Did you know that besides family members, there are also others in line for your assets? Uncle Sam, creditors, business partners, and others.

2. Estate Planning Strategies Andy Hoang Financial Planner January 16, 2009

3. Workshop Materials z PRESENTATION GUIDE ESTATE PLANNING WORKBOOK EVALUATION

5. We’re Unique

6. Where Do You Start? ESTATE PLANNING LIFETIME PLANNING Financial Planning

7. Determine Priorities Inflation Cruise Long-term care Spouse’s security Reducing taxes Sale of business Charity Retirement income Grandchildren

11. What’s Wrong With This Picture? Income Expenses

12. Problem

13. Do I Have Enough Capital?

15. Financial Condition Model Capital + or - Sources of Income Less Expenses and Living Needs = Direction of Net Worth

17. Planning Strategies Living Planning Estate Planning

19. What’s Wrong With This Picture? Estate Family Estate Settlement Costs

20. Estate Settlement Costs Family Federal and State Taxes Probate Debts Final Expenses Liquidation Costs

22. Estate Tax Bite $2,000,000 Marginal Rate (effective 2007) Taxable Estate

23. Calendar Year Deathtime Exemption Tax Rates 2007 $2.0 Million 45% 2008 $2.0 Million 45% 2009 $3.5 Million 45% 2010 Taxes Repealed Top Income Tax Rate (Gift Tax Only) 2011 $1.0 Million 55% Applicable Credit Amount

25. Estate Distribution Personal Estate $100,000 Real Estate $100,000 Savings Investments $250,000 Qualified Plans & IRAs $450,000 Life Insurance $500,000 Business Interest $1,200,000 CHARITY IRS FAMILY Taxation 35% ____________ 45% ____________ 45% ____________

29. What’s Wrong With This Picture? The News Heirs in Shock ... Matriarch Leaves No Will!

30. Will and Trust Strategies Simple Will Both Alive Total Estate $5,000,000 Husband’s Death Fed Estate Tax $0 Wife’s Death Fully Taxable* *Less wife’s Credit. Other allowable deductions and credits may also be available. No assumptions is made for state death taxes. Wife’s Estate Wife’s Heirs $3,650,000 Wife’s Property Wife’s: From Husband: Husband’s estate $2,500,000 Outright to Wife Husband’s estate $2,500,000 Estate Tax $1,350,000 $2,500,000 2,500,000

31. Will and Trust Strategies Credit Trust Will Wife’s Estate $3,000,000 Total Distribution $4,550,000 By-Pass Trust $2,000,000 Husband’s Estate $2,500,000 Outright to Wife $500,000 Both Alive Total Estate $5,000,000 Husband’s Death Fed Estate Tax $0 Wife’s Death Fed Estate Tax $450,000 Husband’s Heirs $2,000,000 Estate Tax $450,000 Wife’s Heirs $2,550,000 Estate Tax $0 Wife’s Property Wife’s: From Husband: $2,500,000 500,000

32. Will and Trust Strategies Credit, QTIP Trust Will *Assumes pro-rate share of net federal estate tax Total Distribution $4,550,000 QTip Trust $500,000 Husband’s Estate $2,500,000 Wife’s Property $2,500,000 Wife’s Estate $2,500,000 Estate Tax $375,000* Wife’s Heirs $2,125,000 Husband’s Heirs $425,000 Husband’s Heirs $2,000,000 By-Pass Trust $2,000,000 Wife’s Death Fed Estate Tax $450,000 Husband’s Death Fed Estate Tax $0 Both Alive Total Estate $5,000,000 Estate Tax $0 Estate Tax $75,000*

33. Will and Trust Strategies Credit, QTIP, Insurance Trust *Assumes pro-rate share of net federal estate tax. Life insurance is purchased subject to underwriting approval. Tax Payment Trust Insurance Death Benefit $450,000 Beneficiaries $450,000 QTip Trust $500,000 Husband’s Estate $2,500,000 Wife’s Property $2,500,000 Wife’s Estate $2,500,000 Estate Tax $375,000* Wife’s Heirs $2,125,000 Husband’s Heirs $425,000 Husband’s Heirs $2,000,000 By-Pass Trust $2,000,000 Wife’s Death Fed Estate Tax $450,000 Husband’s death Fed Estate Tax $0 Both Alive Total Estate $5,000,000 Estate Tax $0 Estate Tax $75,000* Estate Tax $0

34. Will Drafting Alternatives Estate Tax Cost Comparison Millions

36. Evaluation Do I have the legal documents that help meet my objectives?

38. Estate Tax Reduction Strategies ESTATE Assets

41. Gifting and Split Gifting CHILD CHILD CHILD 12,000 +12,000 $24,000 12,000 +12,000 $24,000 12,000 +12,000 $24,000 YOU SPOUSE

43. Advantages of a Lifetime Gift Total Outlay $1 million* Transfer Tax Savings: $167,000 *Assumes a 50% effective rate on capital Family Family IRS IRS Bequest Gift

45. Why Not Gift Just Before You Die? Timing is everything recent US Tax Court ruling highlights the importance of estate planning. An elderly man wrote instructions to his brokerage firm to liquidate securities in order to send $10,000 to each of 20 nieces and nephews, says a report on the case in "Tax Notes," the weekly Bible on tax matters. But the man died the same day his letter was delivered, before the brokerage firm could carry out his instructions. The firm carried out the instruction two days later and the $200,000 later was excluded from the dead man's estate. The Internal Revenue Service contended that the $200,000 should have been in the estate and subject to tax. The Tax Court rules that the IRS was right because the gifts were not completed before the man died. The man's letter to his brokerage firm did not constitute a trust for the nieces and nephews, the court said, because it made no mention of a trust. (Knight-Ridder) ...... Reprinted by permission: Tribune Media Services A 2005 2006 2007

48. Direction of Net Worth Year

49. Direction of Estate Tax ESTATE TAX NET WORTH Year

50. Pyramid of Pain Lifetime GSTT Generation Skipping Lifetime Payment of Gift Tax Lifetime Gift of Credit Gift Split Annual Exclusion Do Nothing During Lifetime

54. What’s wrong with this picture? Estate Sale Auction Auction Auction Estate Sale Estate Sale

55. The Robbie Family Estate Tax Troubles Robbie Family Estate Problems The News Robbies Sell Dolphins to Pay Estate Tax The News

56. IBM Monthly Price Ranges November 2001 - October 2002 Financial Planning Slide Presentation Only. This is not an offer or solicitation to buy IBM stock.

63. Any discussion pertaining to taxes in this communication may be part of a promotion or marketing effort. As provided for in government regulations, advice related to federal taxes that is contained in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue code. Individuals should seek advice based on their own particular circumstances from an independent tax advisor. CRN200702-2002903 ©2007 Sagemark Consulting