Taylor Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning

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

Learn more at www.inknowvision.com

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Taylor Family Wealth Goal Achiever - InKnowVision Advanced Estate Planning

  1. 1. InKnowVision’s Monthly HNW Webinar Series Case Study Webinar ©2012. InKnowVision LLC. All rights reserved. www.inknowvision.com
  2. 2. FAMILY WEALTH GOAL ACHIEVER™ - INITIAL PREPARED FOR: MARK AND JACKIE TAYLOR August 2, 2011 DRAFT FOR DISCUSSION PURPOSES ONLY PRESENTED BY Scott Hamilton InKnowVision, LLC 715 Enterprise Drive Oak Brook, IL scott@ikvllc.com Phone: 630-596-5090Copyright 2011 InKnowVision, LLC
  3. 3. YOUR GOALS AND OBJECTIVES MARK AND JACKIE TAYLORMaintain our customary lifestyle. This should take about $250,000 annually after taxes and gifts.Provide for the financial security of the surviving spouse.Maintain adequate liquidity for emergencies and investment opportunities.Provide an inheritance to our children in a manner which will enable them to create opportunities forthemselves but not encourage them to be unproductive.Reduce income taxes to the extent possible.Eliminate or reduce estate taxes. Page 2
  4. 4. FAMILY INFORMATION MARK AND JACKIE TAYLOR CLIENTS Mark Taylor Date of Birth January 5, 1950 Jackie Taylor Date of Birth February 7, 1951 1234 Main Street Chicago, IL 60606 CHILDRENCHILDS NAME DATE OF BIRTH Mark Taylor July 12, 1984 Debbie Taylor February 22, 1988 Page 3
  5. 5. PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - CONSIDERED MARK AND JACKIE TAYLORIn our planning process, we start with the universe of available planning tools. While this universe is constantly changing, the following chartoutlines many of the available tools. We examine each of these strategies and discard those that are not suitable for meeting your goals andobjectives. Charitable Family Limited Grantor Retained Charitable Lead Remainder Uni- 412(e) Private Annuity SCIN Partnership Annuity Trust Annuity Trust Trust Term Life Qualified Personal Sale for Installment Limited Liability GDOT Owned Life Family LLC TCLAT Insurance Residence Trust Note Companies Insurance Conversion Beneficiary Preferred Limited Defective Maximize available ILIT for Jackie & Corporate Premium Finance 529 Plans partnership Inheritors Trust gifting ILIT for children Recapitalization (BDIT) Charitable Life Retirement Plan Transfer Converted Walton GRAT Private Foundations NIMCRUT Asset Protection Estate Rollover to Roth Policies to ILITs Revocable Living Principal Protected Dynasty Trust InternationalSPIA/Life in a CLAT Trusts, DPAs and Crummey Powers GDOT Notes Provisions VUL POAs Supporting Captive Insurance IRA to Charity Gift Annuity Remainder Sales Life Estates LLC/CRTs Organizations Company Charitable Succession Defined Benefit Qualified Plan Bargain Sales Risk Management Remainder Annuity ESOP Planning Planning Plans Limited Partnership Trust Page 4
  6. 6. INTRODUCTION TO THE PLAN STRATEGIES ROADMAP MARK AND JACKIE TAYLORThe 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 5
  7. 7. CREATE AND FUND A FAMILY LIMITED PARTNERSHIP MARK AND JACKIE TAYLOR Mark creates a limited partnership and a management LLC. He receives 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. MARK FAMILY LIMITED PARTNERSHIPReceives LP & LLC interests. LLC interests could be split between Mark & Jackie. LLC GP SHARES LP SHARES 1% 99% Page 6
  8. 8. CREATE AND FUND A FAMILY LIMITED PARTNERSHIP MARK AND JACKIE TAYLOR Mark transfers $5,600,000 of assets to the limited partnership. MARK FAMILY LIMITED PARTNERSHIP $5,600,000 Detail of Assets Transferred Bank 1,000,000 Bank 250,000 Bank 250,000 LLC 1 1,500,000 LLC 2 1,600,000 LLC 3 1,000,000 Total Assets Contributed 5,600,000Note: Check on potential penalties that could be incurred from the early withdraw of the CD and whether they can bewaived. Page 7
  9. 9. HAVE THE LIMITED PARTNERSHIP SHARES APPRAISED MARK AND JACKIE TAYLOR Mark hires an appraiser to value the limited partnership shares that he owns. 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 MARK Appraisal FAMILY LIMITED PARTNERSHIP Valuation adjustmentAppraised value of LP shares is $3,640,000 assumed to be 35% Inside value of assets is $5,600,000 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 8
  10. 10. BUSINESS PURPOSE MARK AND JACKIE TAYLORThe 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 9
  11. 11. CORPORATE RE-CAPITALIZATION MARK AND JACKIE TAYLOR Mark recapitalizes the existing corporate shares into voting and non-voting shares.MARK C CORPORATION VOTING NON-VOTING 1% 99% Businesses To Be Recapitalized Taylor Services (100% equity) 2,000,000 Total 2,000,000 Page 10
  12. 12. HAVE THE NON-VOTING SHARES APPRAISED MARK AND JACKIE TAYLORMark hires an appraiser to value the non-voting shares. 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 corporations MARK Appraisal C CORPORATION Adjusted value of non-voting shares is Valuation adjustment assumed to be 35% Inside value of assets is $2,000,000 $1,300,000The assumed value of the non-voting stock is for illustration purposes only.Note: Business appraisal is not an exact science. The IRS does not like valuation adjustments.A well regarded appraiser should be retained to value the interests being sold. Page 11
  13. 13. CREATE GRANTOR DEEMED OWNER TRUST MARK AND JACKIE TAYLOR Mark creates a grantor deemed owner trust (GDOT).MARK MARKs GDOT HEIRS Beneficiaries include Jackie and children Page 12
  14. 14. GIFT TO GRANTOR DEEMED OWNER TRUST MARK AND JACKIE TAYLOR Mark makes a gift of $3,640,000 to his GDOT. This gift is designed to maximize his available gifting exemption. MARK Gift of the limited partnership MARKs GDOT shares worth $3,640,000 Owns LP shares worth $3,640,000Planning 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 - Heirs can have access to income generated from assets in the trust, while not being burdened with asset management decisions - Maximizes use of available exemption Page 13
  15. 15. CREATE IRREVOCABLE LIFE INSURANCE TRUST MARK AND JACKIE TAYLORMark & Jackie create a new Irrevocable Life Insurance Trust (ILIT). This trust is established to keep insurance proceeds and otherassets in a tax favored and asset protected structure for the benefit of your children. MARK & JACKIE ILIT FOR CHILDREN HEIRS Page 14
  16. 16. GIFT TO IRREVOCABLE LIFE INSURANCE TRUST MARK AND JACKIE TAYLOR Jackie makes a gift of $1,300,000 to the childrens ILIT. This gift is designed to maximize her available gifting exemption. Gift of non-voting stock in JACKIE Taylor Services worth ILIT FOR CHILDREN $1,300,000 Owns non-voting stock in Taylor Services worth $1,300,000Note: Mark must gift stock of Taylor Services to Jackie prior to transferring these interests to the ILIT.Planning Goals Accomplished: - Controls assets so inheritance provides opportunities while minimizing problems for children, grandchildren and future generations. - Provides enhanced asset protection - Heirs can have access to income generated from assets in the trust, while not being burdened with asset management decisions - Maximizes use of available exemption Page 15
  17. 17. CONVERT EXISTING TERM INSURANCE POLICIES MARK AND JACKIE TAYLOR MARKOwns a term policy on his life with annualpremiums of $4,910 and a death benefit of $1,000,000. Policy expires in 2027. Convert two term MARK AND JACKIE policies to one survivorship UL policy Own a survivorship policy for life with annual premiums of $17,338 and a death benefit of $2,000,000 JACKIEOwns a term policy on her life with annualpremiums of $2,259 and a death benefit of $1,000,000. Policy expires in 2027. 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 16
  18. 18. CONVERT EXISTING TERM INSURANCE POLICY MARK AND JACKIE TAYLOR MARK AND JACKIE Own a survivorship policy for life with annual premiums of $19,521 and a death benefit of Convert term policy $2,000,000. Policys primary beneficiaries are into a UL for the your children. benefit of Jackie and a MARK Survivorship UL for the benefit of the childrenOwns a term policy on his life with annualpremiums of $32,585 and a death benefit of $5,000,000. Policy expires in 2029. MARK Owns a UL policy on his life with annual premiums of $58,675 and a death benefit of $3,000,000. Policys primary beneficiary is Jackie. 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 17
  19. 19. INTERNAL RATE OF RETURN ON LIFE INSURANCE MARK AND JACKIE TAYLOR MARKS AGE JACKIES AGE YEAR PREMIUM DEATH BENEFIT IRR 62 60 2011 17,338 2,000,000 11435.36% 63 61 2012 17,338 2,000,000 925.19% 64 62 2013 17,338 2,000,000 349.26% 65 63 2014 17,338 2,000,000 196.68% 66 64 2015 17,338 2,000,000 131.53% 67 65 2016 17,338 2,000,000 96.56% 68 66 2017 17,338 2,000,000 75.11% 69 67 2018 17,338 2,000,000 60.75% 70 68 2019 17,338 2,000,000 50.55% 71 69 2020 17,338 2,000,000 42.96% 72 70 2021 17,338 2,000,000 37.12% 73 71 2022 17,338 2,000,000 32.51% 74 72 2023 17,338 2,000,000 28.77% 75 73 2024 17,338 2,000,000 25.70% 76 74 2025 17,338 2,000,000 23.13% 77 75 2026 17,338 2,000,000 20.95% 78 76 2027 17,338 2,000,000 19.09% 79 77 2028 17,338 2,000,000 17.48% 80 78 2029 17,338 2,000,000 16.07% 81 79 2030 17,338 2,000,000 14.83% 82 80 2031 17,338 2,000,000 13.74% 83 81 2032 17,338 2,000,000 12.77% 84 82 2033 17,338 2,000,000 11.89% 85 83 2034 17,338 2,000,000 11.11% 86 84 2035 17,338 2,000,000 10.40% 87 85 2036 17,338 2,000,000 9.76% 88 86 2037 17,338 2,000,000 9.17% 89 87 2038 17,338 2,000,000 8.64% 90 88 2039 17,338 2,000,000 8.15% 91 89 2040 17,338 2,000,000 7.69% 92 90 2041 17,338 2,000,000 7.28% 93 91 2042 17,338 2,000,000 6.89%Converted Survivorship UL. Assumes joint life expectancy of 2037. Page 18
  20. 20. INTERNAL RATE OF RETURN ON LIFE INSURANCE MARK AND JACKIE TAYLOR MARKS AGE JACKIES AGE YEAR PREMIUM DEATH BENEFIT IRR 62 60 2011 19,521 2,000,000 10145.38% 63 61 2012 19,521 2,000,000 863.43% 64 62 2013 19,521 2,000,000 330.24% 65 63 2014 19,521 2,000,000 186.89% 66 64 2015 19,521 2,000,000 125.23% 67 65 2016 19,521 2,000,000 92.00% 68 66 2017 19,521 2,000,000 71.55% 69 67 2018 19,521 2,000,000 57.85% 70 68 2019 19,521 2,000,000 48.10% 71 69 2020 19,521 2,000,000 40.84% 72 70 2021 19,521 2,000,000 35.25% 73 71 2022 19,521 2,000,000 30.83% 74 72 2023 19,521 2,000,000 27.25% 75 73 2024 19,521 2,000,000 24.31% 76 74 2025 19,521 2,000,000 21.84% 77 75 2026 19,521 2,000,000 19.76% 78 76 2027 19,521 2,000,000 17.97% 79 77 2028 19,521 2,000,000 16.43% 80 78 2029 19,521 2,000,000 15.08% 81 79 2030 19,521 2,000,000 13.90% 82 80 2031 19,521 2,000,000 12.85% 83 81 2032 19,521 2,000,000 11.92% 84 82 2033 19,521 2,000,000 11.09% 85 83 2034 19,521 2,000,000 10.34% 86 84 2035 19,521 2,000,000 9.66% 87 85 2036 19,521 2,000,000 9.04% 88 86 2037 19,521 2,000,000 8.48% 89 87 2038 19,521 2,000,000 7.97% 90 88 2039 19,521 2,000,000 7.50% 91 89 2040 19,521 2,000,000 7.07% 92 90 2041 19,521 2,000,000 6.67% 93 91 2042 19,521 2,000,000 6.31%Converted Survivorship UL. Assumes joint life expectancy of 2037. Page 19
  21. 21. INTERNAL RATE OF RETURN ON LIFE INSURANCE MARK AND JACKIE TAYLOR MARKS AGE YEAR PREMIUM DEATH BENEFIT IRR 62 2011 58,675 3,000,000 5012.91% 63 2012 58,675 3,000,000 566.79% 64 2013 58,675 3,000,000 232.47% 65 2014 58,675 3,000,000 134.70% 66 2015 58,675 3,000,000 90.89% 67 2016 58,675 3,000,000 66.70% 68 2017 58,675 3,000,000 51.60% 69 2018 58,675 3,000,000 41.38% 70 2019 58,675 3,000,000 34.07% 71 2020 58,675 3,000,000 28.60% 72 2021 58,675 3,000,000 24.38% 73 2022 58,675 3,000,000 21.04% 74 2023 58,675 3,000,000 18.33% 75 2024 58,675 3,000,000 16.11% 76 2025 58,675 3,000,000 14.25% 77 2026 58,675 3,000,000 12.68% 78 2027 58,675 3,000,000 11.34% 79 2028 58,675 3,000,000 10.18% 80 2029 58,675 3,000,000 9.17% 81 2030 58,675 3,000,000 8.28% 82 2031 58,675 3,000,000 7.50% 83 2032 58,675 3,000,000 6.81% 84 2033 58,675 3,000,000 6.19% 85 2034 58,675 3,000,000 5.64% 86 2035 58,675 3,000,000 5.14% 87 2036 58,675 3,000,000 4.68%Converted UL on Mark. Assumes Marks life expectancy of 2031. Page 20
  22. 22. TRANSFER CONVERTED INSURANCE TO NEW ILIT MARK AND JACKIE TAYLOR Mark creates a new Irrevocable Life Insurance Trust (ILIT). This trust will be set-up for Jackie to be the primary beneficiary and will keep insurance proceeds in a tax favored and asset protected structure. MARK Gift existing policy to ILIT. ILIT FOR JACKIEOwns life insurance personally with annual Make annual gifts of $13,000 to make premium payments.* Owns life insurance with a death benefit ofpremiums of $58,675 and a death benefit of $3,000,000 $3,000,000 Policy proceeds will be included in the taxable estate if Mark dies within three years of the date of the gift. HEIRS Estate tax savings from transfer of this policy could be as much as $1,500,000 * Additional funds for premium payments may come as Jackie will be the primary beneficiary discretionary distributions from cash inside of the GDOT. ** Gift of the policy is a use of Marks lifetime gift exclusion. We assume a gift value of the first years premium of $58,675 for this illustration. *** Transfer may occur prior to policy conversion. Page 21
  23. 23. TRANSFER CONVERTED INSURANCE TO NEW ILIT MARK AND JACKIE TAYLOR Mark & Jackie gift the survivorship policies to the ILIT for their children. This trust will hold insurance proceeds in a tax favored and asset protected structure for the benefit of your children. MARK AND JACKIE Gift existing policies to ILIT ILIT FOR CHILDRENOwn survivorship life insurance policies personally Make annual gifts of $36,859 to make premium payments Owns life insurance with a death benefit of with annual premiums of $19,521 and $17,338 $4,000,000 with a combined death benefit of $4,000,000 Policy proceeds will be included in the taxable estate if death occurs within three years of the date of the gift. HEIRS Estate tax savings from transfer of this policy could be as much as $2,000,000 Children and future generations ** Gift of the policy is a use of Mark & Jackies lifetime gift exclusion. We assume a total gift value of the first years premium of $36,859 for this illustration. *** Transfer may occur prior to policy conversion. Page 22
  24. 24. INSURANCE BENEFITS - CURRENT VS. PROPOSED MARK AND JACKIE TAYLOR $8,000,000 $7,000,000 $6,000,000 Gifted insurance policies not subject to estate tax $5,000,000 $4,000,000 - Term policy $3,000,000 expirations $2,000,000 $1,000,000 $- nt 11 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 re 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 ur C Current Plan Proposed PlanThis chart compares the net after-tax benefit of insurance proceeds of the existing term policies as against the converted and transferredpolicies under the proposed plan. Page 23
  25. 25. RETIREMENT PLAN ROLLOVER MARK AND JACKIE TAYLOR Rollover $1,000,000 from your existing retirement plans into a Roth IRA. EXISTING RETIREMENT PLAN $1,000,000 ROTH IRANote: To the extent that real estate losses continue, use operating losses to shelter distributions from defined benefits if possible.AdvantagesNo income tax on future Roth IRA growth or plan distributionsLocks in the tax savings from the Net Operating Losses against potential changes in future tax lawNo income in respect of a decedent taxEstimated tax savings at 35% = $350,000 todayNote: Need to consult with current defined benefit actuary to determine feasibility. Page 24
  26. 26. PERIODIC TABLE OF ESTATE PLANNING ELEMENTS - RECOMMENDED MARK AND JACKIE TAYLORThe 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 Term Life Qualified Personal Sale for Installment Limited Liability GDOT Owned Life Family LLC TCLAT Insurance Residence Trust Note Companies Insurance Conversion Beneficiary Preferred Limited Maximize available ILIT for Jackie & Corporate Premium Finance Defective Inheritors 529 Plans partnership gifting ILIT for children Recapitalization Trust (BDIT) Retirement Plan Transfer Converted Walton GRAT Private Foundations Charitable Life Estate NIMCRUT Asset Protection Rollover to Roth Policies to ILITs Revocable Living Principal Protected Dynasty Trust InternationalSPIA/Life in a CLAT Trusts, DPAs and Crummey Powers GDOT Notes Provisions VUL POAs Supporting Captive Insurance IRA to Charity Gift Annuity Remainder Sales Life Estates LLC/CRTs Organizations 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 25
  27. 27. MARK AND JACKIE TAYLORLIFETIME SPENDING AND LIQUIDITY Page 26
  28. 28. PERSONAL SPENDING VS. INCOME - PROPOSED PLAN MARK AND JACKIE TAYLOR $600,000 $550,000 Begin date for required $500,000 retirement plan distributions $450,000 $400,000 - $350,000 $300,000 $250,000 Living expenses reduced to $200,000 $200,000 11 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 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 your personal cash flow income to cash flow expense under the proposed plan year by year. Page 27
  29. 29. YOUR LIQUID ASSETS - PROPOSED PLAN MARK AND JACKIE TAYLOR $9,000,000 $8,000,000 $7,000,000 $6,000,000 - $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- 11 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 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 PlanMost of our clients want to know that they have sufficient income and liquid assets to pay their living expenses for the rest of their lives. This chartshows your liquid assets over your life expectancy in the proposed plan. Liquid assets include cash, stocks, bonds, annuities and qualified retirementaccounts but do not include any other assets you might own such as promissory notes, businesses or real estate. Page 28
  30. 30. MARK AND JACKIE TAYLORINCREASE INHERITANCEAND REDUCE ESTATE TAX Page 29
  31. 31. COMPARISON OF PLAN RESULTS - PLAN YEAR 2011 MARK AND JACKIE TAYLOR Existing Plan Proposed Plan Advantage Estate Value $ 11,575,522 $ 3,877,719 Heirs Receive Immediately $ 15,404,330 $ 16,179,263 $ 774,933 Total Benefits to Family $ 15,404,330 $ 16,179,263 $ 774,933 Estate and Income Tax $ 2,910,024 $ 2,140,183 $ 769,841This chart assumes that you both die this year and compares the results of the current plan with the proposed plan. Page 30
  32. 32. COMPARISON OF PLAN RESULTS - PLAN YEAR 2014 MARK AND JACKIE TAYLOR Existing Plan Proposed Plan Advantage Estate Value $ 12,946,363 $ 4,524,488 Heirs Receive Immediately $ 9,727,520 $ 17,344,675 $ 7,617,155 Total Benefits to Family $ 9,727,520 $ 17,344,675 $ 7,617,155 Estate and Income Tax $ 9,898,524 $ 2,270,038 $ 7,628,486This chart assumes that you both die in 2014, and reflects the benefit of having the life insurance proceeds outside ofthe taxable estate after 3 years. Page 31
  33. 33. COMPARISON OF PLAN RESULTS - PLAN YEAR 2037 MARK AND JACKIE TAYLOR Existing Plan Proposed Plan Advantage Estate Value $ 27,627,337 $ 10,096,308 Heirs Receive Immediately $ 13,136,527 $ 28,955,443 $ 15,818,917 Total Benefits to Family $ 13,136,527 $ 28,955,443 $ 15,818,917 Estate and Income Tax $ 14,065,088 $ 5,335,132 $ 8,729,956 Present Value of total to Heirs $6,091,338 $13,426,486 Discount rate for PV calculation 3.00%This chart assumes that you both die at life expectancy and compares the results of the current plan with the proposed plan.The present value of the total passing to heirs is our attempt to put inheritance into todays dollars to provide perspective.We are using an inflation rate of 3% to calculate the present value numbers. Page 32
  34. 34. COMPARISON OF PLAN RESULTS - PLAN YEAR 2037 MARK AND JACKIE TAYLOR Existing Plan Proposed Plan - TCLAT Advantage Estate Value $ 27,627,337 $ 10,096,308 Heirs Receive Immediately $ 13,136,527 $ 24,390,355 $ 11,253,828 Heirs Receive from Deferred Inheritance $ - $ 1,892,475 $ 1,892,475 Total Benefits to Family $ 13,136,527 $ 26,282,830 $ 13,146,304 Family Charity $ - $ 9,900,221 $ 9,900,221 Estate and Income Tax $ 14,065,088 $ - $ 14,065,088 Present Value of total to Heirs $6,091,338 $12,187,210 Discount rate for PV calculation 3.00%This chart assumes that you both die at life expectancy and compares the results of the current plan with the proposed plan.Taxes are eliminated by giving the retirement funds to charity at the 2nd death and funding a Testamentary Charitable Lead Annuity Trust(TCLAT) at the 2nd death with any other assets subject to estate taxes.Deferred Inheritance is a general approximation based on the long term performance of the TCLAT. Page 33
  35. 35. ASSETS PASSING TO YOUR FAMILY - CURRENT VS. PROPOSED MARK AND JACKIE TAYLOR $32,000,000 $28,000,000 $24,000,000 Gifted insurance policies no longer subject to estate tax $20,000,000 - Term insurance policy expirations $16,000,000 $12,000,000 $8,000,000 nt 11 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 re 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 ur C Current Plan Proposed PlanThis chart compares the amount of your assets that will pass to heirs after estate taxes and costs of implementation in the current plan as against theproposed plan. Page 34
  36. 36. DETAILED FINANCIAL ANALYSIS MARK AND JACKIE TAYLOR 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 35
  37. 37. DETAILED FINANCIAL ANALYSIS MARK AND JACKIE TAYLOR CURRENT PLAN FINANCIALSIn the Current Plan Section you will find a Net Worth Statement and a detailed cash flow and assetvalue projection analysis. Page 36
  38. 38. CURRENT NET WORTH STATEMENT MARK AND JACKIE TAYLOR MARK JACKIE JOINT TOTAL YIELD GROWTHCASH AND EQUIVALENTS Bank - 1,200,000 - 1,200,000 1.0% 0.0% Bank 200,000 250,000 - 450,000 1.0% 0.0% Bank - 250,000 - 250,000 1.0% 0.0% Bank 95,000 - - 95,000 1.0% 0.0% Bank 40,000 - - 40,000 1.0% 0.0% Bank 73,000 - - 73,000 1.0% 0.0% Bank 160,000 - - 160,000 1.0% 0.0% Total of Cash and Equivalents 568,000 1,700,000 - 2,268,000 1.0% 0.0% Page 37
  39. 39. CURRENT NET WORTH STATEMENT (Page 2) MARK AND JACKIE TAYLOR MARK JACKIE JOINT TOTAL YIELD GROWTHREAL ESTATE INVESTMENTS LLC 1 1,500,000 - - 1,500,000 -11.5% 5.0% LLC 2 1,200,000 400,000 - 1,600,000 -2.2% 5.0% LLC 3 1,000,000 - - 1,000,000 -12.6% 5.0% LLC 4 1,300,000 - - 1,300,000 -7.7% 0.0% Total of Real Estate Investments 5,000,000 400,000 - 5,400,000 -8.0% 3.8%CLOSELY HELD BUSINESS Taylor Services (100% equity) 2,000,000 - - 2,000,000 0.0% 0.0% Total Closely Held Business 2,000,000 - - 2,000,000 0.0% 0.0%RETIREMENT PLANS/IRAs Taylor Services DB 2,364,564 - 2,364,564 0.0% 3.0% Taylor Services 401(k) 156,468 - 156,468 0.0% 3.0% Taylor Services PSP 258,530 - 258,530 0.0% 3.0% Taylor Services 401(k) - 145,145 145,145 0.0% 3.0% Total Retirement Plans 2,779,562 145,145 2,924,707 0.0% 3.0% Page 38
  40. 40. CURRENT NET WORTH STATEMENT (Page 3) MARK AND JACKIE TAYLOR MARK JACKIE JOINT TOTAL YIELD GROWTHRESIDENTIAL REAL ESTATE 1234 Main Street 1,500,000 - - 1,500,000 0.0% 3.0% Total of Personal Residences 1,500,000 - - 1,500,000 0.0% 3.0%PERSONAL PROPERTY Autos 255,000 - - 255,000 0.0% 0.0% Jewelry & Watches 700,000 - - 700,000 0.0% 0.0% Total of Personal Property 955,000 - - 955,000 0.0% 0.0%TOTAL ASSETS 12,802,562 2,245,145 - 15,047,707LIABILITIES 1234 Main Street 1,000,000 - - 1,000,000 Notes Payable - Bank (unsecured) 400,000 - - 400,000 Notes Payable - Bank (unsecured) 1,000,000 - - 1,000,000 Total Liabilities 2,400,000 - - 2,400,000COMMERCIAL LIABILITIES Notes Payable - LLC 4 1,300,000 - - 1,300,000 Total Commercial Liabilities 1,300,000 - - 1,300,000TOTAL LIABILITIES 3,700,000 - - 3,700,000NET WORTH 9,102,562 2,245,145 - 11,347,707 Page 39
  41. 41. SCHEDULE OF LIFE INSURANCE BENEFITS - CURRENT PLAN MARK AND JACKIE TAYLOR COMPANY INSURED POLICY # BENEFICIARY PREMIUM CASH VALUE DEATH BENEFITPolicies owned by MarkCompany (term - 20yr) Mark # Jackie 32,585 - 5,000,000Company (term - 20yr) Mark # Jackie 4,910 - 1,000,000 Totals 37,495 - 6,000,000Policies owned by JackieCompany (term - 20yr) Jackie # Mark 2,259 - 1,000,000 Totals 2,259 - 1,000,000 Page 40
  42. 42. FINANCIAL ANALYSIS - EXISTING PLAN ASSET VALUE PROJECTIONS - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Asset ValuesCash and cash equivalents 2,268,000 2,300,926 2,329,181 2,352,619 2,371,089 2,384,438 2,531,764 3,875,248 7,738,724Real estate investments 5,400,000 5,472,698 5,680,458 5,896,105 6,119,939 6,352,270 7,653,114 9,220,352 14,418,822Closely held business 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000Retirement plans/IRAs 2,924,707 3,030,900 3,196,827 3,367,732 3,543,763 3,725,076 4,553,530 4,293,204 2,945,403Personal residences 1,500,000 1,515,998 1,561,478 1,608,322 1,656,572 1,706,269 1,978,033 2,293,083 3,269,388Personal property 955,000 955,000 955,000 955,000 955,000 955,000 955,000 955,000 955,000Total assets in estate 15,047,707 15,275,522 15,722,944 16,179,778 16,646,363 17,123,053 19,671,442 22,636,886 31,327,337Less estimated liabilities (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000)Combined net worth $ 11,347,707 $ 11,575,522 $ 12,022,944 $ 12,479,778 $ 12,946,363 $ 13,423,053 $ 15,971,442 $ 18,936,886 $ 27,627,337In the event that there is a cash flow surplus, the surplus is added to the cash 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 cash.No calculations are illustrated which: - Reduce debt - Account for depreciation of real estate - Account for sale of real estate Page 41
  43. 43. TAXABLE INCOME PROJECTIONS - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Sources of taxable incomeCash and cash equivalents 22,680 23,009 23,292 23,526 23,711 23,834 35,980 73,967Real estate investments (434,465) (434,465) (434,465) (434,465) (434,465) (434,465) (434,465) (434,465)Retirement plans/IRAs - - - - - 163,040 197,519 242,582Net Operating Loss Carryover (950,000) (950,000) (950,000) (950,000) (950,000) (950,000) (950,000) (950,000)Client earned income 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000Spouse earned income 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000Gross taxable income $ (1,061,785) $ (1,061,456) $ (1,061,173) $ (1,060,939) $ (1,060,754) $ (897,591) $ (850,966) $ (767,916) Page 42
  44. 44. INCOME TAX PROJECTIONS - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Income tax EstimationAdjusted gross income:Earned and other income (1,061,785) (1,061,456) (1,061,173) (1,060,939) (1,060,754) (897,591) (850,966) (767,916) Adjusted gross income (1,061,785) (1,061,456) (1,061,173) (1,060,939) (1,060,754) (897,591) (850,966) (767,916)DeductionsReal estate tax 21,692 21,692 22,126 22,568 23,020 23,480 25,924 28,622 36,300Illinois state income taxes - - - - - - - -Interest 3,279 3,279 3,345 3,411 3,480 3,549 3,919 4,327 5,487Total deductions 24,971 25,470 25,980 26,499 27,029 29,843 32,949 41,787Deductions allowed 24,971 25,470 25,980 26,499 27,029 29,843 32,949 41,787Taxable income (1,086,756) (1,086,926) (1,087,153) (1,087,438) (1,087,784) (927,434) (883,915) (809,703)Federal and State income tax $ - $ - $ - $ - $ - $ - $ - $ - Page 43
  45. 45. CASH FLOW PROJECTIONS - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Sources of income for LifestyleDistribution from Cash - - - - - - - -Cash and cash equivalents 22,680 23,009 23,292 23,526 23,711 23,834 35,980 73,967Client earned income 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000Spouse earned income 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000Retirement plans/IRAs - - - - - 163,040 197,519 242,582Total income available for lifestyle 322,680 323,009 323,292 323,526 323,711 486,874 533,499 616,549Uses of CashLiving expenses 1 250,000 255,000 260,100 265,302 270,608 298,773 216,486 274,557Personally held insurance premiums 39,754 39,754 39,754 39,754 39,754 39,754 39,754 -Total uses of cash 289,754 294,754 299,854 305,056 310,362 338,527 256,240 274,557Surplus $ 32,926 $ 28,255 $ 23,438 $ 18,470 $ 13,349 $ 148,347 $ 277,258 $ 341,9921 Assumes that in 2021, livings expenses decrease to $200,000.In the event that there is a cash flow surplus, the surplus is added to the cash 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 cash onthe "Asset Value Projections" 3 pages earlier. Page 44
  46. 46. FIRST ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Tax calculation on Marks deathCombined net worth 11,347,707 11,575,522 12,022,944 12,479,778 12,946,363 13,423,053 15,971,442 18,936,886 27,627,337Marks estimated estate 9,102,562 9,285,304 9,644,203 10,010,652 10,384,924 10,767,301 12,811,491 15,190,221 22,161,265Death benefit exceeding CV 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 -Total gross estate 15,102,562 15,285,304 15,644,203 16,010,652 16,384,924 16,767,301 18,811,491 21,190,221 22,161,265Settlement expenses (100,513) (101,427) (103,221) (105,053) (106,925) (108,837) (119,057) (130,951) (135,806)Joint, personal and IRA to Jackie (3,734,562) (3,835,485) (3,993,177) (4,155,600) (4,322,896) (4,495,211) (5,282,551) (5,035,144) (3,754,231)Insurance passing to Jackie (6,000,000) (6,000,000) (6,000,000) (6,000,000) (6,000,000) (6,000,000) (6,000,000) (6,000,000) -Outright or in trust to Jackie (267,487) (348,392) (547,805) (4,749,999) (4,955,103) (5,163,253) (6,409,882) (9,024,126) (17,271,228)Taxable estate 5,000,000 5,000,000 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Tax base 5,000,000 5,000,000 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Federal Estate Tax - - - - - - - - -Distribution of Marks estateSettlement expenses 100,513 101,427 103,221 105,053 106,925 108,837 119,057 130,951 135,806To family trust 5,000,000 5,000,000 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Joint, personal and IRA to Jackie 3,734,562 3,835,485 3,993,177 4,155,600 4,322,896 4,495,211 5,282,551 5,035,144 3,754,231Insurance passing to Jackie 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 -Outright or in trust to Jackie 267,487 348,392 547,805 4,749,999 4,955,103 5,163,253 6,409,882 9,024,126 17,271,228Total $ 15,102,562 $ 15,285,304 $ 15,644,203 $ 16,010,652 $ 16,384,924 $ 16,767,301 $ 18,811,491 $ 21,190,221 $ 22,161,265AssumptionsWe assume that Mark dies first, followed immediately by Jackie.Taxes under "Distribution of First Estate" include estate and income taxes. Page 45
  47. 47. SECOND ESTATE TAX ESTIMATION AND DISTRIBUTION - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Tax Calculation on Jackies deathJackies assets 2,245,145 2,290,218 2,378,741 2,469,125 2,561,439 2,655,752 3,159,951 3,746,665 5,466,071Death benefit exceeding CV 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 -Plus assets from Marks estate 10,002,049 10,183,877 10,540,982 14,905,599 15,277,999 15,658,464 17,692,433 20,059,270 21,025,459Jackies estimated estate 13,247,194 13,474,095 13,919,723 18,374,724 18,839,439 19,314,217 21,852,385 24,805,935 26,491,530Settlement expenses (157,472) (159,741) (164,197) (208,747) (213,394) (218,142) (243,524) (273,059) (289,915)Jackies taxable estate 13,089,722 13,314,354 13,755,526 18,165,977 18,626,044 19,096,074 21,608,861 24,532,876 26,201,615Tax base 13,089,722 13,314,354 13,755,526 18,165,977 18,626,044 19,096,074 21,608,861 24,532,876 26,201,615Federal Estate Tax 2,831,403 2,910,024 3,064,434 9,645,487 9,898,524 10,157,041 11,539,073 13,147,282 14,065,088Total Estate Tax Due 2,831,403 2,910,024 3,064,434 9,645,487 9,898,524 10,157,041 11,539,073 13,147,282 14,065,088Distribution of Jackies estateSettlement expenses 157,472 159,741 164,197 208,747 213,394 218,142 243,524 273,059 289,915Taxes 2,831,403 2,910,024 3,064,434 9,645,487 9,898,524 10,157,041 11,539,073 13,147,282 14,065,088Qualified plan to heirs 2,924,707 3,030,900 3,196,827 3,367,732 3,543,763 3,725,076 4,553,530 4,293,204 2,945,403Insurance passing to heirs 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 -Residual estate to heirs 6,333,612 6,373,431 6,494,265 4,152,758 4,183,756 4,213,957 4,516,257 6,092,391 9,191,124Total $ 13,247,194 $ 13,474,095 $ 13,919,723 $ 18,374,724 $ 18,839,439 $ 19,314,217 $ 21,852,385 $ 24,805,935 $ 26,491,530AssumptionsWe assume that Mark dies first, followed immediately by Jackie.Taxes under "Distribution of Second Estate" include estate and income taxes. Page 46
  48. 48. SUMMARY OF BENEFITS TO FAMILY - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Benefits to FamilyFamily trust 5,000,000 5,000,000 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Residual estate 7,333,612 7,373,431 7,494,265 5,152,758 5,183,756 5,213,957 5,516,257 7,092,391 9,191,124Qualified plan assets 2,924,707 3,030,900 3,196,827 3,367,732 3,543,763 3,725,076 4,553,530 4,293,204 2,945,403Total assets to heirs $ 15,258,319 $ 15,404,330 $ 15,691,092 $ 9,520,490 $ 9,727,520 $ 9,939,033 $ 11,069,787 $ 12,385,594 $ 13,136,527 Page 47
  49. 49. DETAILS OF MARKS QUALIFIED PLAN - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Marks Qualified PlansMarks Age 62 63 64 65 66 71 76 88Jackies Age 60 61 62 63 64 69 74 86Minimum distribution factor 34.9 33.9 33.0 32.0 31.1 26.5 22.0 12.7Plan contributions 75,000 75,000 75,000 75,000 75,000 75,000 - -Plan balance 2,779,562 2,884,207 3,045,733 3,212,105 3,383,468 3,559,972 4,362,129 4,103,696 2,806,898Minimum distribution - - - - - 163,040 189,460 232,340Preferred distribution - - - - - - - -Actual distribution - - - - - 163,040 189,460 232,340 Page 48
  50. 50. DETAILS OF JACKIES QUALIFIED PLAN - EXISTING PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Jackies Qualified PlansJackies Age 60 61 62 63 64 69 74 86Marks Age 62 63 64 65 66 71 76 88Minimum distribution factor 36.8 35.8 34.9 33.9 33.0 28.3 23.8 14.1Plan contributions - - - - - - - -Plan balance 145,145 146,693 151,094 155,627 160,295 165,104 191,401 189,508 138,505Minimum distribution - - - - - - 8,059 10,242Preferred distribution - - - - - - - -Actual distribution - - - - - - 8,059 10,242 Page 49
  51. 51. DETAILED FINANCIAL ANALYSIS MARK AND JACKIE TAYLOR PROPOSED PLAN FINANCIALSIn the Proposed Plan Section you will find a balance sheet which reflects the repositioning of assetsas set out in the step by step roadmap in the proceeding section. You will also find detailed cashflow and asset projection information on each of the proposed planning strategies. Page 50
  52. 52. NET WORTH STATEMENT AFTER PLAN IMPLEMENTATION MARK AND JACKIE TAYLOR MARK JACKIE JOINT TOTAL YIELD GROWTHCASH AND EQUIVALENTS Bank - 200,000 - 200,000 1.0% 0.0% Bank 200,000 - - 200,000 1.0% 0.0% Bank 95,000 - - 95,000 1.0% 0.0% Bank 40,000 - - 40,000 1.0% 0.0% Bank 73,000 - - 73,000 1.0% 0.0% Bank 160,000 - - 160,000 1.0% 0.0% Total of Cash and Equivalents 568,000 200,000 - 768,000 1.0% 0.0%REAL ESTATE INVESTMENTS LLC 4 1,300,000 - - 1,300,000 -7.7% 0.0% Total of Real Estate Investments 1,300,000 - - 1,300,000 -7.7% 0.0%RETIREMENT PLANS/IRAs Taylor Services DB 2,364,564 - 2,364,564 0.0% 3.0% Taylor Services 401(k) 156,468 - 156,468 0.0% 3.0% Taylor Services PSP 258,530 - 258,530 0.0% 3.0% Taylor Services 401(k) - 145,145 145,145 0.0% 3.0% Total Retirement Plans 2,779,562 145,145 2,924,707 0.0% 3.0% Page 51
  53. 53. REVISED NET WORTH STATEMENT (Page 2) MARK AND JACKIE TAYLOR MARK JACKIE JOINT TOTAL YIELD GROWTHRESIDENTIAL REAL ESTATE 1234 Main Street 1,500,000 - - 1,500,000 0.0% 3.0% Total of Personal Residences 1,500,000 - - 1,500,000 0.0% 3.0%PERSONAL PROPERTY Autos 255,000 - - 255,000 0.0% 0.0% Jewelry & Watches 700,000 - - 700,000 0.0% 0.0% Total of Personal Property 955,000 - - 955,000 0.0% 0.0%TOTAL ASSETS 7,102,562 345,145 - 7,447,707LIABILITIES 1234 Main Street 1,000,000 - - 1,000,000 Notes Payable - Bank (unsecured) 400,000 - - 400,000 Notes Payable - Bank (unsecured) 1,000,000 - - 1,000,000 Total Liabilities 2,400,000 - - 2,400,000COMMERCIAL LIABILITIES Notes Payable - LLC 4 1,300,000 - - 1,300,000 Total Commercial Liabilities 1,300,000 - - 1,300,000TOTAL LIABILITIES 3,700,000 - - 3,700,000NET WORTH 3,402,562 345,145 - 3,747,707 Page 52
  54. 54. FINANCIAL ANALYSIS - PROPOSED PLAN ASSET VALUE PROJECTIONS - PROPOSED PLAN 3%YEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Asset ValuesCash and cash equivalents 768,000 775,821 778,720 776,548 769,153 756,377 721,308 1,656,716 3,978,748Roth IRA - 1,000,000 1,030,000 1,060,900 1,092,727 1,125,509 1,304,773 1,512,590 2,156,591Real estate investments 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000Retirement plans/IRAs 2,924,707 2,030,900 2,166,827 2,306,832 2,451,036 2,599,568 3,296,559 3,110,702 2,136,581Personal residences 1,500,000 1,515,998 1,561,478 1,608,322 1,656,572 1,706,269 1,978,033 2,293,083 3,269,388Personal property 955,000 955,000 955,000 955,000 955,000 955,000 955,000 955,000 955,000Total assets in estate 7,447,707 7,577,719 7,792,025 8,007,602 8,224,488 8,442,723 9,555,674 10,828,090 13,796,308Less estimated liabilities (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000) (3,700,000)Combined net worth $ 3,747,707 $ 3,877,719 $ 4,092,025 $ 4,307,602 $ 4,524,488 $ 4,742,723 $ 5,855,674 $ 7,128,090 $ 10,096,308In the event that there is a cash flow surplus, the surplus is added to the cash 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 cash.No calculations are illustrated which: - Reduce debt - Account for depreciation of real estate - Account for sale of real estate Page 53
  55. 55. TAXABLE INCOME PROJECTIONS - PROPOSED PLANYEAR Current 2011 2012 2013 2014 2015 2020 2025 2037Sources of Taxable IncomeCash and cash equivalents 7,680 7,758 7,787 7,765 7,692 6,482 14,655 37,896Cash - GDOT 15,000 14,693 14,383 14,071 13,754 12,126 10,415 5,943Real estate investments (100,151) (100,151) (100,151) (100,151) (100,151) (100,151) (100,151) (100,151)Net Operating Loss Carryover (950,000) - - - - - - -Retirement plans/IRAs 1,000,000 - - - - 115,237 142,925 175,632Other taxable earnings - GDOT (334,314) (340,220) (357,231) (375,092) (393,847) (502,659) (641,535) (1,152,105)Client earned income 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000Spouse earned income 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000Gross income $ (61,785) $ (117,919) $ (135,211) $ (153,407) $ (172,552) $ (168,965) $ (273,691) $ (732,784) Page 54

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