InKnowVision’s Monthly  HNW Webinar Series               Case Study Webinar    ©2012. InKnowVision LLC. All rights reserve...
ESTATE AND FINANCIAL PLAN DESIGN                                                                        PREPARED FOR:     ...
YOUR GOALS AND OBJECTIVES                                             BEN AND AMANDA MORGANMaintain our customary lifestyl...
FAMILY INFORMATION                                        BEN AND AMANDA MORGAN                                           ...
PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - POTENTIALThe highlighted tools are the POTENTIAL strategies that were discuss...
PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - RECOMMENDED                                                          BEN AND ...
YOUR GOALS AND OBJECTIVES - ACCOMPLISHED                                            BEN AND AMANDA MORGANCash Flow - The p...
PLAN ASSUMPTIONS                                                            BEN AND AMANDA MORGANThe plan is based on nume...
INTRODUCTION TO THE PLAN STRATEGIES ROADMAP                                                  BEN AND AMANDA MORGANThe foll...
CREATE AND FUND A FAMILY LIMITED PARTNERSHIP                                                                   BEN AND AMA...
CREATE AND FUND A FAMILY LIMITED PARTNERSHIP                                                                  BEN AND AMAN...
HAVE THE LIMITED PARTNERSHIP SHARES APPRAISED                                                     BEN AND AMANDA MORGAN Be...
BUSINESS PURPOSE                                                                      BEN AND AMANDA MORGANThe Family enti...
CORPORATE RE-CAPITALIZATION OF BEN, INC                                                                          BEN AND A...
HAVE THE NON-VOTING SHARES APPRAISED                                                    BEN AND AMANDA MORGANBen and Amand...
CREATE GRANTOR DEEMED OWNER TRUSTS                                                  BEN AND AMANDA MORGAN                 ...
GIFT TO GRANTOR DEEMED OWNER TRUST                                                   BEN AND AMANDA MORGANBen and Amanda e...
SELL PARTNERSHIP AND CORPORATE SHARES TO EACH GDOT                                                                   BEN A...
ACHIEVING INHERITANCE GOALS AND LIQUIDITY NEEDS                                                                   BEN AND ...
CREATE A CAPTIVE INSURANCE COMPANY                                                                    BEN AND AMANDA MORGA...
COMPANY INSURES RISKS                                                BEN AND AMANDA MORGAN                                ...
POTENTIAL INSURABLE RISKS                                              BEN AND AMANDA MORGANThe Captive Insurance Company ...
LEAVE YOUR IRA TO CHARITY                                                    BEN AND AMANDA MORGAN                        ...
TESTAM                    TESTAMENTARY CHARITABLE LEAD ANNUITY TRUST (Part I)                                             ...
TESTAMENTARY CHARITABLE LEAD ANNUITY TRUST (Part II)                                                                 BEN A...
ESTATE PLAN OVERVIEW AND ESTATE DISTRIBUTION - 2012                                                                       ...
BEN AND AMANDA MORGANMEETING INHERITANCE     OBJECTIVES                              Page 26
MEETING YOUR INHERITANCE GOALS                                                                BEN AND AMANDA MORGAN   $300...
MEETING YOUR INHERITANCE AND CHARITABLE OBJECTIVES                                                BEN AND AMANDA MORGAN   ...
MEETING YOUR INHERITANCE AND CHARITABLE OBJECTIVES                                                    BEN AND AMANDA MORGA...
DYNASTY TRUST/FAMILY BANK TO HOLD INHERITANCES                                                   BEN AND AMANDA MORGANThe ...
BEN AND AMANDA MORGANLIFETIME SPENDING  AND LIQUIDITY                             Page 31
YOUR LIQUID ASSETS - CURRENT PLAN VS. PROPOSED PLAN                                                                 BEN AN...
SPENDING VS. INCOME - PROPOSED PLAN                                                                                   BEN ...
BEN AND AMANDA MORGANINCOME TAX PLANNING                              Page 34
COMPARISON OF INCOME TAX RESULTS - PLAN YEAR 2012                                           BEN AND AMANDA MORGAN         ...
BEN AND AMANDA MORGANINCREASE INHERITANCEAND REDUCE ESTATE TAX                               Page 36
COMPARISON OF PLAN RESULTS - PLAN YEAR 2012                                                    BEN AND AMANDA MORGAN      ...
COMPARISON OF PLAN RESULTS - PLAN YEAR 2038                                                           BEN AND AMANDA MORGA...
ASSETS PASSING TO YOUR FAMILY & EXECUTIVES- CURRENT VS. PROPOSED                                                          ...
BEN AND AMANDA MORGAN   INCREASE INCHARITABLE GIVING                             Page 40
COMPARISON OF CHARITY RESULTS - PLAN YEAR 2012                                                        BEN AND AMANDA MORGA...
COMPARISON OF CHARITY RESULTS - PLAN YEAR 2038                                                        BEN AND AMANDA MORGA...
COST BENEFIT ANALYSIS                                                           BEN AND AMANDA MORGANAll strategies have a...
COST BENEFIT ANALYSIS (Continued)                                                               BEN AND AMANDA MORGANInter...
DETAILED FINANCIAL ANALYSIS                                   BEN AND AMANDA MORGAN                              INTRODUCT...
DETAILED FINANCIAL ANALYSIS                                   BEN AND AMANDA MORGAN                 CURRENT PLAN FINANCIAL...
CURRENT NET WORTH STATEMENT                                            BEN AND AMANDA MORGAN                              ...
CURRENT NET WORTH STATEMENT (Page 2)                                               BEN AND AMANDA MORGAN                  ...
CURRENT NET WORTH STATEMENT (Page 3)                                              BEN AND AMANDA MORGAN                   ...
SCHEDULE OF LIFE INSURANCE BENEFITS - CURRENT PLAN                                              BEN AND AMANDA MORGAN     ...
FINANCIAL ANALYSIS - EXISTING PLAN           ASSET VALUE PROJECTIONS - EXISTING PLANYEAR                                  ...
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning
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Morgan Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning

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This redacted advanced estate planning and tax planning design plan covers the facts and circumstances, the Family Wealth Goal Achiever Process, and the solutions used in the case.

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Transcript of "Morgan 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. ESTATE AND FINANCIAL PLAN DESIGN PREPARED FOR: BEN AND AMANDA MORGAN January 17, 2012 PRESENTED BY Scott Hamilton InKnowVision, LLC 715 Enterprise Dr. Oak Brook, IL 60523 scott@ikvllc.com Phone: (630) 596-5090Copyright 2012 InKnowVision, LLC - Family Wealth Goal Achiever™
  3. 3. YOUR GOALS AND OBJECTIVES BEN AND AMANDA MORGANMaintain our customary lifestyle. This should take about $641,000 annually after taxes and gifts.Provide for the financial security of the surviving spouse.Explore options for a business succession plan that maximizes the after-tax proceeds from the sale of thebusiness.Create sufficient funds for retirement.We wish to continue giving charitably during our lives and wish to create a significant charitable gift upondeath in order to leave a family legacy.We would like to leave our children and grandchildren an inheritance in an amount that leaves themcomfortable, but not in a manner that they become non-productive members of society.Reduce income taxes if possible.Implement an asset protection structure that protects our assets and the assets our children & grandchildrenwill inherit.Eliminate or reduce estate taxes.Assure we have sufficient liquid assets available at our deaths to avoid a forced liquidation of our business andreal estate assets. Page 2
  4. 4. FAMILY INFORMATION BEN AND AMANDA MORGAN CLIENTS Ben Morgan Date of Birth February 24, 1949 Amanda Morgan Date of Birth April 8, 1952 123 Main St. CHILDRENCHILDS NAME DATE OF BIRTH Rena Morgan November 9, 1976 Beth Morgan August 17, 1978 Ann Morgan February 6, 1981 Gloria Morgan March 21, 1984 GRANDCHILDREN NAME DATE OF BIRTH Tim Morgan April 4, 2010 Amy Morgan September 6, 2007 Susan Morgan March 5, 2011 Page 3
  5. 5. PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - POTENTIALThe highlighted tools are the POTENTIAL strategies that were discussed during our initial comprehensive diagnositc report that could beutilized by your family in order to enhance your wealth transfer and management planning. Charitable Family Limited Grantor Retained Charitable Lead Remainder Uni- 412(e) Private Annuity SCIN Partnership Annuity Trust Annuity Trust Trust Qualified Personal Sale for Installment Limited Liability Family LLC TCLAT Flip CRT Life Insurance Residence Trust Note Companies Preferred Limited Corporate Premium Finance Family Charity Plan 529 Plans Gifting ILIT partnership Recapitalization Annuity Walton GRAT Family Foundation Charitable Life Estate NIMCRUT Asset Protection SPIA/Life Arbitrage Withdrawal Principal Protected Wills, DPAs and InternationalSPIA/Life in a CLAT Crummey Powers Dynasty Trust GDOT Notes POAs VUL Employee Stock International Supporting Qualified Plan to Gift Annuity Ownership Plan Life Estates Business Risk LLC/CRTs Organizations Charity (ESOP) Management Charitable Updated Buy/Sell Defined Benefit Qualified Plan Bargain Sales Risk Management Remainder Annuity Management LLC Agreements Plans Limited Partnership Trust Green equals a Blue equals a social Yellow equals an planning tool for capital or existing planning family charitable tool tool
  6. 6. PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - RECOMMENDED BEN AND AMANDA MORGANThe highlighted tools are those we have determined are most suited to achieving your goals and objectives. Charitable Family Limited Grantor Retained Charitable Lead Remainder Uni- 412(e) Private Annuity SCIN Partnership Annuity Trust Annuity Trust Trust Qualified Personal Sale for Installment Series Limited GDOT Owned Life Family LLC TCLAT Flip CRT Residence Trust Note Liability Company Insurance Beneficiary Preferred Limited Corporate Premium Finance Defective Inheritors 529 Plans Gifting ILIT partnership Recapitalization Trust (BDIT) Annuity Walton GRAT Family Foundation Charitable Life Estate NIMCRUT Asset Protection SPIA/Life Arbitrage Withdrawal Principal Protected Wills, DPAs and InternationalSPIA/Life in a CLAT Crummey Powers Dynasty Trust GDOT Notes POAs VUL Supporting Revocable Living Captive Insurance IRA to Charity Gift Annuity Life Estates LLC/CRTs Organizations Trusts Company Charitable Succession Defined Benefit Qualified Plan Bargain Sales Risk Management Remainder Annuity ESOP Planning Planning Plans Limited Partnership TrustGreen equals a new Blue equals a social Yellow equals an planning tool for capital or existing planning family charitable tool tool Page 5
  7. 7. YOUR GOALS AND OBJECTIVES - ACCOMPLISHED BEN AND AMANDA MORGANCash Flow - The plan provides cash flow to maintain your lifestyle at $641,000 increasing annually at 3% aftertaxes and giftsBusiness Continuation - The plan lays a foundation for business succession, while leaving control with you.Income tax deferral - Over the next 5 years income taxes could be reduced by as much as $2,600,000Inheritance Planning - The proposed plan provides for an inheritance to your children and executive team of atleast 75% of your estate and manages your childrens inheritance in a way that provides them withopportunities, while limiting the dangers associated with receiving too much, too soon.Charitable Giving - Your family foundation could expect future gifts of more than $35,000,000Estate Tax Elimination - Under your current plan, assuming current law, your estate taxes would be in excess of$392,696,058 at life expectancy. The plan eliminates those estate taxes entirely.Liquidity - The continued investment of company profit back into the company creates a need for liquidity. Theplan helps this problem. Page 6
  8. 8. PLAN ASSUMPTIONS BEN AND AMANDA MORGANThe plan is based on numerous assumptions. Important among these are the yield and growth assumptionscontained on the balance sheet in the Financial Analysis section. Other important assumptions are contained onthis Plan Assumptions page. Tax Rate Assumptions State Income Tax Rate 9% State Inheritance - Estate Tax No state estate tax Tax on IRD Unless a qualified plan is given to charity, we assume the beneficiary designations are changed to provide for a stretch out distribution. 7520 Rates Highest rate 3.0% March, 2011 Current rate 3.0% April, 2011 Lowest rate 2.8% January, 2011 Long Term AFR Rate 4.3% April, 2011 Annual increase in Bens earned income 2% Number of years Bens income is expected to continue 4 Lifestyle Need Assumptions Net annual outlay for Ben and Amandas lifestyle needs, not including gifts or income taxes $641,000 Annual cost of living increase used in the plan 3% 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 7
  9. 9. INTRODUCTION TO THE PLAN STRATEGIES ROADMAP BEN AND AMANDA MORGANThe following section of the plan contains a step by step roadmap for each of the strategies that we are recommending.You will notice that the strategies are often interdependent; that is, in order for one strategy to be successful, you mustcomplete another strategy as well. It is the integration of each of these strategies that allows you to most efficientlyaccomplish your goals.Also keep in mind that there is often more than one way to get from point A to point B. This is true in wealth transferplanning. If a particular strategy or combination of strategies is not acceptable to you, we may be able to reach the desiredresult in a less efficient but perhaps more acceptable way.The following pages are a conceptual road map only, there are numerous details contained in each strategy that are notdetailed in the overall plan that follows. Page 8
  10. 10. CREATE AND FUND A FAMILY LIMITED PARTNERSHIP BEN AND AMANDA MORGAN Ben and Amanda 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. BEN & AMANDA FAMILY LIMITED PARTNERSHIP LP & LLC interests are split between Ben & Amanda LLC GP SHARES LP SHARES 1% 99% Planning Goals Accomplished: - Sets up a vehicle for business transition, with the potential to pass management of these assets to professional trustees and have the children benefit from their operation. - Controls assets so inheritance provides opportunities while minimizing problems for children and grandchildren. - Reduces estate taxes. - Provides a vehicle to enhance asset protection. - Helps to avoid liquidation of real estate and business assets at your death.Financials found on pgs. 72, 73 Page 9
  11. 11. CREATE AND FUND A FAMILY LIMITED PARTNERSHIP BEN AND AMANDA MORGAN Ben and Amanda transfer $6,112,095 of assets to the limited partnership. BEN & AMANDA FAMILY LIMITED PARTNERSHIP $6,112,095 Detail of Assets Transferred Morgan Enterprises, LLC 1 Main St. 500,000 Loan - Mortgage - 1 Main St. (172,928) 12 Main St. 5,000,000 Loan - Mortgage - 12 Main St. (3,850,000) 123 Main St. 825,000 54 Main St. LLC 12,500 55 Main St. Office Building 2,650,000 Loan - Mortgage - 55 Main St. (2,576,000) Open Land, LLC 1,000,000 Loan - Mortgage - Open Land, LLC (339,627) Community, LLC 60,000 Cash 138,150 Technology, LLC (100%) 1,000,000 Note from ABC Corp - 8.59% 1,865,000 Total Assets Contributed 6,112,095 NOTE: Transfer of assets may require approval of your lender.Financials found on pgs. 72, 73 Page 10
  12. 12. HAVE THE LIMITED PARTNERSHIP SHARES APPRAISED BEN AND AMANDA MORGAN Ben and Amanda 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 BEN & AMANDA Appraisal FAMILY LIMITED PARTNERSHIP Valuation adjustmentAppraised value of LP shares is $3,972,862 assumed to be 35% Inside value of assets is $6,112,095 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 11
  13. 13. BUSINESS PURPOSE BEN AND AMANDA MORGANThe Family entity must have a legitimate business purpose for being organized and these purposes should be well documented. Legitimate business purposes examples are asfollows:a. To Make a Profit – The primary reason for creating this Entity is to make a profit.b. To Increase Wealth – This Entity will provide an effective legal vehicle to increase the wealth of the Members and their families.c. To Provide Centralized Management of Investments – This Entity is designed to hold investment assets and allow for centralized management of those assets.d. To Manage and Develop Real Estate – This Entity will provide the legal vehicle to effectively manage and/or develop any real estate owned or acquired by the Company.e. To Avoid Two Layers of Taxation on Profits – This Entity provides flexibility in business planning not available to the Members through trusts, corporations, or other businessentities.f. To Make Gifts Without Fractionalizing Assets – This Entity establishes a method by which annual gifts may be made without fractionalizing family assets.g. To Make Gifts Without Causing a Loss of Incentive – This Entity provides a method of ownership which allows gifts to be made to children and other beneficiaries withoutcausing a loss of productivity or the incentive to strive to do well.h. To Control Cash Flow to Members – This Entity provides a structure by which the Manager can control the assets and the cash flow to Members to achieve the legitimatepurposes of the Company.i. To Provide a Buy-Sell Arrangement – This Entity provides an orderly buy-sell arrangement between the members of the families that own membership interests to keep theownership of Company assets in those families.j. To Resolve Disputes Privately – This Entity provides for mediation and binding arbitration in disputes by Members that is intended to prevent expensive and embarrassing publiclitigation of private family business matters.k. To Require the Losers of Disputes to Pay the Dispute Costs – This Entity requires the loser in any dispute to pay for the costs of the dispute.l. To Restrict the Right of Non-Members to Acquire Interests – This Entity restricts the right of non-Members to acquire interests in Company assets.m. To Prevent Transfers of Membership Interests Because of Failed Marriages – This Entity prevents the transfer of a family member’s interest in the Company because of a failedmarriage.n. To Prevent Commingling of the Assets of Gift Recipients – This Entity creates a method of ownership that will prevent gifts made to family members from being commingledwith assets owned by others.o. To Make it Difficult to Withdraw – The restrictions in this Operating Agreement make it difficult for any of the parties to withdraw from the Company once they become aMember.p. To Protect Members from the Company’s Creditor Claims – This Entity limits the liability of Members from the Company’s creditors and further limits the liability of Membersholding particular Series of the Company from liability associated with other Series of the Company.q. To Provide Asset Protection for Members – This Entity protects the family resource base from the claims of future creditors of Members.The entity may conduct any lawful business and investment activity permitted under the laws of the State and/or country of organization in which it may have a business orinvestment interest.The entity may own, acquire, manage, develop, operate, sell, exchange, finance, refinance, lease and otherwise deal with real estate, personal property and any type of business asthe 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 12
  14. 14. CORPORATE RE-CAPITALIZATION OF BEN, INC BEN AND AMANDA MORGAN Ben and Amanda recapitalize the existing corporate shares of Ben, Inc into voting and non-voting shares. BEN AND AMANDA MORGAN BEN, INC VOTING NON-VOTING 1% 99% Business To Be Recapitalized Ben, Inc (50% S Corp) Sub-Division Assets 7,000,000 Loan - Mortgage - Sub-division (859,885) 55 Land St., LLC 900,000 55 Land St., LLC (775,434) Total 6,264,681 NOTE: Transfer of assets with liabilities may require lender approval. Planning Goals Accomplished: - Sets up a vehicle for business transition, with the potential to pass management of these assets to professional trustees and have the children benefit from their operation. - Controls assets so inheritance provides opportunities while minimizing problems for children and grandchildren. - Reduces estate taxes. - Provides a vehicle to enhance asset protection. - Helps to avoid liquidation of real estate and business assets at your death.Financials found on pg. 74 Page 13
  15. 15. HAVE THE NON-VOTING SHARES APPRAISED BEN AND AMANDA MORGANBen and Amanda 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 corporation BEN AND AMANDA MORGAN Appraisal BEN, INC Adjusted value of non-voting shares is Valuation adjustment assumed to be 35% Inside value of assets is $6,264,681 $4,072,043The 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 14
  16. 16. CREATE GRANTOR DEEMED OWNER TRUSTS BEN AND AMANDA MORGAN Ben and Amanda create individual grantor deemed owner trusts (GDOT).The GDOTs can be drafted to provide asset protection and long term estate tax savings through the use of dynasty trust provisions. BEN BENs GDOT AMANDA AMANDAs GDOT HEIRSPlanning Goals Accomplished: - Controls assets so inheritance provides opportunities while minimizing problems for children, grandchildren and future generations. - Reduces estate taxes on appreciating assets - Provides enhanced asset protection - Helps to avoid forced liquidation of real estate and business assets - Flexibility of the trusts allows for transfer of ABC Corp interests to key executives when the appropriate time is determined - Heirs can have access to income generated from assets in the trust, while not being burdened with asset management decisions Page 15
  17. 17. GIFT TO GRANTOR DEEMED OWNER TRUST BEN AND AMANDA MORGANBen and Amanda each make a gift of $1,163,750 to their individual GDOT. This gift is designed to give each trust economic substance. BEN BENs GDOT $1,163,750 AMANDA $1,163,750 AMANDAs GDOTIllustration assumes that initial gifts to the GDOTs would represent 7% of your interests in ABC Corp. Page 16
  18. 18. SELL PARTNERSHIP AND CORPORATE SHARES TO EACH GDOT BEN AND AMANDA MORGAN Ben and Amanda sell their family family limited partnership shares, non-voting shares of Ben, Inc and 43% of their shares of ABC Corp to their individual GDOTs for an installment note. Sell their combined family limited partnership shares, non-voting shares of Ben, Inc and 43% of their shares of ABC Corp worth BEN & AMANDA $22,342,404 GDOTs Ben and Amanda own an installment note The GDOTs own LP shares worth $3,972,862, after the sale Receive an installment note non-voting shares of Ben, Inc worth worth $22,342,404 that $4,072,043 and shares in ABC Corp worth provides annual interest $16,625,000 after the sale payments of $949,552 The sale price is based on the assumed value of the assets sold. * The interest rate used in calculating note payments is the long term HEIRS AFR for April 2011 of 4.25%. Note payments also consist of annual principal payments which continue until the note is paid off in 2027. Receive assets in the future according to We make the assumption that in 2019, grantor status is revoked. terms of the trust Since it is no longer a grantor trust, the trust will be responsible for paying its own income tax at that point. Further detailed information regarding Sales to Grantor Deemed Owner Trusts can be found behind the appendix of this plan.Financials found on pg. 75 Page 17
  19. 19. ACHIEVING INHERITANCE GOALS AND LIQUIDITY NEEDS BEN AND AMANDA MORGAN The GDOT Trustees purchase second-to-die life insurance with the assets of the two GDOTs. This policy will have minimum premium payments to keep the policy in place for 15 years. At the end of 15 years, the policy is assumed to be surrendered, and the total premiums paid over 15 years would be refunded. This policy will have the effect of maintaining your goal of passing 75% of your estate as its currently valued over the next 15 years to your children and executive team. GDOTs LIFE INSURANCE Own Life Insurance $30,000,000 Premium Payment Details Premiums in the amount of $246,000 are paid for the first 5 years. Beginning in year 6, premiums in the amount of $63,000 are paid for 10 years. At the end of year 15, if the policy is surrended, all premium payments totaling $1,860,000 would be refunded. The premium is based on certain assumptions. This is for illustration purposes only. Actual insurance numbers can only be determined by applying for insurance.Financials found on pg. 27, 75 Page 18
  20. 20. CREATE A CAPTIVE INSURANCE COMPANY BEN AND AMANDA MORGAN GDOT Trustees create a captive insurance company. The captive is formed to insure currently insured and uninsured risks of ABC CORP. ABC CORP Premium CAPTIVE INSURANCE COMPANY Risk Coverage GDOTs The captive could be a pure captive and owned by a trust for your benefit or for the benefit of your heirs (or both). The decision as to which direction to follow can be made during the feasibility phase. Asset protected and tax favorable trusts could Prior to forming a captive insurance company, there must be a own the non-voting shares of the captive and feasibility study to determine insurable risks. receive underwriting profits Planning Goals Accomplished: - Asset protection - Creates a pool of liquidity in trust - Effective tool for passing a tax advantaged inheritance - Creates income tax deferral for the companyFinancials found on pgs. 70, 71 Page 19
  21. 21. COMPANY INSURES RISKS BEN AND AMANDA MORGAN The Captive Insurance Company insures various risks of loss. Pay maximum annual premiums of $1,200,000 to cover risk of loss. Premiums for insurance are deductible if theyre ordinary ABC CORP CAPTIVE INSURANCE COMPANY and necessary business expenses Risk Coverage UNDERWRITING PROFITSNet premium of up to $1.2M is excludable from captive companyincome if proper tax election is made. Underwriting profits of the captive will ultimately be distributed out to the owner of the captiveFurther detailed information regarding Captive Insurance Companies can be found behind theappendix of this plan. Page 20
  22. 22. POTENTIAL INSURABLE RISKS BEN AND AMANDA MORGANThe Captive Insurance Company must have legitimate business risks to insure and should be well documented.Examples of legitimate insurable risks are as follows:a. Employee Benefitsb. Legal expense reimbursement (plaintiff and defense)c. Loss of key client/accountd. Administrative actione. Business interruptionf. Intellectual propertyg. Political riskh. Patent infringementi. Employment practicesj. Reputationk. Supply chain risksl. Service obligationsm. Long term liabilities Page 21
  23. 23. LEAVE YOUR IRA TO CHARITY BEN AND AMANDA MORGAN At the 2nd death, leave your IRA and qualified plans to charity. IRA $297,222 MORGAN FAMILY FOUNDATIONAdvantagesNo estate taxNo income in respect of a decedent taxIf you are interested in leaving money to charity, IRAs and Qualified Plans are thebest choice due to the heavy taxes on them when left to heirs Page 22
  24. 24. TESTAM TESTAMENTARY CHARITABLE LEAD ANNUITY TRUST (Part I) BEN AND AMANDA MORGAN Include language in your trust or will that creates a testamentary charitable lead trust (TCLAT) at the second death. Alternatively, you could make an outright bequest of your taxable estate to charity. BEN & AMANDA TCLAT At death $34,704,265 of the assets taxable TCLAT owns assets with a value of in your estate will pass to the TCLAT. This $34,704,265 after your death. should bring your estate tax to $0. MORGAN FAMILY FOUNDATION TCLAT Assumptions The charity will receive payments of Asset growth rate 5.00% $1,948,846 each year for a period of 25 years TCLAT payout rate 5.62% totaling $48,721,143. Present value discount rate 5.00% Assumed date of death 2012Financials found on pg. 77 Page 23
  25. 25. TESTAMENTARY CHARITABLE LEAD ANNUITY TRUST (Part II) BEN AND AMANDA MORGAN At the end of the TCLAT term, your heirs will receive all of the assets remaining in the trust. TCLAT HEIRS Based on the plan assumptions, your heirs could expect to inherit $7,237,342 from the At the end of the 25 year term, the TCLAT TCLAT. The amount passing to heirs is a assets will be distributed to your heirs. present value number using a discount rate of 5%. Note: The amount passing to beneficiaries is entirely dependent on the rate of return of the assets in the trust. A higher rate of return means more passing to heirs and a lower rate of return could mean that nothing passes to heirs.Financials found on pg. 77 Page 24
  26. 26. ESTATE PLAN OVERVIEW AND ESTATE DISTRIBUTION - 2012 BEN AND AMANDA MORGAN Gift IRA to Charity at the 2nd death Gifts to existing ILIT NET WORTH Corporate Transfer Property IRA TO CHARITY BEN, INC shares 42,477,862 FLP ILIT Ownership Units 297,222 6,264,681 6,112,095 1,500,000 Receive voting and non- Sell FLP units, non-voting shares voting shares back of Ben, Inc and shares of ABC GDOT purchases life insurance Corp to GDOT GDOT Installment Note Owns FLP units and corporate shares LIFE INSURANCE Seed Gift 30,000,000First Death ADMIN Amanda also owns FAMILY TRUST / AMANDA MARITAL TRUST / AMANDA AMANDA a note from her 3,836,250 179,253 GDOT worth 24,984,765 1,050,390 $11,171,202Second Death ADMIN TCLAT HEIRS 34,704,265 417,553 56,480,890 Heirs From TCLAT Residual estate $3,836,250 Family trust $3,836,250 FAMILY CHARITY Excess FLP value $2,235,389 Excess S Corp value $2,255,493 35,001,488 Value of GDOT $4,180,167 Life insurance proceeds GDOT $30,000,000 Captive Insurance Company in Trust $1,400,000 Proceeds from ILIT $1,500,000 Potential Future Inheritances: Page25 NPV of TCLAT benefits to children $7,237,342
  27. 27. BEN AND AMANDA MORGANMEETING INHERITANCE OBJECTIVES Page 26
  28. 28. MEETING YOUR INHERITANCE GOALS BEN AND AMANDA MORGAN $300,000,000 $250,000,000 $200,000,000 $150,000,000 - $100,000,000 $50,000,000 $- nt 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 re 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 ur C Inheritance Goal - 75% of Estate Proposed Plan Proposed Plan - No InsuranceThis chart shows how the recommended strategies coupled with carefully managed amounts of life insurance will help you to meet your inheritancegoals. Page 27
  29. 29. MEETING YOUR INHERITANCE AND CHARITABLE OBJECTIVES BEN AND AMANDA MORGAN Your Current Plan GROSS ESTATE TODAY $52,363,741 Existing plan distribution of estate to charity, heirs and taxes. MORGAN FAMILY HEIRS TAXES FOUNDATION Children receive $39,043,892 $0 outright. No provision is made for $14,831,327 your senior execs. EXECUTIVE TEAMInherit $0 under the existing plan. Page 28
  30. 30. MEETING YOUR INHERITANCE AND CHARITABLE OBJECTIVES BEN AND AMANDA MORGAN Distribution Under the Proposed Plan GROSS ESTATE TODAY $52,363,741 Proposed plan distribution of estate to charity, heirs, execs and taxes. MORGAN FAMILY HEIRS/EXECUTIVE TEAM TAXES FOUNDATION Executive team and children receive $35,001,488 $49,243,549, which is approx. 94% $0,000 of todays gross estate EXECUTIVE TEAM DYNASTY TRUST/FAMILY BANK Inherits $16,414,516 under the proposed Inherits $32,829,032 under the proposedplan, which is approx. 31% of todays gross plan, which is approx. 63% of todays gross estate estate Page 29
  31. 31. DYNASTY TRUST/FAMILY BANK TO HOLD INHERITANCES BEN AND AMANDA MORGANThe GDOTs should be set-up as Dynasty Trusts. These trusts would hold the inheritances for children, grandchildren and futuregenerations in asset protected and tax advantaged trusts, while protecting heirs from frivolous spending. Heirs would receive annualincome from the trust. The example on this page assumes annual distributions of 3% of the total. This payout could be higher orlower. In addition, payments of principal could be made for health, education, maintenance, support or other items you feel wouldbe appropriate to allow. DYNASTY TRUST/FAMILY BANK FOR CHILDREN $32,829,032 Trust distributes 3% of trust principal annually RENA BETH ANN GLORIA $250,000 $250,000 $250,000 $250,000 Page 30
  32. 32. BEN AND AMANDA MORGANLIFETIME SPENDING AND LIQUIDITY Page 31
  33. 33. YOUR LIQUID ASSETS - CURRENT PLAN VS. PROPOSED PLAN BEN AND AMANDA MORGAN $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 - $400,000 $300,000 $200,000 $100,000 $- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Liquid Assets Proposed Liquid Assets CurrentWhile your stated liquidity goal is at least $1,000,000 of cash/securities, your current business strategy of putting all of your excess cash flow back intothe business does not allow for a build up of liquid assets. We have illustrated your proposed and current liquid assets over time. You could increasethese by decreasing your reinvestments back into the company. Page 32
  34. 34. SPENDING VS. INCOME - PROPOSED PLAN BEN AND AMANDA MORGAN $30,000,000 $25,000,000 $20,000,000 GDOT promissory note $15,000,000 ends - $10,000,000 $5,000,000 GDOT ceases to be a grantor trust and takes over income tax obligations $- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Annual Cash Flow Income Total Living ExpensesThis chart compares cash flow income to cash flow expense under the proposed plan year by year to life expectancy. Page 33
  35. 35. BEN AND AMANDA MORGANINCOME TAX PLANNING Page 34
  36. 36. COMPARISON OF INCOME TAX RESULTS - PLAN YEAR 2012 BEN AND AMANDA MORGAN Existing Plan Proposed Plan Income Tax Deferred 2012 Estimated Income Tax $ 2,700,000 $ 2,200,000 $ 500,000 2013 Estimated Income Tax $ 5,100,000 $ 4,500,000 $ 600,000 2014 Estimated Income Tax $ 7,800,000 $ 7,300,000 $ 500,000 2015 Estimated Income Tax $ 11,100,000 $ 10,600,000 $ 500,000 2016 Estimated Income Tax $ 15,500,000 $ 15,000,000 $ 500,0005 Year Estimated Income Tax Deferred $ 2,600,000 Page 35
  37. 37. BEN AND AMANDA MORGANINCREASE INHERITANCEAND REDUCE ESTATE TAX Page 36
  38. 38. COMPARISON OF PLAN RESULTS - PLAN YEAR 2012 BEN AND AMANDA MORGAN Existing Plan Proposed Plan Advantage Estate Value $ 52,363,741 $ 42,477,862 Heirs/Execs Receive Immediately $ 39,043,892 $ 49,243,549 $ 10,199,656 Heirs Receive from Deferred Inheritance $ - $ 7,237,342 $ 7,237,342 Total Benefits to Family & Executives $ 39,043,892 $ 56,480,890 $ 17,436,998 Family Charity $ - $ 35,001,488 $ 35,001,488 Estate and Income Tax $ 14,831,327 $ - $ 14,831,327This chart assumes that you both die this year and compares the results of the current plan with the proposed plan.Deferred Inheritance is a general approximation based on the long term performance of the TCLAT. Page 37
  39. 39. COMPARISON OF PLAN RESULTS - PLAN YEAR 2038 BEN AND AMANDA MORGAN Existing Plan Proposed Plan Advantage Estate Value $ 725,547,201 $ 312,684,622 Heirs/Execs Receive Immediately $ 324,425,502 $ 475,598,938 $ 151,173,436 Heirs Receive from Deferred Inheritance $ - $ 64,351,036 $ 64,351,036 Total Benefits to Family & Executives $ 324,425,502 $ 539,949,975 $ 215,524,472 Family Charity $ - $ 309,193,873 $ 309,193,873 Estate and Income Tax $ 392,696,058 $ - $ 392,696,058 Present Value of total to Heirs & Executives $91,241,667 $151,855,928 Discount rate for PV calculation 5.00%This chart assumes that you both die at life expectancy and compares the results of the current plan with the proposed plan.Deferred Inheritance is a general approximation based on the long term performance of the TCLAT. Page 38
  40. 40. ASSETS PASSING TO YOUR FAMILY & EXECUTIVES- CURRENT VS. PROPOSED BEN AND AMANDA MORGAN $500,000,000 $450,000,000 $400,000,000 $350,000,000 $300,000,000 $250,000,000 - $200,000,000 $150,000,000 $100,000,000 $50,000,000 $- nt 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 rre 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Cu Current Plan Proposed PlanThis chart compares the amount of your assets that will pass to heirs and execs after estate taxes and costs of implementation in the current plan asagainst the proposed plan. There may be additional funds available to heirs. We have not included them here because of the speculative nature of theinheritance from a TCLAT remainder. Page 39
  41. 41. BEN AND AMANDA MORGAN INCREASE INCHARITABLE GIVING Page 40
  42. 42. COMPARISON OF CHARITY RESULTS - PLAN YEAR 2012 BEN AND AMANDA MORGAN Existing Plan Proposed Plan Increase in Charity Charity Receives from TCLAT $ - $ 34,700,000 $ 34,700,000 Charitable gift of IRA assets $ - $ 300,000 $ 300,000 Family Charity $ - $ 35,000,000 $ 35,000,000Note: An outright bequest to charity would yield a gift of $34,700,000, but your foundation would receive the money all at once. Page 41
  43. 43. COMPARISON OF CHARITY RESULTS - PLAN YEAR 2038 BEN AND AMANDA MORGAN Existing Plan Proposed Plan Increase in Charity Charity Receives from TCLAT $ - $ 308,600,000 $ 308,600,000 Charitable gift of IRA assets $ - $ 600,000 $ 600,000 Family Charity $ - $ 309,200,000 $ 309,200,000 Present Value of total to Charity $0 $86,959,635 Discount rate for PV calculation 5.00%Note: An outright bequest to charity would yield a gift of $308,600,000, but your foundation would receive the money all at once. Page 42
  44. 44. COST BENEFIT ANALYSIS BEN AND AMANDA MORGANAll strategies have an element of risk; a chance that the program adopted does not work as planned. Estate planning strategies carry an element ofrisk as well. Many advisors warn their clients of risk but do not make an effort to quantify those risks. We have taken the position in our planningthat if a risk is quantifiable, it should be identified as such and the cost of the risk should be disclosed to our client. When the risk is notquantifiable, this should also be disclosed.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 $17,436,998 over your existing plan.The reward of the proposed plan results in an advantage to your heirs at life expectancy of $215,524,472 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 toprovide a worst case analysis. Transaction costs Planning Fees - Attorneys Fees - Valuation Fees - Total $ - Annual Maintenance Fee $ - 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 43
  45. 45. COST BENEFIT ANALYSIS (Continued) BEN AND AMANDA MORGANInterest (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 $262,551.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 valuation penalty. Risk Analysis $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $- Benefit to Heirs 2012 Benefit to Heirs 2038 Potential Loss (Total Failure) Page 44
  46. 46. DETAILED FINANCIAL ANALYSIS BEN AND AMANDA MORGAN INTRODUCTIONThe following section of the plan contains all of the financial analysis used to show you where youstand with your current plan and what is possible with the proposed plan.All of the numbers are based on information provided by you or gleaned from statements and taxreturns. If numbers do not look correct, please let us know so that we can make appropriatechanges.Assumed growth and yield numbers are all listed on the Net Worth pages contained in these sections. Page 45
  47. 47. DETAILED FINANCIAL ANALYSIS BEN AND AMANDA MORGAN CURRENT PLAN FINANCIALSIn the Current Plan Section you will find a Net Worth Statement and a detailed cash flow and assetvalue projection analysis. Page 46
  48. 48. CURRENT NET WORTH STATEMENT BEN AND AMANDA MORGAN BEN AMANDA JOINT TOTAL YIELD GROWTHCASH AND EQUIVALENTS Cash - - 29,579 29,579 0.0% 0.0% Savings 9,877 - - 9,877 0.0% 0.0% MM 30,362 - - 30,362 0.0% 0.0% Cash Value of Life Insurance 7,068 - 7,068 0.0% 0.0% Total of Cash and Equivalents 47,307 - 29,579 76,886 0.0% 0.0%MARKETABLE SECURITIES - EQUITIES Securities Account - - 15,976 15,976 2.0% 5.0% Total of Equities - - 15,976 15,976 2.0% 5.0% Page 47
  49. 49. CURRENT NET WORTH STATEMENT (Page 2) BEN AND AMANDA MORGAN 93,250 373,881 8,694,904 13,376,776 BEN AMANDA JOINT TOTAL YIELD GROWTHOTHER INVESTMENTS Morgan Enterprises, LLC - - - - 0.0% 3.0% 1 Main St. 250,000 250,000 - 500,000 0.0% 3.0% Loan - Mortgage - 1 Main St. (86,464) (86,464) - (172,928) 0.0% 3.0% 12 Main St. 2,500,000 2,500,000 - 5,000,000 0.0% 3.0% Loan - Mortgage - 12 Main St. (1,925,000) (1,925,000) - (3,850,000) 0.0% 3.0% 123 Main St. 412,500 412,500 - 825,000 0.0% 3.0% 54 Main St. LLC 6,250 6,250 - 12,500 0.0% 3.0% 55 Main St. Office Building 1,325,000 1,325,000 - 2,650,000 0.0% 3.0% Loan - Mortgage - 55 Main St. (1,288,000) (1,288,000) - (2,576,000) 0.0% 3.0% Open Land, LLC 500,000 500,000 - 1,000,000 0.0% 3.0% Loan - Mortgage - Open Land, LLC (174,786) (164,841) - (339,627) 0.0% 3.0% Community, LLC 30,000 30,000 - 60,000 0.0% 3.0% Cash 69,075 69,075 - 138,150 0.0% 3.0% Technology, LLC (100%) 1,000,000 - - 1,000,000 0.0% 3.0% Note from ABC Corp - 8.59% 1,865,000 - - 1,865,000 0.0% 8.6% Sub-Division, LLC (100%) 1 - - 1 0.0% 3.0% Total of Other Investments 4,483,576 1,628,520 - 6,112,096 0.0% 4.7% 3,247,095 (8,228,018)CLOSELY HELD BUSINESS 6,264,681 (6,592,699) Ben, Inc (50% S Corp) - - - - 0.0% 3.0% Sub-Division Assets 7,000,000 - - 7,000,000 0.0% 3.0% Loan - Mortgage - Sub-division (859,885) - - (859,885) 0.0% 3.0% 55 Land St., LLC 900,000 - - 900,000 0.0% 3.0% 55 Land St., LLC (775,434) - - (775,434) 0.0% 3.0% ABC Corp, Inc (95% S Corp) 33,250,000 - - 33,250,000 19.4% 3.0% Total Closely Held Business 39,514,681 - - 39,514,681 16.3% 3.0% Page 48
  50. 50. CURRENT NET WORTH STATEMENT (Page 3) BEN AND AMANDA MORGAN BEN AMANDA JOINT TOTAL YIELD GROWTHRETIREMENT PLANS/IRAs ABC Corp 401(k) 278,603 - 278,603 0.0% 7.0% Total Retirement Plans 278,603 - 278,603 0.0% 7.0%RESIDENTIAL REAL ESTATE 123 Main St. - - 1,200,000 1,200,000 0.0% 3.0% Total of Personal Residences - - 1,200,000 1,200,000 0.0% 3.0%PERSONAL PROPERTY Autos - 25,000 - 25,000 0.0% 0.0% Personal Property - - 200,000 200,000 0.0% 0.0% Total of Personal Property - 25,000 200,000 225,000 0.0% 0.0%TOTAL ASSETS 44,324,167 1,653,520 1,445,555 47,423,242TOTAL LIABILITIES - - - -NET WORTH 44,324,167 1,653,520 1,445,555 47,423,242 Page 49
  51. 51. SCHEDULE OF LIFE INSURANCE BENEFITS - CURRENT PLAN BEN AND AMANDA MORGAN COMPANY INSURED POLICY # BENEFICIARY PREMIUM CASH VALUE DEATH BENEFITPolicies owned by BenUL Contract Ben # Amanda 7,398 7,068 800,000 Totals 7,398 7,068 800,000Other PoliciesABC Corp Ben # Amanda - - 150,000 Totals - - 150,000Policies owned by ILITWhole Contract 2nd to Die # ILIT 15,692 316,275 1,500,000 Totals 15,692 316,275 1,500,000 Page 50
  52. 52. FINANCIAL ANALYSIS - EXISTING PLAN ASSET VALUE PROJECTIONS - EXISTING PLANYEAR Current 2012 2013 2014 2015 2018 2019 2028 2038Asset ValuesCash and cash equivalents 76,886 76,886 76,886 76,886 76,886 76,886 76,886 76,886 76,886Marketable securities - Equities 15,976 16,739 17,576 18,455 19,377 22,432 23,553 36,539 59,518Other investments 6,112,096 6,386,825 6,687,370 7,002,057 7,331,552 8,416,020 8,812,052 13,329,372 21,111,183Closely held business 6,264,681 6,444,266 6,637,594 6,836,722 7,041,823 7,694,791 7,925,634 10,341,155 13,897,648ABC Corp 33,250,000 37,682,403 44,054,582 53,775,403 67,635,023 127,350,089 148,412,985 367,617,412 686,894,999Retirement plans/IRAs 278,603 297,222 318,028 340,290 364,110 446,051 477,274 601,175 619,873Personal residences 1,200,000 1,234,400 1,271,432 1,309,574 1,348,862 1,473,938 1,518,156 1,980,849 2,662,095Personal property 225,000 225,000 225,000 225,000 225,000 225,000 225,000 225,000 225,000Total assets in estate 47,423,242 52,363,741 59,288,467 69,584,387 84,042,633 145,705,206 167,471,541 394,208,387 725,547,201Combined net worth $ 47,423,242 $ 52,363,741 $ 59,288,467 $ 69,584,387 $ 84,042,633 $ 145,705,206 $ 167,471,541 $ 394,208,387 $ 725,547,201In the event that there is a cash flow surplus, the surplus is added to the ABC Corp row by default. Page 51

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