Case Study Webinar

©2013. InKnowVision LLC. All rights reserved. www.inknowvision.com
FAMILY WEALTH GOAL ACHIEVER™ - INITIAL

PREPARED FOR:

JEFF AND THERESA ANDERSON
January 31, 2014

DRAFT FOR DISCUSSION PU...
PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - RECOMMENDED
JEFF AND THERESA ANDERSON
The highlighted tools are those we have...
JEFF AND THERESA ANDERSON

LIFETIME SPENDING
AND LIQUIDITY

Page 3
PERSONAL LIVING EXPENSES vs. AVAILABLE CASH FLOW
JEFF AND THERESA ANDERSON

$6,000,000

$5,000,000

$4,000,000

Deferred C...
YOUR LIQUID ASSETS - CURRENT PLAN VS. PROPOSED PLAN
JEFF AND THERESA ANDERSON

$220,000,000
$200,000,000
$180,000,000
$160...
JEFF AND THERESA ANDERSON

INCREASE INHERITANCE
AND REDUCE ESTATE TAX

Page 6
COMPARISON OF PLAN RESULTS - PLAN YEAR 2014
JEFF AND THERESA ANDERSON

Existing Plan

Proposed Plan

Advantage

Estate Val...
COMPARISON OF PLAN RESULTS - PLAN YEAR 2033
JEFF AND THERESA ANDERSON

Existing Plan

Proposed Plan

Advantage

Estate Val...
ASSETS PASSING TO YOUR FAMILY - CURRENT VS. PROPOSED
JEFF AND THERESA ANDERSON

$220,000,000
$200,000,000
$180,000,000
$16...
INTRODUCTION TO THE PLAN STRATEGIES ROADMAP
JEFF AND THERESA ANDERSON

The following section of the plan contains a step b...
CREATE AND FUND A FAMILY LIMITED PARTNERSHIP
JEFF AND THERESA ANDERSON

Jeff and Theresa create a limited partnership and ...
CREATE AND FUND A FAMILY LIMITED PARTNERSHIP
JEFF AND THERESA ANDERSON

Jeff and Theresa transfer $37,622,700 of assets to...
HAVE THE LIMITED PARTNERSHIP SHARES APPRAISED
JEFF AND THERESA ANDERSON

Jeff and Theresa hire an appraiser to value the l...
BUSINESS PURPOSE
JEFF AND THERESA ANDERSON
The Family entity must have a legitimate business purpose for being organized a...
CREATE GRANTOR DEEMED OWNER TRUSTS
JEFF AND THERESA ANDERSON

Jeff and Theresa create individual grantor deemed owner trus...
GIFT TO GRANTOR DEEMED OWNER TRUST
JEFF AND THERESA ANDERSON

Jeff and Theresa each make a gift of $3,250,000 in cash/secu...
SELL PARTNERSHIP SHARES TO EACH GDOT
JEFF AND THERESA ANDERSON

Jeff and Theresa sell their limited partnership shares to ...
PURCHASE LIFE INSURANCE IN THE GDOT
JEFF AND THERESA ANDERSON

The GDOT Trustees purchase second-to-die life insurance wit...
INTERNAL RATE OF RETURN ON LIFE INSURANCE
JEFF AND THERESA ANDERSON

JEFF'S AGE

THERESA'S AGE

YEAR

PREMIUM

DEATH BENEF...
COMPARISON OF POTENTIAL PLAN RESULTS - PLAN YEAR 2024
JEFF AND THERESA ANDERSON

Existing Plan

94,127,380

Proposed Plan ...
DETAILED FINANCIAL ANALYSIS
JEFF AND THERESA ANDERSON

INTRODUCTION

The following section of the plan contains all of the...
DETAILED FINANCIAL ANALYSIS
JEFF AND THERESA ANDERSON

CURRENT PLAN FINANCIALS

In the Current Plan Section you will find ...
CURRENT NET WORTH STATEMENT
JEFF AND THERESA ANDERSON
JEFF

THERESA

JOINT

TOTAL

YIELD

GROWTH

CASH AND EQUIVALENTS
Cas...
CURRENT NET WORTH STATEMENT (Page 2)
JEFF AND THERESA ANDERSON
JEFF

THERESA

JOINT

TOTAL

YIELD

GROWTH

OTHER INVESTMEN...
CURRENT NET WORTH STATEMENT (Page 3)
JEFF AND THERESA ANDERSON
JEFF

THERESA

JOINT

TOTAL

YIELD

GROWTH

54,400

0.0%

5...
SCHEDULE OF LIFE INSURANCE BENEFITS - CURRENT PLAN
JEFF AND THERESA ANDERSON

COMPANY

INSURED

POLICY #

BENEFICIARY

2nd...
FINANCIAL ANALYSIS - EXISTING PLAN

ASSET VALUE PROJECTIONS - EXISTING PLAN
613,500

613,500

2,000,000 2,036,572

YEAR

C...
TAXABLE INCOME PROJECTIONS - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Sources of taxable in...
INCOME TAX PROJECTIONS - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Income tax Estimation
Adj...
CASH FLOW PROJECTIONS - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Sources of income for Life...
FIRST ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Tax...
SECOND ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Ta...
SUMMARY OF BENEFITS TO FAMILY - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Benefits to Family...
ANDERSON FAMILY FOUNDATION DETAILS - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Anderson Fami...
DETAILS OF JEFF'S QUALIFIED PLAN - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Jeff's Qualifie...
DETAILS OF THERESA'S QUALIFIED PLAN - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Theresa's Qu...
DETAILED FINANCIAL ANALYSIS
JEFF AND THERESA ANDERSON

PROPOSED PLAN FINANCIALS

In the Proposed Plan Section you will fin...
NET WORTH STATEMENT AFTER PLAN IMPLEMENTATION
JEFF AND THERESA ANDERSON
JEFF

THERESA

JOINT

TOTAL

YIELD

GROWTH

CASH A...
REVISED NET WORTH STATEMENT (Page 2)
JEFF AND THERESA ANDERSON
JEFF

THERESA

JOINT

TOTAL

YIELD

GROWTH

OTHER INVESTMEN...
REVISED NET WORTH STATEMENT (Page 3)
JEFF AND THERESA ANDERSON
JEFF

THERESA

JOINT

TOTAL

YIELD

GROWTH

RESIDENTIAL REA...
ASSET VALUE PROJECTIONS - PROPOSED PLAN

FINANCIAL ANALYSIS - PROPOSED PLAN

613,500

YEAR

613,500

644,175

676,384

710...
TAXABLE INCOME PROJECTIONS - PROPOSED PLAN

YEAR

Current

2014

Investment assets

2015

552,992

2016

604,388

2017

66...
INCOME TAX PROJECTIONS - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Income Tax Estimation
Adj...
CASH FLOW PROJECTIONS - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Sources of Income for Life...
FIRST ESTATE TAX ESTIMATION AND DISTRIBUTION - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Tax...
SECOND ESTATE TAX ESTIMATION AND DISTRIBUTION - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Ta...
SUMMARY OF BENEFITS TO FAMILY - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Benefits to Family...
FAMILY LIMITED PARTNERSHIP DETAILS - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Balance Sheet...
FAMILY LIMITED PARTNERSHIP DETAILS - PROPOSED PLAN
(Continued)

Partnership Cash Flow

Current

2014

2015

2016

2017

20...
GRANTOR DEEMED OWNER TRUST DETAILS - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

GDOT Balance ...
IRREVOCABLE LIFE INSURANCE TRUST DETAILS - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Cash gi...
ANDERSON FAMILY FOUNDATION DETAILS - EXISTING PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Anderson Fami...
BENEFITS TO ANDERSON FAMILY CHARITY - PROPOSED PLAN

YEAR

Current

Anderson Family Foundation - Existing
Existing Charita...
DETAILS OF JEFF'S QUALIFIED PLAN - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Jeff's Qualifie...
DETAILS OF THERESA'S QUALIFIED PLAN - PROPOSED PLAN

YEAR

Current

2014

2015

2016

2017

2018

2025

2033

Theresa's Qu...
FAMILY INFORMATION
JEFF AND THERESA ANDERSON

CLIENTS
Jeff Anderson
Theresa Anderson
123 Main St.

Date of Birth
Date of B...
PLAN ASSUMPTIONS
JEFF AND THERESA ANDERSON

The plan is based on numerous assumptions. Important among these are the yield...
DISCLAIMER AND DISCLOSURE
JEFF AND THERESA ANDERSON

InKnowVision, LLC does not give accounting or investment advice to it...
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InKnowVision February 2014 Case Study - Anderson FWGA

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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 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 in excess of $60M that comprises a large portion of their $90M net worth.

The primary planning goals are to:
- Provide an inheritance to their children in a manner which will enable them to create opportunities for themselves but not encourage them to be unproductive.
- Provide for a charitable gift at death to their family foundation as long as it doesn’t greatly diminish the amount they pass to their heirs.
- Eliminate or reduce estate taxes.

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InKnowVision February 2014 Case Study - Anderson FWGA

  1. 1. Case Study Webinar ©2013. InKnowVision LLC. All rights reserved. www.inknowvision.com
  2. 2. FAMILY WEALTH GOAL ACHIEVER™ - INITIAL PREPARED FOR: JEFF AND THERESA ANDERSON January 31, 2014 DRAFT FOR DISCUSSION PURPOSES ONLY PRESENTED BY Scott Hamilton InKnowVision, LLC 715 Enterprise Dr. Oak Brook, IL 60523 scott@ikvllc.com (630) 596-5090 Copyright 2014 InKnowVision, LLC
  3. 3. PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - RECOMMENDED JEFF AND THERESA ANDERSON The highlighted tools are those we have determined are most suited to achieving your goals and objectives. Charitable Remainder UniTrust 412(e) Family Limited Partnership Private Annuity Family LLC TCLAT Qualified Personal Residence Trust Flip CRT Grantor Retained Annuity Trust Charitable Lead Annuity Trust SCIN Sale for Installment Series Limited GDOT Owned Life Note Liability Company Insurance Premium Finance Beneficiary Preferred Limited Defective Inheritor's partnership Trust (BDIT) 529 Plans Gifting ILIT Corporate Recapitalization Walton GRAT Anderson Family Charitable Life Estate Foundation NIMCRUT Annuity Withdrawal Asset Protection SPIA/Life Arbitrage Revocable Living Trusts, DPAs and POAs Crummey Powers Dynasty Trust International VUL GDOT Charitable Bequest SPIA/Life in a CLAT of $10M to Family Foundation Supporting Organizations IRA to Charity Gift Annuity Remainder Sales Life Estates International Business Risk Management LLC/CRTs Bargain Sales Succession Planning Risk Management Charitable Remainder Annuity Trust ESOP Planning Defined Benefit Plans Qualified Plan Limited Partnership Green equals a new planning tool for family Blue equals a social capital or charitable tool Yellow equals an existing planning tool Page 2
  4. 4. JEFF AND THERESA ANDERSON LIFETIME SPENDING AND LIQUIDITY Page 3
  5. 5. PERSONAL LIVING EXPENSES vs. AVAILABLE CASH FLOW JEFF AND THERESA ANDERSON $6,000,000 $5,000,000 $4,000,000 Deferred Comp payments end in 2018 - $3,000,000 $2,000,000 $1,000,000 $- Proposed Living Expenses Proposed Annual Cash Flow Illustration compares your living expenses under the proposed plan as against your annual cash flow available. Page 4
  6. 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 on the value of assets inside of your estate with the notes from sale $140,000,000 $120,000,000 - $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- Readily Liquid Assets - Proposed Liquidity Available from GDOT Notes - Proposed Current Liquid Assets This illustration reflects the amount of liquid assets available to you during life under the current plan assumptions as against the proposed plan assumptions. Liquid assets include cash, securities, bonds (corporate and municipal), annuities and retirement funds. Due to the nature of the assets involved in the Trust transaction there is liquidity available during life from the Trust notes. Page 5
  7. 7. JEFF AND THERESA ANDERSON INCREASE INHERITANCE AND REDUCE ESTATE TAX Page 6
  8. 8. COMPARISON OF PLAN RESULTS - PLAN YEAR 2014 JEFF AND THERESA ANDERSON Existing Plan Proposed Plan Advantage Estate Value $ 96,726,766 $ 80,677,119 Total Benefits to Family $ 58,079,705 $ 110,849,083 $ Family Charity $ 15,687,087 $ 15,687,087 $ Estate and Income Tax $ 31,886,664 $ 28,138,450 $ 52,769,378 - 3,748,214 This chart assumes that you both die this year and compares the results of the current plan with the proposed plan. Page 7
  9. 9. COMPARISON OF PLAN RESULTS - PLAN YEAR 2033 JEFF AND THERESA ANDERSON Existing Plan Proposed Plan Advantage Estate Value $ 236,958,860 $ 133,754,087 Total Benefits to Family $ 144,388,657 $ 192,631,030 $ Family Charity $ 19,816,617 $ 19,816,617 $ Estate and Income Tax $ 86,971,644 $ 47,511,445 $ Present Value of total to Heirs Discount rate for PV calculation $82,342,834 48,242,373 - 39,460,199 $109,854,785 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 today's dollars to provide perspective. We are using an inflation rate of 3% to calculate the present value numbers. Page 8
  10. 10. ASSETS PASSING TO YOUR FAMILY - CURRENT VS. PROPOSED JEFF AND THERESA ANDERSON $220,000,000 $200,000,000 $180,000,000 $160,000,000 $140,000,000 - $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 Current Plan Proposed Plan This 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 proposed plan. Page 9
  11. 11. INTRODUCTION TO THE PLAN STRATEGIES ROADMAP JEFF AND THERESA ANDERSON The 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 must complete another strategy as well. It is the integration of each of these strategies that allows you to most efficiently accomplish 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 transfer planning. If a particular strategy or combination of strategies is not acceptable to you, we may be able to reach the desired 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 not detailed in the overall plan that follows. Page 10
  12. 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. Page 11
  13. 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. $37,622,700 Detail of Assets Transferred Securities Acct. Corp Sale Note (50%) Energy Investment Total Assets Contributed 34,282,700 3,240,000 100,000 37,622,700 Page 12
  14. 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 Appraisal Valuation adjustment assumed to be 20% 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. 15. BUSINESS PURPOSE JEFF AND THERESA ANDERSON The Family entity must have a legitimate business purpose for being organized and these purposes should be well documented. Legitimate business purposes examples are as follows: 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 business entities. 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 without causing 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 legitimate purposes 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 the ownership 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 embarrassing public 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 failed marriage. 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 commingled with 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 a Member. 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 Members holding 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 or investment 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 business as 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. 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. Note: Jeff may also be a discretionary beneficiary of Theresa's trust. Attention should be paid to avoid reciprocal trust doctrine. Page 15
  17. 17. GIFT TO GRANTOR DEEMED OWNER TRUST JEFF AND THERESA ANDERSON Jeff and Theresa each make a gift of $3,250,000 in cash/securities to their individual GDOT. This gift is designed to give each trust economic substance and maximize their available lifetime exemption. $3,250,000 $3,250,000 Page 16
  18. 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 $30,098,160 Installment note with a value of $30,098,160 that provides annual payments of $791,582 The sale price is based on the assumed value of the assets sold. *Note payments are assumed to be interest only at the Jan. long term AFR of 2.63%. ** The note can be re-financed or paid off during the term of the note. Page 17
  19. 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 paid for all years with assets of the GDOTs. Policy Benefits: - Used as wealth replacement, it can allow increased charitable giving that reduces or eliminates estate 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) will reduce the income taxes from other investment assets subject to income taxes The premium is based on certain assumptions. This is for illustration purposes only. Actual insurance numbers can only be determined by applying for insurance. Page 18
  20. 20. INTERNAL RATE OF RETURN ON LIFE INSURANCE JEFF AND THERESA ANDERSON JEFF'S AGE THERESA'S AGE YEAR PREMIUM DEATH BENEFIT IRR 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 4155.32% 504.24% 210.14% 122.27% 82.48% 60.39% 46.55% 37.16% 30.44% 25.41% 21.52% 18.45% 15.96% 13.92% 12.21% 10.77% 9.54% 8.48% 7.55% 6.74% 6.03% 5.40% 4.84% 4.33% Page 19
  21. 21. COMPARISON OF POTENTIAL PLAN RESULTS - PLAN YEAR 2024 JEFF AND THERESA ANDERSON Existing Plan 94,127,380 Proposed Plan A $ 115,867,575 $ 87,409,391 $ 14,687,733 $ 29,375,467 $ Deferred Inheritance** $ Total Benefits to Family $ 94,127,380 $ 145,451,064 $ 130,555,309 $ 116,784,858 Family Charity $ 17,571,894 $ 17,571,894 $ 66,756,809 $ 111,544,061 Estate and Income Tax $ 53,787,013 $ 35,931,394 $ 16,329,068 $ $ 145,451,064 Proposed Plan C** Heirs Receive Immediately - $ Proposed Plan B ** - - ** 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 2024 and compares the results of the current plan with the proposed plan(s). Page 20
  22. 22. DETAILED FINANCIAL ANALYSIS JEFF AND THERESA ANDERSON INTRODUCTION The following section of the plan contains all of the financial analysis used to show you where you stand 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 tax returns. If numbers 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 21
  23. 23. DETAILED FINANCIAL ANALYSIS JEFF AND THERESA ANDERSON CURRENT PLAN FINANCIALS In the Current Plan Section you will find a Net Worth Statement and a detailed cash flow and asset value projection analysis. Page 22
  24. 24. CURRENT NET WORTH STATEMENT JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTH CASH 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% 1,214,000 1,214,000 - 2,428,000 0.0% 0.0% 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% 1,010,000 - 1,010,000 0.0% 5.0% Total of Cash and Equivalents INVESTMENT ASSETS Securities Acct. - 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% 31,086,622 32,096,622 - 63,183,243 2.8% 4.1% Total of Investment Assets Page 23
  25. 25. CURRENT NET WORTH STATEMENT (Page 2) JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTH OTHER 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% 100,000 - - 100,000 120.0% 0.0% 10,619,000 - - 10,619,000 1.1% 2.1% Energy Investment Total of Other Investments ** 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 Total Employee Benefits 260,200 - - 260,200 0.0% 5.0% 613,500 - - 613,500 0.0% 5.0% Page 24
  26. 26. CURRENT NET WORTH STATEMENT (Page 3) JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTH 54,400 0.0% 5.0% 25,000 0.0% 5.0% 4,555,000 0.0% 5.0% 4,634,400 0.0% 5.0% RETIREMENT PLANS/IRAs SEP/IRA IRA 401(k) Total Retirement Plans 54,400 4,555,000 25,000 - 4,609,400 25,000 123 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% 500,000 500,000 - 1,000,000 0.0% 2.0% 32,500 32,500 - 65,000 0.0% 2.0% 4,920,000 4,920,000 - 9,840,000 0.0% 1.0% 250,000 250,000 - 500,000 0.0% 0.0% 50,000 50,000 - 100,000 0.0% 0.0% 200,000 200,000 - 400,000 0.0% 0.0% 500,000 500,000 - 1,000,000 0.0% 0.0% 53,562,522 38,755,622 - 92,318,143 RESIDENTIAL REAL ESTATE Europe Home Lake Home Total of Personal Residences PERSONAL PROPERTY Collections/Art/Jewelry Autos Furnishings Total of Personal Property TOTAL ASSETS TOTAL LIABILITIES NET WORTH - 53,562,522 - 38,755,622 - - - 92,318,143 Page 25
  27. 27. SCHEDULE OF LIFE INSURANCE BENEFITS - CURRENT PLAN JEFF AND THERESA ANDERSON COMPANY INSURED POLICY # BENEFICIARY 2nd to die # Children PREMIUM CASH VALUE DEATH BENEFIT Policies owned by Jeff UL Policy 41,806 - 2,064,053 41,806 Totals - 2,064,053 48,850 - 3,005,028 48,850 - 3,005,028 Policies owned by ILIT UL Policy Totals 2nd to die # ILIT Page 26
  28. 28. FINANCIAL ANALYSIS - EXISTING PLAN ASSET VALUE PROJECTIONS - EXISTING PLAN 613,500 613,500 2,000,000 2,036,572 YEAR Current 644,175 2,077,303 2014 676,384 2,118,849 2015 710,203 2,161,226 2016 745,713 2,204,451 2017 1,049,293 2,532,221 2018 2025 2033 Asset Values Cash and cash equivalents 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 Investment Assets 63,183,243 67,650,223 72,696,047 78,139,838 84,013,492 90,350,008 133,034,123 207,983,467 Other investments 10,619,000 10,458,650 10,313,723 10,165,815 10,014,866 9,860,812 9,792,353 11,524,160 Employee Benefits 613,500 613,500 644,175 676,384 710,203 745,713 1,049,293 1,550,284 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,676,051 4,305,899 3,077,245 Personal residences 1 9,840,000 9,932,656 10,034,910 10,138,216 10,242,587 10,348,031 8,656,547 9,395,704 Personal property 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 92,318,143 96,726,766 101,781,824 107,226,557 113,091,051 119,408,616 160,266,214 236,958,860 96,726,766 $ 101,781,824 $ 107,226,557 $ 113,091,051 $ 119,408,616 $ 160,266,214 $ 236,958,860 Retirement plans/IRAs Total assets in estate Combined net worth 1 $ 92,318,143 $ Assumes the 2nd residence was put in a 15 yr. QPRT in 2006. Beginning in 2022, the residence is outside of Jeff & Theresa's 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. 29. TAXABLE INCOME PROJECTIONS - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Sources of taxable income Investment Assets 1,741,935 1,865,088 2,004,199 2,154,282 2,316,216 3,471,757 5,419,088 Other investments 120,000 120,000 120,000 120,000 120,000 120,000 120,000 311,647 359,295 Retirement plans/IRAs Deferred Compensation Corp Buyout 202,260 Social security income Gross income 1 230,315 239,947 2,277,342 2,436,756 2,607,329 - - 360,000 360,000 360,000 360,000 - - 35,431 $ 4,448,745 35,431 $ 4,719,829 35,431 $ 5,016,886 35,431 $ 5,336,784 35,431 $ 5,678,923 35,431 $ 3,938,834 35,431 $ 5,933,813 Deferred compensation payments are made until 2018. 2 219,915 2,128,357 360,000 2 210,954 1,989,119 1 $30,000/month payments over the next 9 years. Page 28
  30. 30. INCOME TAX PROJECTIONS - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Income tax Estimation Adjusted gross income: Dividend income (marketable sec.) 1,741,935 1,865,088 2,004,199 2,154,282 2,316,216 Earned and other income 2,706,810 2,854,741 3,012,687 3,182,502 3,362,707 467,078 514,725 4,448,745 4,719,829 5,016,886 5,336,784 5,678,923 3,938,834 5,933,813 Adjusted gross income 3,471,757 5,419,088 Deductions Real estate tax 92,000 92,000 93,840 95,717 97,631 99,584 114,390 134,027 Charitable gifts to Family Foundation 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Charitable Deduction available 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Charitable Deduction allowed 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Total deductions 102,000 103,840 105,717 107,631 109,584 124,390 144,027 Reductions (81,600) (83,072) (84,573) (86,105) (87,667) (99,512) (115,221) 20,400 20,768 21,143 21,526 21,917 24,878 28,805 Deductions allowed Taxable income Federal income tax 4,428,345 $ 1,359,851 4,699,061 $ 1,442,917 4,995,743 $ 1,533,137 5,315,257 $ 1,630,249 5,657,006 $ 1,733,842 3,913,956 $ 817,077 5,905,008 $ 1,223,888 Page 29
  31. 31. CASH FLOW PROJECTIONS - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Sources of income for Lifestyle Non-taxable Social Security Income 6,252 6,252 6,252 6,252 6,252 6,252 6,252 Consumable income (taxable) 4,448,745 4,719,829 5,016,886 5,336,784 5,678,923 3,938,834 5,933,813 Total income available for lifestyle 4,454,997 4,726,082 5,023,139 5,343,036 5,685,176 3,945,087 5,940,066 725,000 739,500 754,290 769,376 784,763 901,446 1,056,188 Uses of Cash Living expenses Income tax 1,359,851 1,442,917 1,533,137 1,630,249 1,733,842 817,077 1,223,888 Personally held insurance premiums 41,806 41,806 41,806 41,806 41,806 41,806 41,806 Cash gifts to ILIT 48,850 48,850 48,850 48,850 48,850 48,850 48,850 158,000 158,000 158,000 158,000 158,000 158,000 158,000 Cash gifts to family Cash gifts to Family Foundation 10,000 Surplus $ 10,000 10,000 10,000 10,000 10,000 10,000 2,343,507 Total uses of cash 2,441,073 2,546,083 2,658,280 2,777,261 1,977,179 2,538,732 2,111,490 $ 2,285,009 $ 2,477,056 $ 2,684,756 $ 2,907,914 $ 1,967,907 $ 3,401,334 In 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 marketable securities row on the "Asset Value Projections" 3 pages earlier. Page 30
  32. 32. FIRST ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Tax calculation on Jeff's death Combined net worth 92,318,143 96,726,766 101,781,824 107,226,557 113,091,051 119,408,616 160,266,214 236,958,860 Jeff's estimated estate 53,562,522 56,120,382 59,053,302 62,212,308 65,614,858 69,280,278 92,985,650 137,482,337 Death benefit exceeding CV 2,064,053 Settlement expenses 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 55,626,575 Total gross estate 58,184,435 61,117,355 64,276,361 67,678,911 71,344,331 95,049,703 139,546,390 (303,133) (315,922) (330,587) (346,382) (363,395) (381,722) (500,249) (722,732) (5,109,400) Joint, personal and IRA to Theresa (5,118,687) (5,139,805) (5,153,067) (5,156,647) (5,150,827) (4,782,671) (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 (44,530,726) (47,066,511) (49,963,647) (53,093,597) (56,475,553) (60,128,466) (84,083,468) (129,579,697) Taxable estate 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 Plus Jeff's lifetime taxable gifts 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737 1,720,737 Tax base 5,340,000 5,340,000 5,340,000 5,340,000 5,340,000 5,340,000 5,340,000 5,340,000 - Federal Estate Tax - - - - - - - Distribution of Jeff's estate Settlement expenses 303,133 315,922 330,587 346,382 363,395 381,722 500,249 722,732 To family trust 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 Joint, personal and IRA to Theresa 5,109,400 5,118,687 5,139,805 5,153,067 5,156,647 5,150,827 4,782,671 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 44,530,726 47,066,511 49,963,647 53,093,597 56,475,553 60,128,466 84,083,468 129,579,697 95,049,703 $ 139,546,390 Total $ 55,626,575 $ 58,184,435 $ 61,117,355 $ 64,276,361 $ 67,678,911 $ 71,344,331 $ Assumptions We assume that Jeff dies first, followed immediately by Theresa. Taxes under "Distribution of First Estate" include estate and income taxes. Page 31
  33. 33. SECOND ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Tax Calculation on Theresa's death Theresa's assets 38,755,622 40,606,384 42,728,523 45,014,249 47,476,193 50,128,339 67,280,564 99,476,523 Plus assets from Jeff's estate 51,704,179 54,249,250 57,167,505 60,310,716 63,696,253 67,343,346 90,930,191 135,204,395 Theresa's estimated estate 90,459,800 Theresa's taxable estate 99,896,028 105,324,965 111,172,446 117,471,685 158,210,755 234,680,918 (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (929,598) Settlement expenses 94,855,634 (10,540,000) Charitable Bequest (973,556) (1,023,960) (1,078,250) (1,136,724) (1,199,717) (1,607,108) 88,332,067 93,706,716 99,495,722 78,990,202 Plus Theresa's lifetime taxable gifts 83,342,078 105,731,968 146,063,648 (2,371,809) 221,769,109 1,714,582 1,714,582 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Tax base 80,704,784 85,056,660 89,332,067 94,706,716 100,495,722 106,731,968 147,063,648 222,769,109 Federal Estate Tax 30,145,914 31,886,664 33,596,827 35,746,686 38,062,289 40,556,787 56,689,459 86,971,644 Total Estate Tax Due 30,145,914 31,886,664 33,596,827 35,746,686 38,062,289 40,556,787 56,689,459 86,971,644 Distribution of Theresa's estate Settlement expenses 929,598 Qualified plan to heirs 1,023,960 1,078,250 1,136,724 1,199,717 1,607,108 2,371,809 31,886,664 33,596,827 35,746,686 38,062,289 40,556,787 56,689,459 86,971,644 4,634,400 Residual estate to heirs 4,643,737 4,664,970 4,678,304 4,681,904 4,676,051 4,305,899 3,077,245 10,540,000 Charitable Bequest Total 973,556 30,145,914 Taxes 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 44,209,888 $ 90,459,800 46,811,677 $ 94,855,634 50,070,270 $ 53,281,726 56,751,529 60,499,129 85,068,290 131,720,220 99,896,028 $ 105,324,965 $ 111,172,446 $ 117,471,685 $ 158,210,755 $ 234,680,918 Assumptions We assume that Jeff dies first, followed immediately by Theresa. Taxes under "Distribution of Second Estate" include estate and income taxes. Page 32
  34. 34. SUMMARY OF BENEFITS TO FAMILY - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Benefits to Family Family trust 3,619,263 QPRT - 2nd Residence 1 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 3,619,263 46,811,677 50,070,270 53,281,726 56,751,529 60,499,129 85,068,290 131,720,220 4,634,400 Qualified plan assets 3,619,263 44,209,888 Residual estate 4,643,737 4,664,970 4,678,304 4,681,904 4,676,051 - Proceeds from ILIT 3,005,028 - 3,005,028 - 3,005,028 4,305,899 3,005,028 3,005,028 3,077,245 2,532,221 - 2,966,901 3,005,028 3,005,028 Total assets to heirs $ 55,468,579 $ 58,079,705 $ 61,359,531 $ 64,584,320 $ 68,057,724 $ 71,799,472 $ 98,530,701 $ 144,388,657 Estate Taxes $ 30,145,914 $ 31,886,664 $ 33,596,827 $ 35,746,686 $ 38,062,289 $ 40,556,787 $ 56,689,459 $ 1 3,005,028 - 86,971,644 Assumes the 2nd residence was put in a 15 yr. QPRT in 2006. Beginning in 2022, the residence is outside of Jeff & Theresa's estate. Page 33
  35. 35. ANDERSON FAMILY FOUNDATION DETAILS - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Anderson Family Foundation Beginning of Year Foundation Value 5,000,000 5,137,087 5,301,500 5,470,845 5,645,270 5,824,928 7,242,851 9,266,617 10,000 10,000 10,000 10,000 10,000 10,000 10,000 5,000,000 5,147,087 5,311,500 5,480,845 5,655,270 5,834,928 7,252,851 9,276,617 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 Total to Charity 15,540,000 15,687,087 15,851,500 16,020,845 16,195,270 16,374,928 17,792,851 19,816,617 Annual Contributions Amount passing to charity (EOY) ** The Charitable Bequest includes $540,000 in bequests to various charitable organizations and $10,000,000 to the Anderson Family Foundation. Page 34
  36. 36. DETAILS OF JEFF'S QUALIFIED PLAN - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Jeff's Qualified Plans Jeff's Age 75 76 77 78 79 86 94 Theresa's Age 72 73 74 75 76 83 91 22.9 22.0 21.2 20.3 19.5 14.1 9.1 - - - - - - Minimum distribution factor Plan contributions Plan balance Minimum distribution Preferred distribution Actual distribution 4,609,400 - 4,618,572 4,639,566 4,652,696 4,656,134 4,650,165 4,280,702 3,057,094 201,284 209,935 218,847 229,197 238,776 310,083 357,346 201,284 209,935 218,847 229,197 238,776 310,083 357,346 Page 35
  37. 37. DETAILS OF THERESA'S QUALIFIED PLAN - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Theresa's Qualified Plans Theresa's Age 72 73 74 75 76 83 91 Jeff's Age 75 76 77 78 79 86 94 25.6 24.7 23.8 22.9 22.0 16.3 10.8 - - - - - - Minimum distribution factor Plan contributions Plan balance Minimum distribution Preferred distribution Actual distribution 25,000 - 25,165 25,404 25,607 25,769 25,886 25,196 20,151 977 1,019 1,067 1,118 1,171 1,564 1,949 977 - - - - - - 1,019 1,067 1,118 1,171 1,564 1,949 Page 36
  38. 38. DETAILED FINANCIAL ANALYSIS JEFF AND THERESA ANDERSON PROPOSED PLAN FINANCIALS In the Proposed Plan Section you will find a balance sheet which reflects the repositioning of assets as set out in the step by step roadmap in the proceeding section. You will also find detailed cash flow and asset projection information on each of the proposed planning strategies. Page 37
  39. 39. NET WORTH STATEMENT AFTER PLAN IMPLEMENTATION JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTH CASH 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% 1,214,000 1,214,000 - 2,428,000 0.0% 0.0% 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% 1,010,000 - 1,010,000 0.0% 5.0% Total of Cash and Equivalents INVESTMENT ASSETS Securities Acct. - 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. Total of Investment Assets 2,448,050 2,448,050 - 4,896,100 3.0% 4.0% 13,945,272 14,955,272 - 28,900,543 2.5% 4.2% Page 38
  40. 40. REVISED NET WORTH STATEMENT (Page 2) JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTH OTHER 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% 50,000 - - 50,000 0.0% 3.0% 7,279,000 - - 7,279,000 0.0% 3.0% Corp Outstanding Stock Options 353,300 - - 353,300 0.0% 5.0% Other Stock Options Total Employee Benefits 260,200 - - 260,200 0.0% 5.0% 613,500 - - 613,500 0.0% 5.0% 54,400 - 54,400 0.0% 5.0% - 25,000 25,000 0.0% 5.0% LLC Investment 10 Total of Other Investments EMPLOYEE BENEFITS RETIREMENT PLANS/IRAs SEP/IRA IRA 401(k) Total Retirement Plans 4,555,000 - 4,555,000 0.0% 5.0% 4,609,400 25,000 4,634,400 0.0% 5.0% Page 39
  41. 41. REVISED NET WORTH STATEMENT (Page 3) JEFF AND THERESA ANDERSON JEFF THERESA JOINT TOTAL YIELD GROWTH 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% 500,000 500,000 - 1,000,000 0.0% 2.0% 32,500 32,500 - 65,000 0.0% 2.0% 4,920,000 4,920,000 - 9,840,000 0.0% 1.0% 250,000 250,000 - 500,000 0.0% 0.0% 50,000 50,000 - 100,000 0.0% 0.0% 200,000 200,000 - 400,000 0.0% 0.0% 500,000 500,000 - 1,000,000 0.0% 0.0% 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% 48,130,252 36,663,352 - 84,793,603 Europe Home Lake Home Total of Personal Residences PERSONAL PROPERTY Collections/Art/Jewelry Autos Furnishings Total of Personal Property OTHER STRATEGY ASSETS TOTAL ASSETS TOTAL LIABILITIES NET WORTH - 48,130,252 - 36,663,352 - - - 84,793,603 Page 40
  42. 42. ASSET VALUE PROJECTIONS - PROPOSED PLAN FINANCIAL ANALYSIS - PROPOSED PLAN 613,500 YEAR 613,500 644,175 676,384 710,203 745,713 1,049,293 2,000,000 2,036,572 2,077,303 2,118,849 2,161,226 2,204,451 2,532,221 Current 2014 2015 2016 2017 2018 2025 2033 Asset Values Cash and cash equivalents 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 2,428,000 Investment assets** 22,400,543 24,482,494 26,841,127 29,416,898 32,229,429 35,298,610 49,266,477 73,090,974 Other investments 7,279,000 7,478,572 7,702,929 7,934,017 8,172,037 8,417,198 10,352,092 13,113,721 Employee Benefits 613,500 613,500 644,175 676,384 710,203 745,713 1,049,293 1,550,284 Retirement plans/IRAs 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,676,051 4,305,899 3,077,245 Personal residences 1 9,840,000 9,932,656 10,034,910 10,138,216 10,242,587 10,348,031 8,656,547 9,395,704 Personal property 1,000,000 Total assets in estate Combined net worth 1 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 30,098,160 Note from children's GDOT 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 78,293,603 $ 78,293,603 80,677,119 $ 80,677,119 83,414,271 $ 83,414,271 86,369,978 $ 86,369,978 89,562,319 $ 89,562,319 93,011,764 $ 107,156,468 133,754,087 93,011,764 $ 107,156,468 $ 133,754,087 Assumes the 2nd residence was put in a 15 yr. QPRT in 2006. Beginning in 2022, the residence is outside of Jeff & Theresa's estate. ** Reduced by Seed Gift to GDOT 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 41
  43. 43. TAXABLE INCOME PROJECTIONS - PROPOSED PLAN YEAR Current 2014 Investment assets 2015 552,992 2016 604,388 2017 662,614 2018 726,201 2025 2033 795,633 1,157,458 1,717,958 1,840,658 2,594,227 Investment assets - GDOT 1,223,481 1,260,296 1,303,919 1,350,596 1,400,540 Deferred Compensation 1 1,989,119 2,128,357 2,277,342 2,436,756 2,607,329 Retirement plans/IRAs 202,260 210,954 219,915 230,315 239,947 311,647 359,295 Other taxable earnings - GDOT 480,000 480,000 480,000 480,000 480,000 120,000 120,000 Social security income Gross income 1 35,431 $ 4,483,283 35,431 $ 4,719,425 35,431 $ 4,979,221 35,431 $ 5,259,299 - 35,431 $ 5,558,880 - 35,431 $ 3,465,194 35,431 $ 4,826,910 Deferred compensation payments are made until 2018. Page 42
  44. 44. INCOME TAX PROJECTIONS - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Income Tax Estimation Adjusted gross income: Dividend income (Marketable Sec.) 1,776,473 1,864,683 1,966,533 2,076,797 2,196,173 2,998,117 Earned and other income 2,706,810 2,854,741 3,012,687 3,182,502 3,362,707 467,078 4,312,184 514,725 Adjusted gross income 4,483,283 4,719,425 4,979,221 5,259,299 5,558,880 3,465,194 4,826,910 Real Estate Tax 92,000 93,840 95,717 97,631 99,584 114,390 134,027 Cash charitable gifts 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Charitable Deduction available 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Charitable Deduction allowed 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Total deductions 102,000 103,840 105,717 107,631 109,584 124,390 144,027 Reductions (81,600) (83,072) (84,573) (86,105) (87,667) (94,956) (115,221) 20,400 20,768 21,143 21,526 21,917 29,435 28,805 4,462,883 4,698,657 4,958,077 5,237,772 5,536,963 3,435,760 4,798,104 Deductions Deductions allowed Taxable income Federal income tax $ 1,366,759 $ 1,442,836 $ 1,525,604 $ 1,614,752 $ 1,709,833 $ 720,527 $ 1,002,507 Page 43
  45. 45. CASH FLOW PROJECTIONS - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Sources of Income for Lifestyle Consumable income (taxable) 2,779,802 3,428,703 3,678,340 1,504,536 6,252 6,252 6,252 6,252 6,252 791,582 791,582 791,582 791,582 791,582 791,582 3,577,636 Total income available for lifestyle 3,195,302 6,252 791,582 Note Payment from GDOT 2,979,129 6,252 Non-taxable Social Security Income 2,112,683 3,776,963 3,993,136 4,226,537 4,476,174 2,302,370 2,910,517 Uses of Cash Living expenses 725,000 739,500 754,290 769,376 784,763 901,446 1,056,188 1,366,759 1,442,836 1,525,604 1,614,752 1,709,833 720,527 1,002,507 Personally held insurance premiums 41,806 41,806 41,806 41,806 41,806 41,806 41,806 Cash gifts to ILIT 48,850 48,850 48,850 48,850 48,850 48,850 48,850 158,000 158,000 158,000 158,000 158,000 158,000 158,000 Income tax Cash gifts to family Cash gifts to charity 10,000 Surplus $ 10,000 10,000 10,000 10,000 10,000 10,000 2,350,415 Total uses of cash 2,440,992 2,538,550 2,642,783 2,753,253 1,880,629 2,317,351 1,227,221 $ 1,335,971 $ 1,454,586 $ 1,583,753 $ 1,722,921 $ 421,741 $ 593,166 In 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. 46. FIRST ESTATE TAX ESTIMATION AND DISTRIBUTION - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Tax calculation on Jeff's death Combined Net Worth 78,293,603 80,677,119 83,414,271 86,369,978 89,562,319 93,011,764 107,156,468 133,754,087 Jeff's estimated estate 44,440,744 45,793,667 47,347,320 49,025,028 50,837,054 52,795,016 60,823,783 75,921,032 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 46,504,797 47,857,720 49,411,373 51,089,081 52,901,107 54,859,069 62,887,836 77,985,085 Death benefit exceeding CV Total gross estate Settlement expenses (257,524) Insurance passing to Theresa (264,289) (272,057) (280,445) (289,506) (299,295) (339,439) (414,925) (5,109,400) Joint, personal and IRA to Theresa (5,118,687) (5,139,805) (5,153,067) (5,156,647) (5,150,827) (4,782,671) (3,560,645) (2,064,053) Taxable estate (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (2,064,053) (38,704,557) Outright or in trust to Theresa (40,041,429) (41,566,195) (43,222,253) (45,021,638) (46,975,631) (55,332,410) (71,576,199) 369,263 369,263 369,263 369,263 369,263 369,263 369,263 369,263 Plus Jeff's lifetime taxable gifts 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737 4,970,737 Tax base 5,340,000 5,340,000 5,340,000 5,340,000 5,340,000 5,340,000 5,340,000 5,340,000 Tentative Federal Estate Tax - - - - - - - - Distribution of First Estate Settlement expenses 257,524 To family trust 272,057 280,445 289,506 299,295 339,439 414,925 369,263 Insurance passing to Theresa 369,263 369,263 369,263 369,263 369,263 369,263 369,263 5,109,400 Joint, personal and IRA to Theresa 5,118,687 5,139,805 5,153,067 5,156,647 5,150,827 4,782,671 3,560,645 2,064,053 $ 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 2,064,053 38,704,557 Outright or in trust to Theresa Total 264,289 40,041,429 41,566,195 43,222,253 45,021,638 46,975,631 55,332,410 71,576,199 46,504,797 $ 47,857,720 $ 49,411,373 $ 51,089,081 $ 52,901,107 $ 54,859,069 $ 62,887,836 $ 77,985,085 Assumptions We 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. 47. SECOND ESTATE TAX ESTIMATION AND DISTRIBUTION - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Tax Calculation on Theresa's death Theresa's assets 33,852,859 34,883,452 36,066,951 37,344,950 38,725,265 40,216,748 46,332,684 Plus assets from Jeff's estate 45,878,010 47,224,168 48,770,053 50,439,373 52,242,338 54,190,510 62,179,134 77,200,897 Theresa's estimated estate 79,730,869 82,107,620 84,837,004 87,784,323 90,967,603 94,407,259 108,511,819 135,033,952 Settlement expenses 57,833,055 (822,309) Plus Theresa's lifetime taxable gifts (902,843) (934,676) (969,073) (1,110,118) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) (10,540,000) 68,368,560 Taxable estate (873,370) (10,540,000) Existing Charitable Bequest (846,076) (1,375,340) 70,721,544 73,423,634 76,341,479 79,492,927 82,898,186 96,861,700 123,118,612 4,964,582 4,964,582 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Tax base 73,333,142 75,686,126 74,423,634 77,341,479 80,492,927 83,898,186 97,861,700 124,118,612 Federal Estate Tax 27,197,257 28,138,450 27,633,454 28,800,592 30,061,171 31,423,274 37,008,680 47,511,445 Distribution of Second Estate Settlement expenses 822,309 846,076 873,370 902,843 934,676 969,073 1,110,118 1,375,340 27,197,257 Taxes 28,138,450 27,633,454 28,800,592 30,061,171 31,423,274 37,008,680 47,511,445 Qualified plan to heirs 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,676,051 4,305,899 3,077,245 Other gifts to charity 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 10,540,000 Residual estate to heirs Total 36,536,903 $ 79,730,869 37,939,356 $ 82,107,620 41,125,210 $ 84,837,004 42,862,584 $ 87,784,323 44,749,853 $ 90,967,603 46,798,860 $ 55,547,122 72,529,922 94,407,259 $ 108,511,819 $ 135,033,952 Assumptions We 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. 48. SUMMARY OF BENEFITS TO FAMILY - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Benefits to Family Residual estate 36,536,903 37,939,356 41,125,210 42,862,584 44,749,853 46,798,860 55,547,122 369,263 369,263 369,263 369,263 369,263 369,263 369,263 369,263 Excess FLP value 7,524,540 7,650,468 7,815,389 7,998,512 8,201,176 8,424,814 10,646,221 14,562,718 Qualified plan assets 4,634,400 4,643,737 4,664,970 4,678,304 4,681,904 4,676,051 4,305,899 3,077,245 Family trust Value of GDOT Life insurance proceeds GDOT Existing QPRT - 2nd Residence 1 Proceeds from ILIT Total assets to heirs 1 72,529,922 6,500,000 7,241,230 8,170,417 9,183,190 10,285,336 11,483,043 23,159,179 46,119,953 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 2,532,221 2,966,901 - - - - - - 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 $ 108,570,134 $ 110,849,083 $ 115,150,278 $ 118,096,881 $ 121,292,559 $ 124,757,060 $ 149,564,932 $ 192,631,030 Assumes the 2nd residence was put in a 15 yr. QPRT in 2006. Beginning in 2022, the residence is outside of Jeff & Theresa's estate. Page 47
  49. 49. FAMILY LIMITED PARTNERSHIP DETAILS - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Balance Sheet LP Assets Investment Assets 34,282,700 35,272,339 36,456,947 37,732,562 39,105,879 40,584,072 53,131,107 Other Investments 3,340,000 2,980,000 2,620,000 2,260,000 1,900,000 1,540,000 100,000 100,000 37,622,700 38,252,339 39,076,947 39,992,562 41,005,879 42,124,072 53,231,107 72,813,589 Total Assets in FLP Discounted value of FLP interests $ 37,622,700 $ 38,252,339 $ 39,076,947 $ 39,992,562 $ 41,005,879 $ 42,124,072 $ 53,231,107 72,713,589 $ 72,813,589 30,098,160 30,601,871 31,261,557 31,994,049 32,804,703 33,699,258 42,584,886 58,250,871 7,524,540 7,650,468 7,815,389 7,998,512 8,201,176 8,424,814 10,646,221 14,562,718 Difference between FLP asset value and discounted LP value Page 48
  50. 50. FAMILY LIMITED PARTNERSHIP DETAILS - PROPOSED PLAN (Continued) Partnership Cash Flow Current 2014 2015 2016 2017 2018 2025 2033 Income Investment Assets 1,028,481 1,058,170 1,093,708 1,131,977 1,173,176 Corp Buyout Note Payments 1 360,000 360,000 360,000 360,000 360,000 Other Investments 120,000 120,000 120,000 120,000 120,000 120,000 120,000 1,508,481 1,538,170 1,573,708 1,611,977 1,653,176 1,652,799 2,217,507 1,508,481 1,538,170 1,573,708 1,611,977 1,653,176 1,652,799 2,217,507 263,101 226,286 182,663 135,986 86,041 5,923 Total Income 1,532,799 - 2,097,507 - Expenses Net Income to Distribute LP Capital Distributed* - * Note: Capital distributions, if any, are subtracted from the investment assets row on the prior page. Taxable Income Dividend income (Investment assets) Other Investments Taxable Income Current 2014 1,028,481 2015 1,058,170 2016 1,093,708 2017 1,131,977 2018 1,173,176 2025 1,532,799 2033 2,097,507 480,000 480,000 480,000 480,000 480,000 120,000 120,000 1,508,481 1,538,170 1,573,708 1,611,977 1,653,176 1,652,799 2,217,507 Page 49
  51. 51. GRANTOR DEEMED OWNER TRUST DETAILS - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 GDOT Balance Sheet LP Units 30,098,160 30,601,871 31,261,557 31,994,049 32,804,703 33,699,258 42,584,886 58,250,871 Seed Gift 6,500,000 6,737,519 7,007,020 7,287,301 7,578,793 7,881,945 10,372,102 14,194,937 Reinvested excess cash flow - Note payable to Jeff and Theresa Net equity - (30,098,160) $ 6,500,000 - (30,098,160) $ 7,241,230 - (30,098,160) $ 8,170,417 - (30,098,160) $ 9,183,190 - (30,098,160) $ 10,285,336 300,351 (30,098,160) $ 11,483,043 3,772,305 (30,098,160) $ 23,159,179 (30,098,160) $ 46,119,953 GDOT Income Tax Estimation Taxable dividends from FLP 1,028,481 Earnings from reinvestment acct./Seed Gift 1,058,170 1,093,708 1,131,977 1,173,176 1,532,799 2,097,507 480,000 Other Investments 480,000 480,000 480,000 480,000 120,000 120,000 195,000 202,126 210,211 218,619 227,364 307,859 496,719 1,703,481 Total earnings 1,740,296 1,783,919 1,830,596 1,880,540 1,960,658 2,714,227 GDOT Cash Flow Capital Distribution from LP 263,101 Installment Note payments to Jeff and Theresa 182,663 135,986 86,041 5,923 1,538,170 1,573,708 1,611,977 1,653,176 1,652,799 2,217,507 195,000 Cash flow from reinvestment acct./Seed Gift 226,286 1,508,481 Cash flow from LP units - 202,126 210,211 218,619 227,364 307,859 496,719 (791,582) Cash flow to reinvest (791,582) (791,582) (791,582) (791,582) (791,582) (791,582) (1,175,000) Insurance Premium (1,175,000) (1,175,000) (1,175,000) (1,175,000) (1,175,000) (1,175,000) - - - - - - 747,645 Note: Capital distributions, if any, are subtracted from the marketable securities row on the FLP balance sheet. GDOT Insurance Net death benefit 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 1,175,000 Premium 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 1,175,000 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 30,098,160 791,582 791,582 791,582 791,582 791,582 791,582 791,582 GDOT Note Outstanding note balance Interest payment 30,098,160 Page 50
  52. 52. IRREVOCABLE LIFE INSURANCE TRUST DETAILS - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Cash gift to current ILIT 48,850 48,850 48,850 48,850 48,850 48,850 48,850 48,850 Total outlay to ILITs 48,850 48,850 48,850 48,850 48,850 48,850 48,850 48,850 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 3,005,028 Death benefit from current ILIT Total 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. 53. ANDERSON FAMILY FOUNDATION DETAILS - EXISTING PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Anderson Family Foundation Beginning of Year Foundation Value 5,000,000 Amount passing to charity (EOY) 5,000,000 5,137,087 5,301,500 5,470,845 5,645,270 5,824,928 7,242,851 10,000 Annual Contributions 10,000 10,000 10,000 10,000 10,000 9,266,617 10,000 5,147,087 5,311,500 5,480,845 5,655,270 5,834,928 7,252,851 9,276,617 Page 52
  54. 54. BENEFITS TO ANDERSON FAMILY CHARITY - PROPOSED PLAN YEAR Current Anderson Family Foundation - Existing Existing Charitable Bequest** Total benefits to family charity 2014 5,000,000 10,540,000 $ 15,540,000 2015 5,147,087 10,540,000 $ 15,687,087 2016 5,311,500 10,540,000 $ 15,851,500 2017 5,480,845 10,540,000 $ 16,020,845 2018 5,655,270 10,540,000 $ 16,195,270 2025 5,834,928 10,540,000 $ 16,374,928 2033 7,252,851 9,276,617 10,540,000 $ 17,792,851 10,540,000 $ 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. 55. DETAILS OF JEFF'S QUALIFIED PLAN - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Jeff's Qualified Plans Jeff's age 75 76 77 78 79 86 Theresa's age 72 73 74 75 76 83 91 22.9 22.0 21.2 20.3 19.5 14.1 9.1 Minimum distribution factor 94 Securities in plans 4,609,400 4,618,572 4,639,566 4,652,696 4,656,134 4,650,165 4,280,702 3,057,094 Plan balance during life 4,609,400 4,618,572 4,639,566 4,652,696 4,656,134 4,650,165 4,280,702 3,057,094 Plan balance at death of survivor 4,609,400 4,618,572 4,639,566 4,652,696 4,656,134 4,650,165 4,280,702 3,057,094 Minimum distribution 201,284 209,935 218,847 229,197 238,776 310,083 357,346 Actual distribution 201,284 209,935 218,847 229,197 238,776 310,083 357,346 Page 54
  56. 56. DETAILS OF THERESA'S QUALIFIED PLAN - PROPOSED PLAN YEAR Current 2014 2015 2016 2017 2018 2025 2033 Theresa's Qualified Plans Theresa's age 72 73 74 75 76 83 Jeff's age 75 76 77 78 79 86 94 25.6 24.7 23.8 22.9 22.0 16.3 10.8 25,000 25,165 25,404 25,607 25,769 25,886 25,196 20,151 - - - - - - - Plan balance during life 25,000 25,165 25,404 25,607 25,769 25,886 25,196 20,151 Plan balance at death of survivor 25,000 25,165 25,404 25,607 25,769 25,886 25,196 20,151 977 1,019 1,067 1,118 1,171 1,564 1,949 Minimum distribution factor Securities in plans Plan contributions Minimum distribution Preferred distribution Actual distribution 977 91 - - - - - - 1,019 1,067 1,118 1,171 1,564 1,949 Page 55
  57. 57. FAMILY INFORMATION JEFF AND THERESA ANDERSON CLIENTS Jeff Anderson Theresa Anderson 123 Main St. Date of Birth Date of Birth March 8, 1939 February 5, 1942 CHILDREN CHILD'S NAME George Anderson Alyssa Anderson Jack Anderson GRANDCHILDREN NAME William Anderson Jackie Anderson Jeffrey Anderson Ashley Anderson Gloria Anderson Page 56
  58. 58. PLAN ASSUMPTIONS JEFF AND THERESA ANDERSON The plan is based on numerous assumptions. Important among these are the yield and growth assumptions contained on the balance sheet in the Financial Analysis section. Other important assumptions are contained on this Plan Assumptions page. Tax Rate Assumptions State Income Tax Rate State Inheritance - Estate Tax No state income 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 Current rate Lowest rate 1.5% 1.4% 1.4% December, 2013 January, 2014 January, 2014 Long Term AFR Rate 2.6% January, 2014 Lifestyle Need Assumptions Net annual outlay for Jeff and Theresa's lifestyle needs, not including gifts or income taxes Annual cost of living increase used in the plan Settlement and Administrative Expenses Fixed estate settlement costs Variable estate settlement costs, 1st death Variable estate settlement costs, 2nd death $725,000 2% $25,000 0.50% (of assets) 1.00% (of assets) Page 57
  59. 59. DISCLAIMER AND DISCLOSURE JEFF AND THERESA ANDERSON InKnowVision, LLC does not give accounting or investment advice to its clients. The effectiveness of any of the strategies described will depend 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 strategy is implemented. Any discussion in this presentation relating to tax, accounting, investments, regulatory, or legal matters is based on our understanding as of the 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 to understand that it is a virtual certainty that the actual results will differ from those illustrated. Returns on investment and performance of financial products can cause the results to vary. Changes in tax, trust or property laws can cause plan results to vary. Plan implementation that 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 marketed opinions. While this is an arcane area, suffice it to say that these opinions are often obtained by taxpayers for purposes of avoiding penalties. These opinions are obtained at substantial cost and after substantial legal analysis. If you believe that such an opinion would be helpful 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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