiser will value the shares taking all of the following intoaccount: ▪ Liquidity of the shares ▪ Transferability of the shares ▪ Degree of control that accompanies ownership of the shares ▪ The assets owned by the corporations Appraisal Valuation adjustment assumed t be 35% d to bThe assumed value of the non-voting stock is 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 11
  13. 13. CREATE GRANTOR DEEMED OWNER TRUSTS FERRIS AND BEATRICE BUELLER Ferris and Beatrice create individual grantor deemed owner trusts (GDOT). Page 12
  14. 14. GIFT TO GRANTOR DEEMED OWNER TRUST FERRIS AND BEATRICE BUELLERFerris and Beatrice each make a gift of $921,545 to their individual GDOT. This gift is designed to give each trust economic substance. $921,545 $921,545 Page 13
  15. 15. BENEFICIARIES GUARANTEE GDOT OBLIGATION FERRIS AND BEATRICE BUELLER The heirs guarantee a portion of the obligation of both GDOTs. Installment note Beneficiaries of th GDOT ( others) B fi i i f the (or th ) guarantee a portion of the GDOT obligation. Page 14
  16. 16. SELL NON-VOTING SHARES TO EACH GDOT FERRIS AND BEATRICE BUELLER Ferris and Beatrice sell their non-voting stock to their individual GDOTs for an installment note. Sell their combined non-voting stock worth $22,504,304 Cash or securities of $1,843,090 and an installment note worth $20,661,214 that provides annual payments of $857,440The sale price is based on the assumed value of the assetssold.*Note payments are interest only at 4.15%.Goals Accomplished:- Reduce or eliminate our liability from Mid-Level Care.- Provide a succession plan that will allow for a smooth transition to bringour daughters into Mid-Level Care.- Provide a succession plan that will allow for a smooth transition to bringour daughters into Pizza Distributors.- Maximize the inheritance that we leave for our children and grandchildren.- Reduce estate tax liability.- Avoid Capital Gains tax on the transfer. Page 15
  17. 17. LOAN TO GDOT FERRIS AND BEATRICE BUELLER Ferris and Beatrice loan $1,000,000 to the GDOTs in year one to create adequate cash flow. Loan $1,000,000 of cash to the GDOTs Annual principal and interest payments of $135,868*Note payments are amortized over 10 years at 6%. Page 16
  18. 18. PURCHASE LIFE INSURANCE IN THE GDOT FERRIS AND BEATRICE BUELLER The GDOT Trustees purchase second-to-die life insurance with the assets of the two GDOTs.Premium Payment DetailsPremium in the amount of $827,670 is paid in the first year with assets of the GDOTs.No premium payments are made for 9 years, then beginning in year 11, premiums inthe amount of $388,260 are paid annually thereafter.The premium is based on certain assumptions. This is for illustration purposes only. Actual insurance numbers can only be determinedby applying for insurance.Goals Accomplished:- Assure we have sufficient liquid assets available at our deaths to eliminate the forcedliquidation of our business or real estate assets.- Maximize the inheritance that we leave for our children and grandchildren. Page 17
  19. 19. WHY USE A ONE PAY WITH CATCH UP STRUCTURE FOR PREMIUMS FERRIS AND BEATRICE BUELLERReasons to use a one pay with catch up:1. Allows you to wait and see what will happen with the estate tax.2. You may decide to keep all of the death benefit or you might keep the policy but reduce the death benefit. Clients in theirlate 70s and 80s can consider selling the policy if they decide they do not want to keep it.3. Better economics. Allows you to keep the “unpaid” premium dollars and invest as you normally would. You will usually bebetter off than with level premiums.4. Relatively small commitment compared to death benefit. Usually less than the equivalent of two normal premiums.5. Works nicely with a TCLAT. Allows you to zero out the tax and give money to your kids. Keep in mind that your kids couldbe in their 70s or 80s before they inherit any money from the TCLAT.6. Policy is guaranteed (if required first year and catch up premiums are paid).7. People often lose guarantees because they pay premiums late. Because there are no premiums to pay until the catch-uppremiums begin, there is no need to worry about losing guarantees during this time period.8. Less administration and headache. Because you pay only one premium now, you only need to send Crummey notices thisyear. Then none until premiums start up again. Page 18
  20. 20. COMPANY INSURES RISKS - CREATES DEDUCTION FERRIS AND BEATRICE BUELLER GDOT Trustees create a captive insurance company. The captive is formed to insure currently insured and uninsured risks of Mid-Level Care Corporation and/or Pizza Distributors. Risk CoverageThe captive will be a pure captive and owned by a trust for your benefit orfor the benefit of your heirs (or both). The captive could be either aDomestic Captive or International Captive. Costs illustrated in this planreflect a Domestic Captive. The decision as to which direction to followcan be made during the feasibility phase.NOTE: Prior to forming a Captive insurance company, there must be a feasibility study to determine insurable risk.In the event that there are no insurable risks, there are alternative planning strategies to consider relative to income tax savings. Page 19
  21. 21. COMPANY INSURES RISKS - CREATES DEDUCTION FERRIS AND BEATRICE BUELLER The Captive Insurance Company insures various risks of loss. Pay annual premiums of $500,000 to cover risk of loss. Premiums for insurance that cover real risks are deductible. Risk CoverageNet premium of up to $1.2M is excludable from captive company incomeif proper tax election is made.Goals Accomplished:- Maximize the inheritance we leave for our children and grandchilren.- Reduce income taxes.- Assure our financial independence during retirement. Page 20
  22. 22. EXISTING IRREVOCABLE LIFE INSURANCE TRUST FERRIS AND BEATRICE BUELLER Annual premium payments of $78,690 are distributed from the GDOTs.Premium Payment DetailsPremium in the amount of $0,000 is paid in the first year withassets of the ILIT. No premium payments are made for 9years, then beginning in year 10, premiums in the amount of$0,000 are paid annually thereafter. Page 21
  23. 23. LEAVE YOUR IRA & ANNUITIES TO CHARITY FERRIS AND BEATRICE BUELLER At the 2nd death, leave your IRA and annuities to charity. $584,300AdvantagesNo estate taxNo income in respect of a decedent taxMost efficient assets to satisfy charitable intent Page 22
  24. 24. TESTAM TESTAMENTARY CHARITABLE LEAD ANNUITY TRUST (Part I) - 2011 FERRIS AND BEATRICE BUELLER Include language in your trust or Will that creates a testamentary charitable lead trust (TCLAT) at the second death. TCLAT AssumptionsAsset growth rate 8.00%TCLAT payout rate 5.02%Present value discount rate 4.00%Assumed date of death 2011 Page 23
  25. 25. TESTAMENTARY CHARITABLE LEAD ANNUITY TRUST (Part II) - 2011 FERRIS AND BEATRICE BUELLER At the end of the TCLAT term, your heirs will receive all of the remaining trust assets.Goals Accomplished:- Eliminate or reduce estate taxes.- Maximize the transfer to our heirs.- Continue a structured giving program even after our deaths. Page 24
  26. 26. PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - RECOMMENDED FERRIS AND BEATRICE BUELLERThe 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(i) Private Annuity SCIN Partnership Annuity Trust Annuity Trust Trust Sale for Installment Series Limited GDOT Owned Life Family LLC TCLAT Loan to GDOT Flip CRT Note Liability Company Insurance Preferred Limited GDOT Distributions Corporate Premium Finance 529 Plans Gifting ILIT partnership for ILIT Premiums Recapitalization Charitable Life Walton GRAT Private Foundations NIMCRUT Annuity Withdrawal Asset Protection SPIA/Life Arbitrage Estate Revocable Living bl i i SPIA/Life in a Principal Protected International Trusts, DPAs and Crummey Powers Dynasty Trust GDOT CLAT Notes VUL POAs Supporting IRA/Annuity to Business Risk Gift Annuity Remainder Sales Life Estates LLC/CRTs Organizations Charity Management Charitable Defined Benefit Qualified Plan Bargain Sales Succession Planning Risk Management Remainder Annuity ESOP Planning Plans Limited Partnership TrustGreen equals a new Blue equals a social Yellow equals an planning tool for capital or charitable existing planning family tool tool Page 25
  27. 27. ESTATE PLAN OVERVIEW AND ESTATE DISTRIBUTION - 2011 FERRIS AND BEATRICE BUELLER Gift IRA & Annuity to Charity at the 2nd death NET WORTH Recap Corporations IRA TO CHARITY 36,223,066 CORP RECAP Voting and non-voting 478,386 shares 22,504,304 Sell non-voting shares to GDOT GDOT purchases life insurance GDOT Installment Note Owns non-voting EXISTING ILITs CAPTIVE INS Seed Gift shares LIFE INSURANCE Annual premium 8,000,000 GDOT pays annual premium to Captive Insurance Company accumulation 30,000,000 Annual GDOT distributions for existing ILIT premiumsFirst Death FAMILY TRUST / BEATRICE MARITAL TRUST / BEATRICE BEATRICE ADMIN 4,000,000 16 290 862 16,290,862 2,001,482 2 001 482 137,248Second Death TCLAT ADMIN HEIRS 27,155,660 345,858 93,122,546 Heirs From TCLAT FAMILY CHARITY 27,739,960 Page26
  28. 28. YOUR GOALS ACCOMPLISHED WITH FULL PLAN IMPLEMENTATION FERRIS AND BEATRICE BUELLERThe proposed plan allows you to retain sufficient cash flow to meet your lifestyle goal of $600,000 annuallythroughout your lifetime.Should one of you predecease the other, ample funds remain available to support the surviving spouse.Your liquidity needs for emergencies or investment opportunities are sastisfied. You never have less than $1,700,000in cash and readily marketable securities.Full implementation of the proposed plan provides sufficient liquidity to preserve your business and real estate assets.Under the proposed plan your heirs could expect to receive $93,100,000 today and as much as $252,700,000 at yourjoint life expectancy.By selling the non-voting shares of Mid-Level Care and Pizza Distributors to GDOTs in return for an installmentnote, were able to reduce our liability in Mid-Level Care while simultaneously providing our daughters with asuccession plan into both Pizza Distributors as well as Mid-Level Care.Under the proposed plan charity could expect to receive $27,700,000 today and as much as $30,800,000 at your jointlife expectancy.Income tax savings of the plan could be as much as $0,000 over 10 years.Estate taxes have been eliminated now and at joint life expectancy. Page 27
  29. 29. FERRIS AND BEATRICE BUELLERLIFETIME SPENDING AND LIQUIDITY Page 28
  30. 30. YOUR LIQUID ASSETS - PROPOSED PLAN FERRIS AND BEATRICE BUELLER $16,000,000 $14,000,000 $12,000,000 $10,000,000 Annual Lifestyle Goal $8,000,000 - Annual Liquidity Goal Accomplished $6,000,000 Accomplished $4,000,000 $2,000,000 $- Liquid Assets Proposed Your Liquidity Goal Total Living ExpensesMost of our clients want to know that they have sufficient income and liquid assets to pay their living expenses for the rest of their lives. This chart assumes fullimplementation of the proposed plan and shows your liquid assets over your life expectancy compared with your goal for liquid assets on hand (inflated annually).Liquid assets include cash, stocks, bonds, annuities and qualified retirement accounts but do not include any other assets you might own such as promissory notes,businesses or real estate. Page 29
  31. 31. YOUR LIQUIDITY - CURRENT PLAN FERRIS AND BEATRICE BUELLER $140,000,000 $120,000,000 $100,000,000 $80,000,000 - $60,000,000 $40,000,000 $20,000,000 $- Liquid Assets Current Illiquid Assets Current Estate Tax DueThis review shows your projected estate tax due within nine months of the second of you to die versus the projected liquid and illiquid assets in your estatesituation over the next 20 years under your existing plan. Page 30
  32. 32. YOUR LIQUIDITY - PROPOSED PLAN FERRIS AND BEATRICE BUELLER $55,000,000 $50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 - $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5 000 000 $5,000,000 $- Amount Needed to Fund the TCLAT Illiquid Assets Liquid Assets Proposed Liquid Assets Proposed - No Life InsThis review shows your projected illiquid assets and amount of liquid assets needed to fund the TCLAT versus your liquid assets under a fully implementedproposed plan and a proposed plan without new life insurance. Without the illustrated new life insurance there is some possiblity that your heirs will be left withmostly illiquid assets that are generally more difficult to manage and to divide equally among beneficiaries. If you complete the plan with a TCLAT, having liquidassets is important since TCLATs are most successfully funded with liquid assets. Page 31
  33. 33. FERRIS AND BEATRICE BUELLERINCOME TAX SAVINGS Page 32
  34. 34. COMPARISON OF INCOME TAX RESULTS - PLAN YEAR 2011 FERRIS AND BEATRICE BUELLER Existing Plan Proposed Plan Total Savings 2011 Estimated Income Tax $ 942,000 $ 742,000 $ 200,000 2012 Estimated Income Tax $ 967,000 $ 763,000 $ 204,000 2013 Estimated Income Tax $ 1,149,000 $ 905,000 $ 244,000 2014 Estimated Income Tax $ 1,187,000 $ 936,000 $ 251,000 2015 Estimated Income Tax $ 1,149,000 $ 967,000 $ 182,000 2016 Estimated Income Tax $ 1,187,000 $ 1,006,000 $ 181,000 2017 Estimated Income Tax $ 1,224,000 $ 1,040,000 $ 184,000 2018 Estimated Income Tax $ 1,264,000 $ 1,076,000 $ 188,000 2019 Estimated Income Tax $ 1,306,000 $ 1,114,000 $ 192,000 2020 Estimated Income Tax $ 1,350,000 $ 1,155,000 $ 195,00010 Yr Savings Over Existing Plan $ 2,021,000 Page 33
  35. 35. INCOME TAXES PAID - CURRENT PLAN vs. PROPOSED PLAN FERRIS AND BEATRICE BUELLER $1,600,000 $1,400,000 $1,200,000 - $1,000,000 $800,000 $600,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Existing Plan Captive InsuranceThis chart compares the amount of income taxes paid in the current plan as against the proposed plan. Page 34
  36. 36. FERRIS AND BEATRICE BUELLERINCREASE INHERITANCEAND REDUCE ESTATE TAX Page 35
  37. 37. COMPARISON OF PLAN RESULTS - PLAN YEAR 2011 FERRIS AND BEATRICE BUELLER CURRENT PLAN PROPOSED PLAN 0% 75% 77% 23% 25% 0% Heirs Estate Tax Charity Heirs Estate Tax Charity Heirs $44,693,185 Heirs $93,122,546 Estate Tax $14,522,481 Estate Tax $0 Charity $0 Charity $27,739,960In the current plan, a portion of the benefit to heirs is qualified plan money. Withdrawals from these plans will be treated as ordinary income. Page 36
  38. 38. COMPARISON OF PLAN RESULTS - PLAN YEAR 2039 FERRIS AND BEATRICE BUELLER Existing Plan Proposed Plan Advantage Estate Value $ 200,414,813 $ 31,242,270 Heirs Receive Immediately $ 96,647,995 $ 218,361,049 $ 121,713,054 Heirs Receive from Deferred Inheritance $ - $ 34,339,786 $ 34,339,786 Total Benefits to Family $ 96,647,995 $ 252,700,834 $ 156,052,840 Family Charity $ - $ 30,784,252 $ 30,784,252 Estate and Income Tax $ 109,131,287 $ - $ 109,131,287 Present Value of total to Heirs $42,242,592 $110,449,660 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 37
  39. 39. COMPARISON OF PLAN RESULTS - PLAN YEAR 2039 FERRIS AND BEATRICE BUELLER CURRENT PLAN PROPOSED PLAN 47% 0% 12% 88% 0% 53% Heirs Estate Tax Charity Heirs Estate Tax Charity Heirs $96,647,995 Heirs $218,361,049 Estate Tax $109,131,287 Estate Tax $0 Charity $0 Charity $30,784,252In the current plan, a portion of the benefit to heirs is qualified plan money. Withdrawals from these plans will be treated as ordinary income. Page 38
  40. 40. ASSETS PASSING TO YOUR FAMILY - CURRENT VS. PROPOSED FERRIS AND BEATRICE BUELLER $275,000,000 $250,000,000 Estate Liquidity Goal Accomplished $225,000,000 Maximize Inheritance $200,000,000 to Heirs Goal $175,000,000 Accomplished $150,000,000 - $125,000,000 $100,000,000 $75,000,000 $50,000,000 $25,000,000 Current Plan Proposed Plan Proposed Plan w/out Life InsThis 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 the proposedplan. Page 39
  41. 41. FERRIS AND BEATRICE BUELLER INCREASE INCHARITABLE GIVING Page 40
  42. 42. COMPARISON OF CHARITY RESULTS - PLAN YEAR 2011 FERRIS AND BEATRICE BUELLER Existing Plan Proposed Plan Increase in Charity Charity Receives from TCLAT $ - $ 27,200,000 $ 27,200,000Charitable gift of IRA/Annuity assets $ - $ 600,000 $ 600,000 Total to Family Charity $ - $ 27,700,000 $ 27,700,000 Page 41
  43. 43. COMPARISON OF CHARITY RESULTS - PLAN YEAR 2039 FERRIS AND BEATRICE BUELLER Existing Plan Proposed Plan Increase in Charity Charity Receives from TCLAT $ - $ 28,800,000 $ 28,800,000Charitable gift of IRA/Annuity assets $ - $ 2,000,000 $ 2,000,000 Total to Family Charity $ - $ 30,800,000 $ 30,800,000 Page 42
  44. 44. GIFTING TO CHARITY - EXISTING PLAN VS. PROPOSED PLAN FERRIS AND BEATRICE BUELLER$44,000,000 Provide for a Charitable Gift at Death Goal$40,000,000 Accomplished$36,000,000$32,000,000$28,000,000$24,000,000 -$20,000,000$16,000,000$12,000,000 $8,000,000 $4 000 000 $4,000,000 $- Current Plan Charity Proposed Plan Charity This chart compares the amount of your gifts to charity in the current plan as against the proposed plan. Page 43
  45. 45. COST BENEFIT ANALYSIS FERRIS AND BEATRICE BUELLERAll strategies have an element of risk; a chance that the program adopted does not work as planned. Estate planning strategies carry an element of risk aswell. Many advisors warn their clients of risk but do not make an effort to quantify those risks. We have taken the position in our planning that if a risk isquantifiable, it should be identified as such and the cost of the risk should be disclosed to our client. When the risk is not quantifiable, this should also bedisclosed.Any risk analysis begins with two questions: What is the reward to be gained by taking the risk? What is the cost of the potential loss if the plan fails totally? If you are satisfied that the reward is worth the risk and that the risk of loss is acceptable, it would then make sense to pursue the strategy. If the risk is such that you could not comfortably accept the loss, then the risk should not be taken.Is the reward worth the risk?The reward of the proposed plan results in an advantage to your heirs today of $48,429,361 over your existing plan.The reward of the proposed plan results in an advantage to your heirs at life expectancy of $156,052,840 over your existing plan.What if the Plan fails totally?There are 4 basic areas of potential risk involved in this comprehensive plan. We assume total failure of all planning techniques in order to provide a worstcase analysis. Transaction costs Planning Fees 75,000 Attorneys Fees 125,000 Valuation Fees 15,000 Total $ 215,000 Annual Maintenance Fee $ 7,500 Taxes This represents the taxes that will have to be paid if the plan fails entirely. Note that this is the same amount that would be paid without the planning. Total additional tax over current plan = $0 Page 44
  46. 46. COST BENEFIT ANALYSIS (Continued)Interest (cost of money) Interest is charged on late tax payments by the IRS at the rate of the applicable federal rate plus 3%. You must invest at a rate less than this rate to lose money. Assuming that assets earn in excess of that rate, there should be no risk of loss due to cost of money. Nonetheless, we assume that assets actually earn 2% less than the IRS interest rates, and the risk of loss would be $277,094.Penalties Assuming the plan is implemented with the help of knowledgeable advisors, the only potential penalty is for substantial undervaluation. The penalty comes into play in the case of a challenge to asset valuation. If the value reported for a transaction is less than 65% of the value as finally determined for tax purposes (by the IRS or the courts) then there is a 25% substantial undervaluation penalty. The valuation adjustment assumed in this plan is 35.00%. Therefore, an adjustment should not result in a substantial undervaluation penalty. Risk Analysis $160,000,000 $140,000,000 $120 000 000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- Benefit to Heirs 2011 Benefit to Heirs 2039 Potential Loss (Total Failure) Page 45
  47. 47. DETAILED FINANCIAL ANALYSIS FERRIS AND BEATRICE BUELLER INTRODUCTIONThe following section of the plan contains all of the financial analysis used to show you where you standwith 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 tax returns. Ifnumbers do not look correct, please let us know so that we can make appropriate changes.Assumed growth and yield numbers are all listed on the Net Worth pages contained in these sections. Page 46
  48. 48. DETAILED FINANCIAL ANALYSIS FERRIS AND BEATRICE BUELLER CURRENT PLAN FINANCIALSIn the Current Plan Section you will find a Net Worth Statement and a detailed cash flow and asset valueprojection analysis. Page 47
  49. 49. CURRENT NET WORTH STATEMENT FERRIS AND BEATRICE BUELLER FERRIS BEATRICE JOINT TOTAL YIELD GROWTHCASH AND EQUIVALENTS Cash 500,000 500,000 2.5% 0.0% Cash Value of Life Insurance 20,000 - 20,000 0.0% 0.0% Total of Cash and Equivalents 20,000 - 500,000 520,000 2.4% 0.0%MARKETABLE SECURITIES - EQUITIES Stocks - 500,000 500,000 2.9% 5.0% Total of Equities - - 500,000 500,000 2.9% 5.0%ANNUITIES/DEFERRED COMPENSATION Deferred Comp Plan 100,000 - 100,000 7.0% Total of Annuities - 100,000 - 100,000 0.0% 7.0% Page 48
  50. 50. CURRENT NET WORTH STATEMENT (Page 2) FERRIS AND BEATRICE BUELLER FERRIS BEATRICE JOINT TOTAL YIELD GROWTHOTHER INVESTMENTS Hedge Fund 125,000 - - 125,000 12.8% 5.0% Note to Pizza Distributors 8,993,971 - - 8,993,971 0.0% 0.0% Total of Other Investments 9,118,971 - - 9,118,971 0.2% 0.1%CLOSELY HELD BUSINESS Mid-Level Care Corporation (100 sh) 5,561,003 5,561,003 - 11,122,006 13.3% 3.0% Pizza Distributors Co., Inc (20,000 sh) 11,750,000 11,750,000 - 23,500,000 1.1% 3.0% Total Closely Held Business 17,311,003 17,311,003 - 34,622,006 5.0% 3.0%RETIREMENT PLANS/IRAs 401(k) 250,000 250,000 0.0% 7.0% IRA 114,818 114,818 0.0% 7.0% IRA 86,853 86,853 0.0% 7.0% Total Retirement Plans 364,818 86,853 451,671 0.0% 7.0% Page 49
  51. 51. CURRENT NET WORTH STATEMENT (Page 3) FERRIS AND BEATRICE BUELLER FERRIS BEATRICE JOINT TOTAL YIELD GROWTHINVESTMENT REAL ESTATE 39 Kansas Rd. 150,000 - 150,000 2.6% 4.0% 37 Kansas Rd. 120,000 - 120,000 10.4% 4.0% 60 Acre Farm 300,000 - 300,000 0.0% 4.0% 25 Kansas Rd. 150,000 - 150,000 0.0% 4.0% 21 Kansas Rd. 10,000 10,000 0.0% 4.0% 7 Lake St. 600,000 - - 600,000 0.0% 4.0% 8 Lake St. - 865,000 - 865,000 0.0% 4.0% 35 Kansas Rd. 100,000 - 100,000 0.0% 4.0% 40 Kansas Rd. 150,000 - 150,000 0.0% 4.0% Total of Real Estate Holdings 870,000 1,565,000 10,000 2,445,000 0.7% 4.0%RESIDENTIAL REAL ESTATE 123 Main - - 1,800,000 1,800,000 0.0% 3.0% Total of Personal Residences - - 1,800,000 1,800,000 0.0% 3.0%PERSONAL PROPERTY Personal Property 350,000 350,000 0.0% 0.0% Antiques 50,000 50,000 0.0% 0.0% Total of Personal Property - - 400,000 400,000 0.0% 0.0%TOTAL ASSETS 27,684,792 19,062,856 3,210,000 49,957,648TOTAL LIABILITIES - - - -NET WORTH 27,684,792 19,062,856 3,210,000 49,957,648 Page 50
  52. 52. SCHEDULE OF LIFE INSURANCE BENEFITS - CURRENT PLAN FERRIS AND BEATRICE BUELLER COMPANY INSURED POLICY # BENEFICIARY PREMIUM CASH VALUE DEATH BENEFITPolicies owned by FerrisSPWL Jenny # Beatrice & Ferris - 10,000 10,000SPWL Megan # Beatrice & Ferris - 10,000 10,000 Totals - 20,000 20,000Policies owned by ILITPac Life Ferris # Ferriss ILIT 50,590 290,381 5,000,000Pac Life Beatrice # Beatrices ILIT 28,100 43,562 3,000,000 Totals 78,690 333,943 8,000,000 Page 51
  53. 53. FINANCIAL ANALYSIS - EXISTING PL ASSET VALUE PROJECTIONS - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Asset ValuesCash and cash equivalents 520,000 520,000 520,000 520,000 520,000 520,000 520,000 520,000 520,000Marketable securities - Equities 500,000 1,381,695 2,352,001 3,640,373 5,417,689 7,348,964 22,756,496 83,283,923 104,262,265Annuities 100,000 105,915 113,329 121,262 129,750 138,833 208,350 574,845 704,209Other investments 1 9,118,971 9,124,279 9,130,533 8,762,232 8,004,139 7,214,962 1,753,895 221,375 221,831Closely held business 34,622,006 35,502,184 36,567,250 37,664,267 38,794,195 39,958,021 47,711,967 74,333,690 81,226,430Retirement plans/IRAs 451,671 478,386 511,873 547,704 586,043 627,066 941,057 1,289,467 1,276,939Investment real estate 2,445,000 2,527,816 2,628,929 2,734,086 2,843,450 2,957,188 3,741,786 6,738,745 7,580,172Personal residences 1,800,000 1,845,761 1,901,133 1,958,167 2,016,912 2,077,420 2,480,548 3,864,613 4,222,967Personal property 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000Total assets in estate 49,957,648 51,886,036 54,125,048 56,348,092 58,712,179 61,242,454 80,514,099 171,226,658 200,414,813Combined net worth $ 49,957,648 $ 51,886,036 $ 54,125,048 $ 56,348,092 $ 58,712,179 $ 61,242,454 $ 80,514,099 $ 171,226,658 $ 200,414,8131 Decreased each year beginning in 2013 per amortization schedule for the Pizza Distributors Note.In the event that there is a cash flow surplus, the surplus is added to the marketable securities 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 marketable securities. Page 52
  54. 54. TAXABLE INCOME PROJECTIONS - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Sources of taxable incomeCash and cash equivalents 12,674 12,674 12,674 12,674 12,674 12,674 12,674 12,674Marketable securities - Equities 14,365 39,696 67,573 104,588 155,650 567,287 2,218,551 2,780,285Other investments 15,970 15,979 15,990 15,345 14,018 4,829 387 388Closely held business 1 1,735,964 1,780,097 1,833,499 1,888,504 1,945,160 2,322,622 3,618,570 3,954,109Retirement plans/IRAs - - - - - - 85,109 99,098Investment real estate 16,300 16,852 17,526 18,227 18,956 23,986 43,197 48,591 2Interest Payments from Pizza Distributors Note 359,759 359,759 359,759 344,777 314,213 103,373 - -Client earned income 3 205,980 205,980 210,100 214,302 218,588 222,959 147,699 - -Spouse earned income 3 205,980 205,980 210,100 214,302 218,588 222,959 147,699 - -Directors Fees 13,500 13,770 14,045 14,326 14,613 16,456 22,148 23,504Gross income $ 2,580,492 $ 2,659,026 $ 2,749,670 $ 2,835,617 $ 2,921,202 $ 3,346,626 $ 6,000,636 $ 6,918,6491 We assume in this illustration that Ferris and Beatrice receive 100% of the S Corporations taxable distributions.2 Note payments are interest only for the first 30 months. In the middle of 2013, they begin receiving interest and principal payments for 10 years.3 Beginning in 2021, we assume that Ferris & Beatrice begin taking a 40% reduction in salary. Then in 2031, we assume they retire. Page 53
  55. 55. INCOME TAX PROJECTIONS - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Income tax EstimationAdjusted gross income:Dividend income (marketable sec.) 14,365 39,696 67,573 104,588 155,650 567,287 2,218,551 2,780,285Earned and other income 2,566,127 2,619,330 2,682,097 2,731,029 2,765,552 2,779,339 3,782,085 4,138,364 Adjusted gross income 2,580,492 2,659,026 2,749,670 2,835,617 2,921,202 3,346,626 6,000,636 6,918,649DeductionsReal estate tax 35,044 35,044 35,745 36,460 37,189 37,933 42,718 57,493 61,012State income taxes 154,830 159,542 164,980 170,137 175,272 200,798 360,038 415,119Charitable gifts 47,257 47,257 48,202 49,166 50,150 51,152 57,606 77,530 82,276Charitable Deduction available 47,257 48,202 49,166 50,150 51,152 57,606 77,530 82,276Charitable Deduction allowed 47,257 48,202 49,166 50,150 51,152 57,606 77,530 82,276Total deductions 237,131 243,489 250,606 257,475 264,357 301,122 495,062 558,407Reductions - - (77,486) (80,065) (82,632) (95,395) (175,015) (202,555)Deductions allowed 237,131 243,489 173,120 177,411 181,725 205,727 320,047 355,851Taxable income 2,343,361 2,415,538 2,576,550 2,658,206 2,739,477 3,140,899 5,680,590 6,562,797Federal and State income tax $ 942,004 $ 966,912 $ 1,149,361 $ 1,186,854 $ 1,224,172 $ 1,408,661 $ 2,573,619 $ 2,978,054 Page 54
  56. 56. CASH FLOW PROJECTIONS - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Sources of income for LifestylePrincipal Payments from Pizza Distributors Note 1 - - 374,558 764,099 794,663 1,005,502 - -Consumable income (taxable) 2,580,492 2,659,026 2,749,670 2,835,617 2,921,202 3,346,626 6,000,636 6,918,649Total income available for lifestyle 2,580,492 2,659,026 3,124,229 3,599,716 3,715,864 4,352,128 6,000,636 6,918,649Uses of CashLiving expenses 600,000 612,000 624,240 636,725 649,459 731,397 984,364 1,044,615Income tax 942,004 966,912 1,149,361 1,186,854 1,224,172 1,408,661 2,573,619 2,978,054Cash gifts to ILIT 78,690 78,690 78,690 78,690 78,690 78,690 78,690 78,690Gift taxes due - - - - - - 32,263 32,263Cash gifts to family 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000Cash gifts to charity 47,257 48,202 49,166 50,150 51,152 57,606 77,530 82,276Total uses of cash 1,719,951 1,757,804 1,953,457 2,004,418 2,055,474 2,328,353 3,798,465 4,267,897Surplus $ 860,540 $ 901,222 $ 1,170,771 $ 1,595,298 $ 1,660,391 $ 2,023,775 $ 2,202,171 $ 2,650,7521 Note payments are interest only for the first 30 months. In the middle of 2013, they begin receiving interest and principal payments for 10 years.In the event that there is a cash flow surplus, the surplus is added to the marketable securities 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 55
  57. 57. FIRST ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Tax calculation on Ferriss deathCombined net worth 49,957,648 51,886,036 54,125,048 56,348,092 58,712,179 61,242,454 80,514,099 171,226,658 200,414,813Ferriss estimated estate 29,289,792 30,420,391 31,733,107 33,036,461 34,422,507 35,905,989 47,204,809 100,388,897 117,501,692Total gross estate 29,289,792 30,420,391 31,733,107 33,036,461 34,422,507 35,905,989 47,204,809 100,388,897 117,501,692Settlement expenses (171,449) (177,102) (183,666) (190,182) (197,113) (204,530) (261,024) (526,944) (612,508)Joint, personal and IRA to Beatrice (1,969,818) (2,053,349) (2,152,330) (2,252,692) (2,359,610) (2,474,035) (3,346,793) (6,542,547) (7,470,162)Insurance passing to Beatrice (20,000) (20,000) (20,000) (20,000) (20,000) (20,000) (20,000) (20,000) (20,000)Outright or in trust to Beatrice (22,246,326) (23,287,741) (24,534,257) (29,770,078) (31,081,621) (32,482,604) (43,088,243) (93,299,406) (109,399,022)Taxable estate 4,882,199 4,882,199 4,842,854 803,509 764,164 724,819 488,749 - -Plus Ferriss lifetime taxable gifts 117,801 117,801 157,146 196,491 235,836 275,181 511,251 1,101,426 1,219,461Tax base 5,000,000 5,000,000 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,101,426 1,219,461Federal Estate Tax - - - - - - - - -Distribution of Ferriss estateSettlement expenses 171,449 177,102 183,666 190,182 197,113 204,530 261,024 526,944 612,508To family trust 4,882,199 4,882,199 4,842,854 803,509 764,164 724,819 488,749 - -Joint, personal and IRA to Beatrice 1,969,818 2,053,349 2,152,330 2,252,692 2,359,610 2,474,035 3,346,793 6,542,547 7,470,162Insurance passing to Beatrice 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000Outright or in trust to Beatrice 22,246,326 23,287,741 24,534,257 29,770,078 31,081,621 32,482,604 43,088,243 93,299,406 109,399,022Total $ 29,289,792 $ 30,420,391 $ 31,733,107 $ 33,036,461 $ 34,422,507 $ 35,905,989 $ 47,204,809 $ 100,388,897 $ 117,501,692AssumptionsWe assume that Ferris dies first, followed immediately by Beatrice.Taxes under "Distribution of First Estate" include estate and income taxes. Page 56
  58. 58. SECOND ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Tax Calculation on Beatrices deathBeatrices assets 20,667,856 21,465,644 22,391,941 23,311,631 24,289,671 25,336,465 33,309,290 70,837,761 82,913,121Plus assets from Ferriss estate 24,236,144 25,361,090 26,706,588 32,042,770 33,461,231 34,976,640 46,455,036 99,861,953 116,889,184Beatrices estimated estate 44,904,000 46,826,735 49,098,528 55,354,400 57,750,902 60,313,105 79,764,326 170,699,714 199,802,304Settlement expenses (474,040) (493,267) (515,985) (578,544) (602,509) (628,131) (822,643) (1,731,997) (2,023,023)Beatrices taxable estate 44,429,960 46,333,467 48,582,543 54,775,856 57,148,393 59,684,974 78,941,683 168,967,716 197,779,281Plus Beatrices lifetime taxable gifts 117,799 117,799 157,144 196,489 235,834 275,179 511,249 1,101,424 1,219,459Tax base 44,547,759 46,451,266 48,739,687 54,972,345 57,384,227 59,960,153 79,452,932 170,069,140 198,998,740Federal Estate Tax 13,841,716 14,507,943 15,308,891 29,888,990 31,215,525 32,632,284 43,353,312 93,150,643 109,013,529Tax on IRD 13,000 14,538 16,465 12,827 14,355 15,990 28,503 94,472 117,758Total Estate Tax Due 13,854,716 14,522,481 15,325,356 29,901,817 31,229,880 32,648,274 43,381,815 93,245,115 109,131,287Distribution of Beatrices estateSettlement expenses 474,040 493,267 515,985 578,544 602,509 628,131 822,643 1,731,997 2,023,023Taxes 13,854,716 14,522,481 15,325,356 29,901,817 31,229,880 32,648,274 43,381,815 93,245,115 109,131,287Qualified plan to heirs 451,671 478,386 511,873 547,704 586,043 627,066 941,057 1,289,467 1,276,939Residual estate to heirs 30,123,573 31,332,600 32,745,314 24,326,335 25,332,470 26,409,634 34,618,810 74,433,134 87,371,056Total $ 44,904,000 $ 46,826,735 $ 49,098,528 $ 55,354,400 $ 57,750,902 $ 60,313,105 $ 79,764,326 $ 170,699,714 $ 199,802,304AssumptionsWe assume that Ferris dies first, followed immediately by Beatrice.Taxes under "Distribution of Second Estate" include estate and income taxes. Page 57
  59. 59. SUMMARY OF BENEFITS TO FAMILY - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Benefits to FamilyFamily trust 4,882,199 4,882,199 4,842,854 803,509 764,164 724,819 488,749 - -Residual estate 30,123,573 31,332,600 32,745,314 24,326,335 25,332,470 26,409,634 34,618,810 74,433,134 87,371,056Qualified plan assets 451,671 478,386 511,873 547,704 586,043 627,066 941,057 1,289,467 1,276,939Proceeds from ILIT 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000Total assets to heirs $ 43,457,443 $ 44,693,185 $ 46,100,041 $ 33,677,548 $ 34,682,677 $ 35,761,519 $ 44,048,616 $ 83,722,601 $ 96,647,995 Page 58
  60. 60. DETAILS OF FERRISS QUALIFIED PLAN - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Ferriss Qualified PlansFerriss Age 60 61 62 63 64 70 85 88Beatrices Age 58 59 60 61 62 68 83 86Minimum distribution factor 36.8 35.8 34.9 33.9 33.0 27.4 14.8 12.7Plan contributions - - - - - - - -Plan balance 364,818 386,396 413,443 442,384 473,351 506,486 760,099 1,014,989 1,000,540Minimum distribution - - - - - - 68,414 79,477Preferred distribution - - - - - - - -Actual distribution - - - - - - 68,414 79,477 Page 59
  61. 61. DETAILS OF BEATRICES QUALIFIED PLAN - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2021 2036 2039Beatrices Qualified PlansBeatrices Age 58 59 60 61 62 68 83 86Ferriss Age 60 61 62 63 64 70 85 88Minimum distribution factor 38.7 37.8 36.8 35.8 34.9 29.2 16.3 14.1Plan contributions - - - - - - - -Plan balance 86,853 91,990 98,429 105,319 112,692 120,580 180,958 274,478 276,399Minimum distribution - - - - - - 16,695 19,621Preferred distribution - - - - - - - -Actual distribution - - - - - - 16,695 19,621 Page 60
  62. 62. DETAILED FINANCIAL ANALYSIS FERRIS AND BEATRICE BUELLER PROPOSED PLAN FINANCIALSIn the Proposed Plan Section you will find a balance sheet which reflects the repositioning of assets as setout in the step by step roadmap in the proceeding section. You will also find detailed cash flow and assetprojection information on each of the proposed planning strategies. Page 61
  63. 63. NET WORTH STATEMENT AFTER PLAN IMPLEMENTATION FERRIS AND BEATRICE BUELLER FERRIS BEATRICE JOINT TOTAL YIELD GROWTHCASH AND EQUIVALENTS Cash - - 500,000 500,000 2.5% 0.0% Cash Value of Life Insurance 20,000 - - 20,000 0.0% 0.0% Total of Cash and Equivalents 20,000 - 500,000 520,000 2.4% 0.0%MARKETABLE SECURITIES - EQUITIES Stocks - - 500,000 500,000 2.9% 5.0% Total of Equities - - 500,000 500,000 2.9% 5.0%ANNUITIES/DEFERRED COMPENSATION Deferred Comp Plan - 100,000 - 100,000 7.0% Total of Annuities - 100,000 - 100,000 0.0% 7.0% Page 62
  64. 64. REVISED NET WORTH STATEMENT (Page 2) FERRIS AND BEATRICE BUELLER FERRIS BEATRICE JOINT TOTAL YIELD GROWTHOTHER INVESTMENTS Hedge Fund 125,000 - - 125,000 12.8% 5.0% Note to Pizza Distributors 8,993,971 - - 8,993,971 0.0% 0.0% Total of Other Investments 9,118,971 - - 9,118,971 0.2% 0.1%RETIREMENT PLANS/IRAs 401(k) 250,000 - 250,000 0.0% 7.0% IRA 114,818 - 114,818 0.0% 7.0% IRA - 86,853 86,853 0.0% 7.0% Total Retirement Plans 364,818 86,853 451,671 0.0% 7.0% Page 63
  65. 65. REVISED NET WORTH STATEMENT (Page 3) FERRIS AND BEATRICE BUELLER FERRIS BEATRICE JOINT TOTAL YIELD GROWTHINVESTMENT REAL ESTATE 39 Kansas Rd. - 150,000 - 150,000 2.6% 4.0% 37 Kansas Rd. 120,000 - - 120,000 10.4% 4.0% 60 Acre Farm - 300,000 - 300,000 0.0% 4.0% 25 Kansas Rd. 150,000 - - 150,000 0.0% 4.0% 21 Kansas Rd. - - 10,000 10,000 0.0% 4.0% 7 Lake St. 600,000 - - 600,000 0.0% 4.0% 8 Lake St. - 865,000 - 865,000 0.0% 4.0% 35 Kansas Rd. - 100,000 - 100,000 0.0% 4.0% 40 Kansas Rd. - 150,000 - 150,000 0.0% 4.0% Total of Real Estate Holdings 870,000 1,565,000 10,000 2,445,000 0.7% 4.0%RESIDENTIAL REAL ESTATE 123 Main - - 1,800,000 1,800,000 0.0% 3.0% Total of Personal Residences - - 1,800,000 1,800,000 0.0% 3.0%PERSONAL PROPERTY Personal Property - - 350,000 350,000 0.0% 0.0% Antiques - - 50,000 50,000 0.0% 0.0% Total of Personal Property - - 400,000 400,000 0.0% 0.0%OTHER STRATEGY ASSETS GDOT Note 10,330,607 10,330,607 - 20,661,214 4.15% Total of Other Strategy Assets 10,330,607 10,330,607 - 20,661,214 4.15%NET WORTH 20,704,396 12,082,460 3,210,000 35,996,856 Page 64

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