This document summarizes a presentation on gift, estate, and trust (GET) planning products and services. It outlines the objectives of an effective GET plan, which are to allow control of assets while alive, provide care for loved ones, and distribute assets to beneficiaries as desired. It also discusses the basic components of a plan, including trusts, wills, and powers of attorney. Additionally, it covers estate tax exemptions and rates over time, strategies for effective use of exemptions, and reasons why plans need to be reviewed in light of changing laws. The overall message is that proper planning is important for peace of mind and tax savings.

1. Gift, Estate & Trust (GET) Planning Products and Services San Francisco & Walnut Creek Principals Meeting By Brent D. Rose, M.P.Acc.(Tax), J.D. February 11, 2010

2. .2 Our Mission is to Develop and Implement an Effective Plan for Clients to Provide them with “Peace of Mind” by Understanding and Effectively Utilizing the GET Tools and Techniques that will Protect them and their Loved Ones And Achieve their Objectives

3. .3 Objectives of an Effective GET Plan Allow Control of Business and Property - While Alive and Well to Meet Living Needs Facilitate Care for Them and Loved Ones - When Retired or if Disabled or Die Prematurely Give What they Have to Whom they Want, When they Want, and How they Want At the Lowest Reasonable Cost to them as well as those they Love

4. How to Effectively Accomplish Objectives .4

5. .5 Reasons to Plan Gives “Peace of Mind” Proper planning eases emotional and financial burden Allows influence over family, friends or social causes Reduce Taxes Protect Assets and Business

6. .6 Basic Components of an Effective Plan Advanced Health Care Directive HIPAA Release (Health Insurance Portability and Accountability Act) Living Trust Will Power Of Attorney

7. .7 Sam & Jane $$$$ All Principal for Sam & Jane Beneficiaries Revocable Trust Sam & Jane Trustees All Income for Sam & Jane Beneficiaries Sam Dies

8. .8 Sam Dies Revocable Trust Jane is Trustee All Principal for Jane Beneficiary Jane is Incapacitated All Income for Jane Beneficiary

9. .9 Jane is Incapacitated Principal for Jane Beneficiary Irrevocable Trust during Incapacity Successor Trustee Income for Jane Beneficiary Jane Dies

10. .10 Jane Dies Trust Becomes Irrevocable and later Terminates with Principal and Income Distributed to Designated Beneficiaries BeniOne Adult without Trust BeniThree Minor Stays in Trust to Designated Age(s) BeniTwo Disabled Adult with Special Needs Trust

11. ESTATE TAXES When Net Worth is Large Enough to Need Estate Tax Planning Federal Exemption Amounts .11 2006 to 2008$2,000,000 2009 $3,500,000 2010 Unlimited, for now 2011 $1,000,000

12. ESTATE TAXES When Net Worth is Large Enough to Need Estate Tax Planning Federal Maximum Rates .12 2006 46% 2007 to 200945% 2010 $0, for now 2011 55%

13. .13 UNLIMITED MARITAL DEDUCTION All Property Passing to a Surviving Spouse is Deductible for Federal Estate Taxes, including Property Passing to a Living Trust for the Sole Benefit of the Surviving Spouse While They are Alive

14. .14 INEFFECTIVE USE OF TAX EXEMPTION Sam’s & Jane’s Net Worth $4,000,000 No Trust Sam Died All to Jane After Marital Deduction No Estate Tax

16. $4,000,000

17. No Trust

18. Died in 2009After $3.5M Exemption $500k Taxed at 45% = Net to Heirs of $3,775,000

19. .16 EFFECTIVE USE OF TAX EXEMPTION Sam’s & Jane’s Net Worth $7,000,000 All in Trust Sam Died in 2009 $3.5M to Bypass Trust (Exemption) No Estate Tax $3.5M to Survivor Trust Marital Deduction No Estate Tax

21. $3,500,000

22. All in Survivor Trust

23. Died later in 2009After $3.5M Exemption, No Estate Tax Added to Bypass Trust

24. .18 LONG TERM USE OF TAX EXEMPTION Long-Term Growth Free of Estate and Generation-skipping Taxes (GST) for H.E.M. & S. and Free from Creditors Benefit of Heirs until Exhausted or R.A.P. limit $7M ($3.5M x 2) Dynasty Trust Using Both Estate and GST Exemptions

25. .19 Can You or Clients Afford to Wait? Even a Non-taxable Estate with Probated Assets may Cost You at least 6% (3% each for attorney and personal representative, $60,000 for a $1M estate) Life Insurance may & Retirement Plan Taxed at 85% If SALY, every $ over $3.5M is Taxed at 45% If Fail to Plan before 2011, Exemption may be only $1M and the Tax Rate as High as 55%

26. GET Changes Due To Repeal in 2010 NO Estate or Generation-skipping Transfer (GST) Tax – unlimited amount to “dynasty” trust? Gift Tax Exemption (lifetime) remains at $1 Million but maximum rate drops from 45% to 35% Gift Tax Annual Exclusion remains at $13,000 per New Carryover Basis regime - $1.3 Million “step-up” plus $3 Million if to spouse (or effective trust) .20

27. .21 Why Plans Need to be Reviewed NOW! Sam’s & Jane’s Net Worth $2,000,000 All in Trust Sam Dies in 2010 $0 to Kids Bypass Trust (Exemption) No Estate Tax $2M to Survivor Trust Marital Deduction No Estate Tax

29. $2,000,000

30. All in Trust

31. Dies in 2011 After $1M Exemption, $1M Taxed at 45% = $1.55M ($2M - $450k) Net to Heirs

32. .23 Carryover Basis – Potential Tax Trap Sam’s & Jane’s Net Worth $7,000,000 All in Trust Sam Dies in 2010 $5.7M to Survivor Trust - $3M “step-up” No Tax $1.3M to Bypass Trust (“Step-up”) No Tax

34. $2.7M ($5.7M - $3M)

35. No Appreciation

36. Sells in 2010 $2.7M Taxed at 25% (15% capital + 10% income) = $675,000 Taxes Due to Repeal

38. $2,000,000

39. Dies in 2010

40. Property SoldAfter $1.3M “step-up” $700k Taxed at 25% (15% capital + 10% income) = $175,000 Taxes No Estate, Capital Gains or Income Tax

41. .26 Can You Afford to WAIT for Review? Even a Non-taxable Estate can result in nothing going to children from prior marriage or spouse Amount passing to spouse, even with trust, may be unnecessarily subject to Estate and GST taxes later Heirs, including spouse, may owe significant capital gains and income taxes if sell property worth more than the Carryover Basis “step-up” amounts Difficult, maybe impossible, to track old Basis

42. PLANNING – PROCESS AND DEVELOPMENT Planning is a Process, Not an Event - Fact Finding, Analyzing, Recommending, Implementing and Monitoring Process Plan will be Developed with Presumption Will Not be Here Tomorrow .27

43. .28 FINAL THOUGHTS !!! Most people Spend less Time on Planning than they do Getting their Hair Cut “For my Tax Evasion I should be Punished, for my Tax Avoidance I should be Commended. The Tragedy is that so few people know the Free Bridge even exists.” - U. S. Supreme Court Justice Louis P. Brandeis

44. Question and answer Brent D. Rose, M.P.Acc.(Tax), J.D. 949-428-3177 (ext 507) BRose@sjaccounting.com www.sjaccounting.com