ESTATE EVALUATION. John and Jane Doe

Transcription

1 ESTATE EVALUATION John and Jane Doe Adam Advisor Investment Advisors 265 Anystreet Suite 123 AnyCity, AnyState, AnyZip (555)

2 Important Notes Estate Evaluation is a tool to assist you in exploring potential estate planning opportunities. However, this presentation is not your estate plan or a specific recommendation for your estate plan. Inclusion of any particular option and the use of the term Proposed Plan within this analysis does not constitute a recommendation of a particular option over any other planning alternative. Other alternatives may be more appropriate for your particular situation. Neither Brokerage Unlimited, Inc. (BUI) nor your advisor guarantees or expresses an opinion regarding the accuracy of the system or the output and will not be liable to any person for any damages arising from the use or misuse of Impact s software, or from any errors or omissions in the same. I understand and agree that BUI and my advisor assume no duty to update this software or to notify me of any errors in the software or applicable changes in the law. Numeric examples in this presentation illustrate various estate planning concepts, based on certain assumptions detailed in this analysis. The furnishing of accurate data by you will help ensure the value of this analysis. However, all rates of return are hypothetical and are not a guarantee of the future performance of any asset, including insurance or other financial products. Calculations in this report are only estimates. This presentation does not attempt to illustrate the precise legal, tax, accounting, or investment consequences of a particular planning alternative. Actual results may vary substantially from the figures shown. The precise consequences of a particular planning alternative depend on many variables, some of which may not be accounted for or fully described in this presentation. Unless otherwise indicated, the income tax and generation-skipping transfer implications of particular transactions are not reflected in this analysis. No attorney-client relationship is established between you and any attorney who prepared and/or presented this report. Your own legal and tax advisors should be consulted before you make any estate or business planning decisions (or change title to any assets or change beneficiary designations) to determine (1) the suitability of a particular planning alternative, and (2) the precise legal, tax, investment, and accounting consequences of that alternative. BUI and its agents, employees, and registered representatives do not give legal, tax, accounting, or investment advice. This presentation and any other oral or written communications shall not be construed as such. IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, this notice is to inform you that any U. S. federal tax advice contained in this presentation is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this presentation.

3 Executive Summary for John Doe, age 62, and Jane Doe, age 61 Current Situation Total to family after both deaths $20,934,144 Proposed Strategy (With New Life Insurance) Total to family after both deaths $23,795,186 Current Situation Liquid Assets $7,330,000 Retirement Plans $1,150,000 Fixed Assets $227,000 Residences $1,380,000 Your total value if death occured today: $10,087,000 Effects of Current Situation Combined gross estate in 2041 (using provided rates of return) $23,593,218 At John's death in 2041, Estimated taxes, expenses, probate, and debts $533,120 At Jane's death in 2042, Estimated taxes, expenses, probate, and debts $2,574,971 Income tax on income in respect of decedent 1 $351,705 Shrinkage $3,459,796 Total to family after both deaths $20,934,144 An additional amount would go to charity $100,000 Total distribution to family and charity $21,034,144 Portion of the estate in % Proposed Strategy With New Recommended Life Insurance Your Proposed Plan with new life insurance could provide the following after both deaths. Gifts $1,796,616 Irrevocable Life Insurance Trust $3,053,566 Family Trust $8,945,388 Net Distributions to Heirs $10,334,280 less: Income Tax on Income in Respect of Decedent -$334,663 Total to family after both deaths $23,795,186 Charitable: Trusts, Bequests, and Gifts $243,451 Total to family and charity after both deaths $24,038,637 Without New Recommended Life Insurance Total to family and charity after both deaths $22,034,708 1 Heirs must pay the tax on income in respect of decedent, usually associated with inheriting qualified retirement plan assets and annuities. 1 of 46 January 26, 2017

4 Executive Summary (Continued) Action Plan Issue Revocable trust, while well drafted, is missing 1 several key provisions including trustee removal, 1 generation skipping and beneficiary creditor protection provisions. 2 Durable powers of attorney are approximately 12 years old and risk non-acceptance by certain 2 financial institutions. 3 Health care powers of attorney are missing essential HIPAA provisions and require immediate 3 attention. Revocable trust provides for charitable gift to be 4 distributed to specific charitable beneficiary. 4 However, gift is not currently designed in a tax efficient manner. Projected estate value significantly exceeds 5 projected estate tax exemption at life expectancy, potentially subjecting estate to significant estate 5 taxation. Given significant liquidity provided within the estate 6 as well as the short time horizon to retirement, it 6 does not appear the current income replacement term life insurance policies are necessary. Proposed Action Meet with a qualified estate planning attorney to review the Revocable Trust Review checklist contained within this Report and update trust as necessary. Meet with a qualified estate planning attorney to draft and execute new durable powers of attorney. Meet with a qualified estate planning attorney to draft and execute new health care powers of attorney. Consider removal of charitable gift provision from revocable trust and instead name charity as a partial beneficiary of qualified retirement accounts/iras to maximize tax efficiency of gift. Consider implementation of a gifting program maximizing annual exclusion gifts. A portion of the annual exclusion gifts could be directed to an irrevocable life insurance trust, wherein the trustee would significantly leverage gifted funds into a much larger sum provided by a survivorship life insurance policy. Consider allowing current term insurance policies to lapse after survivorship coverage is in place. Alternatively, term insurance policies should be gifted or sold to an irrevocable life insurance trust to remove death benefits from taxable estate. How Much Will You Leave For Your Heirs? $25,000,000 $24,000,000 $23,000,000 $22,000,000 $21,000,000 $20,000,000 $19,000,000 Current Situation Proposed Strategy $2,861,042 or 13.67% MORE TO YOUR HEIRS! 2 of 46 January 26, 2017

5 Fiduciary Appointments Appointments Under Current Plan Revocable Trust Primary: Successor: 2nd Successor: 3rd Successor: 4th Successor: John and Jane Doe or the Survivor of Them Bob Doe Jack Doe Fiduciary Trust Company - Last Will and Testament Husband Wife Executor: Jane Doe John Doe 1st Alternate: Bob Doe Bob Doe 2nd Alternate: Jack Doe Jack Doe 3rd Alternate: - - 4th Alternate: - - Durable Power of Attorney Husband Wife Attorney in Fact: Jane Doe John Doe 1st Alternate: Bob Doe Bob Doe 2nd Alternate: Jack Doe Jack Doe 3rd Alternate: - - 4th Alternate: - - Health Care Power of Attorney Husband Wife Agent: Jane Doe John Doe 1st Alternate: Bob Doe Bob Doe 2nd Alternate: Jack Doe Jack Doe 3rd Alternate: - - 4th Alternate: - - Beneficiary Trusts Primary: Successor: 2nd Successor: 3rd Successor: 4th Successor: Irrevocable Trust Primary: Successor: 2nd Successor: 3rd Successor: 4th Successor: Bob Doe Jack Doe Fiduciary Trust Company - - Husband Document Not Provided Wife 3 of 46 January 26, 2017

6 Estate Distribution Distribution Under Current Plan John's Estate $8,321,000 Jane's Estate $1,766,000 Upon John's Death Taxes, Expenses, Probate and Debts $254,780 Specific Distributions $100,000 Marital Trust $3,223,257 Family Trust $5,540,000 Named Beneficiaries: Survivor Receives: Survivor Receives: $100,000 Charity A All Trust Income Discretionary Income and Principal Discretionary Principal Distributions Distributions for Health, Education, for Health, Education, Maintenance Maintenance and Support and Support Family Receives: Discretionary Income and Principal Distributions for Health, Education, Maintenance and Support Upon Wife's Death Taxes, Expenses, Probate and Debts $316,077 Adam's Trust $5,580,710 Elizabeth's Trust $5,580,709 Discretionary Distributions For Needs Discretionary Distributions For Needs 1/3 of Principal outright at age 25 1/3 of Principal outright at age 25 1/3 of Principal outright at age 30 1/3 of Principal outright at age 30 1/3 of Principal outright at age 35 1/3 of Principal outright at age 35 Distributed to child's children upon death Distributed to child's children upon death Ultimate Distribution 50% to Husband's Heirs at Law 50% to Wife's Heirs at Law 4 of 46 January 26, 2017

7 Major Differences Comparing Current Situation to Strategic Alternative Scenario The complete analyses of scenarios being compared should be reviewed for differences. The chart below shows the differences in these two scenarios. The Assumptions page and the Additional Details page can provide more details for the items included within a scenario. Current Situation Strategic Alternative IRA - IRA Disposition At Death Rollover To Spouse Net To Charity Expenses Gift Expense - Annual Exclusion Gifts Not included Exists Gift Expense - Annual Exclusion Gifts Not included Exists Life Insurance Life Insurance Policy - New Survivorship Life Insurance Policy Not included Exists Transactions Transaction - Stop Insurance Policy Not included Exists Transaction - Stop Insurance Policy Not included Exists Estate Assumptions John's Will Use Living Trust No Yes Jane's Will Use Living Trust No Yes Bequest To Charity Exists Not included 5 of 46 January 26, 2017

8 Summary of Values Your Current Plan Total Value if Death Today: $12,087,000 Total Values Today $10,087,000 Values from Prior Planning $2,000,000 Total Value if Death Today 1 $12,087,000 Assets For estate planning purposes, assets can be categorized by their availability to pay taxes and expenses at death. Availability of assets depends on two things: 1. Ownership the title to the asset determines how it passes at death. 2. Type of Asset certain assets can be converted to cash more quickly than others. John Jane Joint Total Liquid Assets Checking Account $73,000 $73,000 Savings Account $126,000 $126,000 Money Market Account $312,000 $312,000 Investment Account $677,000 $677,000 Investment Account $5,653,000 $5,653,000 Investment Account $489,000 $489,000 Retirement Plans IRA $131,000 $131,000 IRA $800,000 $800,000 Roth IRA $132,000 $132,000 Roth IRA $87,000 $87,000 Fixed Assets Household Contents $150,000 $150,000 Motor Vehicle $32,000 $32,000 Motor Vehicle $45,000 $45,000 Residences Personal Residence $900,000 $900,000 Florida Home $480,000 $480,000 Total Values Today $7,262,000 $707,000 $2,118,000 $10,087,000 Values from Prior Planning Your prior planning affects the values your heirs will receive if you were to die today. Life Insurance on John 2 Life Insurance on Jane 2 Prior Planning Total $1,500,000 $500,000 $2,000,000 1 Includes values that may not be part of taxable estate. 2 May be in the estate if death today based on ownership and beneficiary designations. 6 of 46 January 26, 2017

9 Your Current Plan Today Total Value of Assets This analysis assumes that both John and Jane die today. The total value of your assets today considers your income as well as the portion of existing assets used to provide the spending patterns detailed in the assumptions. John's Assets Jane's Assets Values at Death Today $8,321,000 $1,766,000 Adjustments at John's Death Cash Flow Adjustment Life Insurance in Estate 1 Estate Total in $2,963 $1,500,000 $9,818,037 Combined Estate Total $11,581,075 -$2,963 $1,763,037 1 Incidents of ownership or beneficiary designation cause inclusion of death proceeds in the estate. 7 of 46 January 26, 2017

10 Your Current Plan Today John Dies in 2017, Jane Dies in 2017 Combined Gross Estate $11,581,075 in 2017 Taxes, Expenses, Probate and Debts $254,780 1 $2,563,037 Remaining Estate at Jane's death $2,784,512 $3,223,257 Marital Trust $3,501,782 $5,540,000 Family Trust $5,540,000 in 2017 Bequests Taxes, Expenses, Probate and Debts $316,077 Family Trust Net Distributions to Heirs less: Income Tax on Income in Respect of Decedent Total to Family Charitable: Trusts, Bequests, and Gifts Total Distributions to Family and Charity $5,540,000 $5,870,218 -$248,799 $11,161,419 $100,000 $11,261,419 1 Debts of $44,880 are deductible for estate tax calculations even though some of these debts were not paid but transferred to the surviving spouse. 8 of 46 January 26, 2017

11 Your Current Plan Today Explanation of Values on Flowchart At John's Death in 2017 Combined Gross Estate The Combined Gross Estate is $11,581,075. Included are assets owned by John and Jane plus life insurance of $1,500,000 with ownership such that the death proceeds are considered as part of the estate at John's death. Taxes, Expenses, Probate and Debts Tentative Tax Base (after expenses, deductions and adjustments): $5,540,000 1 Federal Estate Tax before Credits $2,161,800 Applicable Unified Credit 2 $2,161,800 Missouri State Tax $0 Total Net Taxes Due $0 Remaining Estate Jane's Assets at John's death $1,763,037 plus Other Funds (Net Inheritance) $800,000 Remaining Estate at John's death includes IRA Rollover of $800,000 $2,563,037 Marital Trust At John's death, a Marital Trust is created. The trust is valued at $3,223,257. With growth at assumed rates, the Marital Trust is worth $3,501,782 at Jane's death. Family Trust A Family Trust is established at John's death, using assets valued at $5,540,000. With growth at assumed rates, the Family Trust is worth $5,540,000 at Jane's death. At Jane's Death in 2017 Remaining Estate at Jane's death in 2017 with growth at assumed rates $2,784,512 Taxes, Expenses, Probate and Debts 1 Tentative Tax Base (after expenses, deductions and adjustments): $6,090,364 Federal Estate Tax before Credits $2,381,945 1 See the Estate Calculations page for further details on expenses and deductions. 2 American Taxpayer Relief Act of 2012 provides for an Applicable Exclusion amount of $5,000,000, indexed for inflation after The Basic Unified Credit is $1,945,800, indexed for inflation after Unused Applicable Exclusion amounts may be passed to the surviving spouse ('portability'), provided an election is made on a timely filed estate tax return of the deceased spouse (DSUEA). The Applicable Unified Credit amount is the Basic Unified Credit plus 40% of the DSUEA used at death, if any. 9 of 46 January 26, 2017

12 Your Current Plan Today Taxes, Expenses, Probate and Debts 1 Applicable Unified Credit 2 $2,161,800 Missouri State Tax $0 Total Net Taxes Due $220,145 less Income Tax on Income in Respect of Descedent -$248,799 Value of Other Items at Second Death Charitable Bequests $100,000 Summary of Total Distributions to Heirs and Others Values at Second Death Total Net Distributions to Family $11,161,419 Charitable Bequests $100,000 Total Charitable Trusts, Bequests and Gifts $100,000 Total Distributions to Family and Charity $11,261,419 1 See the Estate Calculations page for further details on expenses and deductions. 2 American Taxpayer Relief Act of 2012 provides for an Applicable Exclusion amount of $5,000,000, indexed for inflation after The Basic Unified Credit is $1,945,800, indexed for inflation after Unused Applicable Exclusion amounts may be passed to the surviving spouse ('portability'), provided an election is made on a timely filed estate tax return of the deceased spouse (DSUEA). The Applicable Unified Credit amount is the Basic Unified Credit plus 40% of the DSUEA used at death, if any. 10 of 46 January 26, 2017

13 Your Current Plan Projected Growth of Assets Total Vaue Today $10,087,000 John's Assets Today $8,321,000 Jane's Assets Today $1,766,000 This analysis assumes that John dies in 24 years and Jane dies 1 year later. The growth of your assets until death considers your income as well as the portion of existing assets used to provide the spending patterns detailed in the assumptions. End of Year Expected Income Total Outgoing Payments Change in Assets ASSET VALUES End of Year Asset Values John's Assets Jane's Assets 2017 $305,000 $320,508 $494,695 $10,581,695 $8,764,997 $1,816, , , ,938 11,070,633 9,217,915 1,852, , , ,770 11,554,402 9,680,756 1,873, , ,952 11,900,355 10,087,946 1,812, , , ,020 12,300,375 10,478,934 1,821, , , ,338 12,710,713 10,817,267 1,893, , , ,579 13,114,292 11,145,132 1,969, , , ,416 13,538,708 11,489,912 2,048, , , ,727 14,027,435 11,880,845 2,146, , , ,902 14,509,337 12,281,617 2,227, , , ,374 15,013,711 12,701,124 2,312, , , ,070 15,538,781 13,137,402 2,401, , , ,178 16,084,959 13,590,674 2,494, , , ,101 16,653,061 14,061,549 2,591, , , ,938 17,243,999 14,550,887 2,693, , , ,962 17,858,961 15,059,317 2,799, , , ,813 18,498,774 15,587,767 2,911, , , ,227 19,165,001 16,137,384 3,027, , , ,720 19,859,721 16,709,949 3,149, , , ,686 20,584,407 17,306,650 3,277, , , ,089 21,340,496 17,928,625 3,411, , , ,986 22,129,482 18,577,050 3,552, , , ,448 22,952,930 19,253,497 3,699, , , ,830 23,812,760 19,959,182 3,853,578 Values at John's death $19,959,182 $3,853,578 Adjustments at John's Death Cash Flow Adjustment Estate Total in $167,611 $19,791,571 Combined Estate Total $23,593,218 -$51,931 $3,801, of 46 January 26, 2017

14 Your Current Plan John Dies in 2041, Jane Dies in 2042 Combined Gross Estate $23,593,218 in 2041 Taxes, Expenses, Probate and Debts $533,120 1 $5,254,228 Remaining Estate at Jane's death $5,422,266 $9,295,870 Marital Trust $9,593,166 $8,510,000 Family Trust $8,945,388 in 2042 Bequests Taxes, Expenses, Probate and Debts $2,574,971 Family Trust Net Distributions to Heirs less: Income Tax on Income in Respect of Decedent Total to Family Charitable: Trusts, Bequests, and Gifts Total Distributions to Family and Charity $8,945,388 $12,340,461 -$351,705 $20,934,144 $100,000 $21,034,144 1 Debts of $15,683 are deductible for estate tax calculations even though some of these debts were not paid but transferred to the surviving spouse. 12 of 46 January 26, 2017

15 Your Current Plan Explanation of Values on Flowchart At John's Death in 2041 Combined Gross Estate The Combined Gross Estate is $23,593,218. Included are assets owned by John and Jane. Taxes, Expenses, Probate and Debts Tentative Tax Base (after expenses, deductions and adjustments): $8,510,000 1 Federal Estate Tax before Credits $3,349,800 Applicable Unified Credit 2 $3,349,800 Missouri State Tax $0 Total Net Taxes Due $0 Remaining Estate Jane's Assets at John's death $3,801,647 plus Other Funds (Net Inheritance) $1,452,581 Remaining Estate at John's death includes IRA Rollover of $1,452,581 $5,254,228 Marital Trust At John's death, a Marital Trust is created. The trust is valued at $9,295,870. With growth at assumed rates, the Marital Trust is worth $9,593,166 at Jane's death. Family Trust A Family Trust is established at John's death, using assets valued at $8,510,000. With growth at assumed rates, the Family Trust is worth $8,945,388 at Jane's death. At Jane's Death in 2042 Remaining Estate at Jane's death in 2042 with growth at assumed rates $5,422,266 Taxes, Expenses, Probate and Debts 1 Tentative Tax Base (after expenses, deductions and adjustments): $14,794,102 Federal Estate Tax before Credits $5,863,441 Applicable Unified Credit 2 $3,409,800 Missouri State Tax $0 Total Net Taxes Due $2,453,641 less Income Tax on Income in Respect of Descedent -$351,705 1 See the Estate Calculations page for further details on expenses and deductions. 2 American Taxpayer Relief Act of 2012 provides for an Applicable Exclusion amount of $5,000,000, indexed for inflation after The Basic Unified Credit is $1,945,800, indexed for inflation after Unused Applicable Exclusion amounts may be passed to the surviving spouse ('portability'), provided an election is made on a timely filed estate tax return of the deceased spouse (DSUEA). The Applicable Unified Credit amount is the Basic Unified Credit plus 40% of the DSUEA used at death, if any. 13 of 46 January 26, 2017

16 Your Current Plan Value of Other Items at Second Death Charitable Bequests $100,000 Summary of Total Distributions to Heirs and Others Values at Second Death Total Net Distributions to Family $20,934,144 Charitable Bequests $100,000 Total Charitable Trusts, Bequests and Gifts $100,000 Total Distributions to Family and Charity $21,034, of 46 January 26, 2017

17 Effects of Additional Planning Projected Growth of Assets Total Vaue Today $10,087,000 John's Assets Today $8,321,000 Jane's Assets Today $1,766,000 This analysis assumes that John dies in 24 years and Jane dies 1 year later. The growth of your assets until death considers your income as well as the portion of existing assets used to provide the spending patterns detailed in the assumptions. End of Year Expected Income Total Outgoing Payments Change in Assets ASSET VALUES End of Year Asset Values John's Assets Jane's Assets 2017 $305,000 $344,419 $470,762 $10,557,762 $8,753,031 $1,804, , , ,663 11,020,425 9,192,812 1,827, , , ,263 11,477,688 9,642,399 1,835, , ,313 11,797,001 10,036,269 1,760, , , ,892 12,164,893 10,343,452 1,821, , , ,761 12,513,654 10,620,209 1,893, , , ,648 12,867,303 10,898,143 1,969, , , ,228 13,237,530 11,188,735 2,048, , , ,155 13,668,685 11,522,094 2,146, , , ,191 14,088,876 11,861,156 2,227, , , ,571 14,527,446 12,214,859 2,312, , , ,486 14,980,932 12,579,554 2,401, , , ,364 15,451,296 12,957,010 2,494, , , ,138 15,939,434 13,347,922 2,591, , , ,542 16,443,976 13,750,865 2,693, , , ,552 16,967,528 14,167,884 2,799, , , ,407 17,510,935 14,599,928 2,911, , , ,493 18,073,429 15,045,812 3,027, , , ,029 18,658,458 15,508,686 3,149, , , ,005 19,267,463 15,989,706 3,277, , , ,031 19,899,494 16,487,622 3,411, , , ,865 20,557,358 17,004,927 3,552, , , ,061 21,240,420 17,540,987 3,699, , , ,487 21,951,907 18,098,329 3,853,578 Values at John's death $18,098,329 $3,853,578 Adjustments at John's Death Cash Flow Adjustment Estate Total in $210,067 $17,888,262 Combined Estate Total $21,689,909 -$51,931 $3,801, of 46 January 26, 2017

18 Effects of Additional Planning John Dies in 2041, Jane Dies in 2042 Combined Gross Estate $21,689,909 in 2041 Taxes, Expenses, Probate and Debts $41,440 1 $5,254,228 Remaining Estate at Jane's death $5,399,562 $7,884,241 Marital Trust $8,102,321 $8,510,000 Family Trust $8,945,388 in 2042 Bequests Taxes, Expenses, Probate and Debts $1,851,515 Gifts Family Trust Net Distributions to Heirs less: Income Tax on Income in Respect of Decedent Total to Family Charitable: Trusts, Bequests, and Gifts Total Distributions to Family and Charity $1,796,616 $8,945,388 $11,383,917 -$334,663 $21,791,257 $243,451 $22,034,708 1 Debts of $21,440 are deductible for estate tax calculations even though some of these debts were not paid but transferred to the surviving spouse. 16 of 46 January 26, 2017

19 Effects of Additional Planning Explanation of Values on Flowchart At John's Death in 2041 Combined Gross Estate The Combined Gross Estate is $21,689,909. Included are assets owned by John and Jane. Taxes, Expenses, Probate and Debts Tentative Tax Base (after expenses, deductions and adjustments): $8,510,000 1 Federal Estate Tax before Credits $3,349,800 Applicable Unified Credit 2 $3,349,800 Missouri State Tax $0 Total Net Taxes Due $0 Remaining Estate Jane's Assets at John's death $3,801,647 plus Other Funds (Net Inheritance) $1,452,581 Remaining Estate at John's death includes IRA Rollover of $1,452,581 $5,254,228 Marital Trust At John's death, a Marital Trust is created. The trust is valued at $7,884,241. With growth at assumed rates, the Marital Trust is worth $8,102,321 at Jane's death. Family Trust A Family Trust is established at John's death, using assets valued at $8,510,000. With growth at assumed rates, the Family Trust is worth $8,945,388 at Jane's death. At Jane's Death in 2042 Remaining Estate at Jane's death in 2042 with growth at assumed rates $5,399,562 Taxes, Expenses, Probate and Debts 1 Tentative Tax Base (after expenses, deductions and adjustments): $13,238,195 Federal Estate Tax before Credits $5,241,078 Applicable Unified Credit 2 $3,409,800 Missouri State Tax $0 Total Net Taxes Due $1,831,278 less Income Tax on Income in Respect of Descedent -$334,663 1 See the Estate Calculations page for further details on expenses and deductions. 2 American Taxpayer Relief Act of 2012 provides for an Applicable Exclusion amount of $5,000,000, indexed for inflation after The Basic Unified Credit is $1,945,800, indexed for inflation after Unused Applicable Exclusion amounts may be passed to the surviving spouse ('portability'), provided an election is made on a timely filed estate tax return of the deceased spouse (DSUEA). The Applicable Unified Credit amount is the Basic Unified Credit plus 40% of the DSUEA used at death, if any. 17 of 46 January 26, 2017

20 Effects of Additional Planning Value of Other Items at Second Death Charitable Bequests $243,451 Gifts (not including life insurance premiums) $1,796,616 Summary of Total Distributions to Heirs and Others Values at Second Death Total Net Distributions to Family $21,791,257 Charitable Bequests $243,451 Total Charitable Trusts, Bequests and Gifts $243,451 Total Distributions to Family and Charity $22,034, of 46 January 26, 2017

21 Effects of Planning and New Life Insurance Projected Growth of Assets Total Vaue Today $10,087,000 John's Assets Today $8,321,000 Jane's Assets Today $1,766,000 This analysis assumes that John dies in 24 years and Jane dies 1 year later. The growth of your assets until death considers your income as well as the portion of existing assets used to provide the spending patterns detailed in the assumptions. End of Year Expected Income Total Outgoing Payments Change in Assets ASSET VALUES End of Year Asset Values John's Assets Jane's Assets 2017 $305,000 $372,419 $442,736 $10,529,736 $8,739,018 $1,790, , , ,155 10,963,891 9,164,545 1,799, , , ,635 11,392,526 9,599,818 1,792, , ,597 11,682,123 9,929,174 1,752, , , ,510 11,996,633 10,175,192 1,821, , , ,526 12,295,160 10,401,714 1,893, , , ,836 12,599,995 10,630,836 1,969, , , ,117 12,921,113 10,872,317 2,048, , , ,365 13,300,477 11,153,887 2,146, , , ,817 13,665,294 11,437,575 2,227, , , ,083 14,045,377 11,732,790 2,312, , , ,827 14,437,205 12,035,826 2,401, , , ,380 14,842,584 12,348,298 2,494, , , ,650 15,262,234 12,670,722 2,591, , , ,358 15,694,592 13,001,480 2,693, , , ,469 16,142,061 13,342,416 2,799, , , ,214 16,605,275 13,694,268 2,911, , , ,965 17,083,239 14,055,623 3,027, , , ,929 17,579,168 14,429,396 3,149, , , ,083 18,094,251 14,816,494 3,277, , , ,024 18,627,276 15,215,404 3,411, , , ,497 19,180,773 15,628,341 3,552, , , ,041 19,753,814 16,054,381 3,699, , , ,505 20,349,319 16,495,741 3,853,578 Values at John's death $16,495,741 $3,853,578 Adjustments at John's Death Cash Flow Adjustment Estate Total in $234,821 $16,260,919 Combined Estate Total $20,062,567 -$51,931 $3,801,647 Premiums may vary based on many factors, including the age, sex, and health of the insured. This presentation is not valid unless accompanied by an illustration of proposed policy values. 19 of 46 January 26, 2017

22 Effects of Planning and New Life Insurance John Dies in 2041, Jane Dies in 2042 Combined Gross Estate $20,062,567 in 2041 Irrevocable Life Insurance Trust Taxes, Expenses, Probate and Debts $44,796 1 $5,254,228 Remaining Estate at Jane's death $5,366,032 $6,253,543 Marital Trust $6,386,610 $8,510,000 Family Trust $8,945,388 in 2042 Bequests Taxes, Expenses, Probate and Debts $1,151,911 Gifts Irrevocable Life Insurance Trust Family Trust Net Distributions to Heirs less: Income Tax on Income in Respect of Decedent Total to Family Charitable: Trusts, Bequests, and Gifts Total Distributions to Family and Charity $1,796,616 $3,053,566 $8,945,388 $10,334,280 -$334,663 $23,795,186 $243,451 $24,038,637 Premiums may vary based on many factors, including the age, sex, and health of the insured. This presentation is not valid unless accompanied by an illustration of proposed policy values. 1 Debts of $24,796 are deductible for estate tax calculations even though some of these debts were not paid but transferred to the surviving spouse. 20 of 46 January 26, 2017

23 Effects of Planning and New Life Insurance Explanation of Values on Flowchart At John's Death in 2041 Combined Gross Estate The Combined Gross Estate is $20,062,567. Included are assets owned by John and Jane. Taxes, Expenses, Probate and Debts Tentative Tax Base (after expenses, deductions and adjustments): $8,510,000 1 Federal Estate Tax before Credits $3,349,800 Applicable Unified Credit 2 $3,349,800 Missouri State Tax $0 Total Net Taxes Due $0 Remaining Estate Jane's Assets at John's death $3,801,647 plus Other Funds (Net Inheritance) $1,452,581 Remaining Estate at John's death includes IRA Rollover of $1,452,581 $5,254,228 Marital Trust At John's death, a Marital Trust is created. The trust is valued at $6,253,543. With growth at assumed rates, the Marital Trust is worth $6,386,610 at Jane's death. Family Trust A Family Trust is established at John's death, using assets valued at $8,510,000. With growth at assumed rates, the Family Trust is worth $8,945,388 at Jane's death. At Jane's Death in 2042 Remaining Estate at Jane's death in 2042 with growth at assumed rates $5,366,032 Taxes, Expenses, Probate and Debts 1 Tentative Tax Base (after expenses, deductions and adjustments): $11,488,800 Federal Estate Tax before Credits $4,541,320 Premiums may vary based on many factors, including the age, sex, and health of the insured. This presentation is not valid unless accompanied by an illustration of proposed policy values. 1 See the Estate Calculations page for further details on expenses and deductions. 2 American Taxpayer Relief Act of 2012 provides for an Applicable Exclusion amount of $5,000,000, indexed for inflation after The Basic Unified Credit is $1,945,800, indexed for inflation after Unused Applicable Exclusion amounts may be passed to the surviving spouse ('portability'), provided an election is made on a timely filed estate tax return of the deceased spouse (DSUEA). The Applicable Unified Credit amount is the Basic Unified Credit plus 40% of the DSUEA used at death, if any. 21 of 46 January 26, 2017

24 Effects of Planning and New Life Insurance Taxes, Expenses, Probate and Debts 1 Applicable Unified Credit 2 $3,409,800 Missouri State Tax $0 Total Net Taxes Due $1,131,520 less Income Tax on Income in Respect of Descedent -$334,663 Value of Other Items at Second Death Irrevocable Life Insurance Trust (ILIT) $3,053,566 Charitable Bequests $243,451 Gifts (not including life insurance premiums) $1,796,616 Summary of Total Distributions to Heirs and Others Values at Second Death Irrevocable Life Insurance Trust (ILIT) $3,053,566 Total Net Distributions to Family $23,795,186 Charitable Bequests $243,451 Total Charitable Trusts, Bequests and Gifts $243,451 Total Distributions to Family and Charity $24,038,637 Premiums may vary based on many factors, including the age, sex, and health of the insured. This presentation is not valid unless accompanied by an illustration of proposed policy values. 1 See the Estate Calculations page for further details on expenses and deductions. 2 American Taxpayer Relief Act of 2012 provides for an Applicable Exclusion amount of $5,000,000, indexed for inflation after The Basic Unified Credit is $1,945,800, indexed for inflation after Unused Applicable Exclusion amounts may be passed to the surviving spouse ('portability'), provided an election is made on a timely filed estate tax return of the deceased spouse (DSUEA). The Applicable Unified Credit amount is the Basic Unified Credit plus 40% of the DSUEA used at death, if any. 22 of 46 January 26, 2017

25 Making the Most of Your Life Insurance Estate Taxes on Existing Life Insurance One of the first steps in estate planning is to make your life insurance more effective. Estate taxes must be paid on all assets, including life insurance proceeds. 1 If the life insurance is outside the estate, all of the proceeds are available to your heirs. 2 For example: Life Insurance Inside Estate Amounts inside the estate are policies in which the owner or beneficiary designation causes the death proceeds to be included in the taxable estate of one of the clients. Life Insurance Outside Estate Amounts outside the estate are policies that have ownership and beneficiary designations that remove the death proceeds from both estates. Total to Heirs: $60,000 Total to Heirs: $100,000 1 Assumes a marginal federal estate tax rate of 40%. 2 Changes in ownership must be in effect for three years to avoid estate taxation. 23 of 46 January 26, 2017

26 Leveraging Gifts with Life Insurance Using Gifts to Purchase Life Insurance In this example, the first bar shows gifts exactly equal to the life insurance premiums. The appreciation of these gifts is based on an annual growth rate of 8%. The second bar shows the same gift being used in payment for life insurance premiums. The life insurance would have a value equal to the policy cash value prior to the death(s) of the insured(s). At death in 10 years, the value to the beneficiary would be the death proceeds, or $1,000,000 in this example. In each case, the same assumptions are made concerning the taxation of gifts. It is also assumed that these gifts will be outside the insured's taxable estate. If excluded from taxable estate, insurance proceeds will be income and estate tax free. (Exceptions not considered here are gift taxes paid within three years of death and any transfer of life insurance within three years of death.) This example shows equal gifts and assumes equal estate and gift taxation. "Leveraging" gifts with life insurance describes how smaller gifts, used to pay life insurance premiums, may purchase a larger death benefit. The difference between the cumulative premiums, adjusted for growth, and the death benefit will depend on a variety of factors, such as when death occurs and the growth rates assumed. No existing policy values have been used to pay or "finance" new life insurance. $1,000,000 $156,455 $100,000 $100,000 Regular Gifts Gifts totaling $100,000 ($10,000 per year for 10 years) plus the appreciation (growth) for 10 years have a value of $156,455 to the beneficiaries. Gifts of Premiums Gifts totaling $100,000 ($10,000 per year for 10 years) used to help pay for life insurance premiums. If death occurs at the end of 10 years, this gift has a value of $1,000,000 to beneficiaries. This is a hypothetical situation. It is not intended to illustrate any particular life insurance product. Any insurance proposed should be accompanied by a complete illustration of proposed policy values. 24 of 46 January 26, 2017

27 Estate Calculations at First Death John Dies First in 2041 Estate at John's Death in 2041 Current Plan Proposed Plan Net Estate $19,775,887 $16,236,124 John's Gross Estate $19,791,571 $16,260,919 less Liabilities -$15,683 -$24,796 Net Estate $19,775,887 $16,236,124 Total Expenses $517,436 $20,000 Probate and Administrative Fees $497,436 $0 Final Expenses $20,000 $20,000 Total Expenses $517,436 $20,000 Adjusted Gross Estate (A-B) $19,258,451 $16,216,124 Total Deductions $10,748,451 $7,706,124 Marital Deduction $10,748,451 $7,706,124 Includes Marital Trust $9,295,870 $6,253,543 Total Additions $0 $0 Tentative Tax Base (C-D+E) $8,510,000 $8,510,000 Total Net Taxes Due $0 $0 Federal Estate Tax before Credits $3,349,800 $3,349,800 less Applicable Unified Credit 1 -$3,349,800 -$3,349,800 State Tax $0 $0 Total Net Taxes Due $0 $0 Distributions at John's Death (C-G) $19,258,451 $16,216,124 1 American Taxpayer Relief Act of 2012 provides for an Applicable Exclusion amount of $5,000,000, indexed for inflation after The Basic Unified Credit is $1,945,800, indexed for inflation after Unused Applicable Exclusion amounts may be passed to the surviving spouse ('portability'), provided an election is made on a timely filed estate tax return of the deceased spouse (DSUEA). The Applicable Unified Credit amount is the Basic Unified Credit plus 40% of the DSUEA used at death, if any. 25 of 46 January 26, 2017

28 Estate Transferred to Heirs John Dies First in 2041 Distributions at John's Death in 2041 Current Plan Proposed Plan John's Gross Estate $19,791,571 $16,260,919 less Liabilities -$15,683 -$24,796 less Total Expenses -$517,436 -$20,000 less Total Net Taxes Due -$0 -$0 After Tax Estate $19,258,451 $16,216,124 Reduction after Taxes and Expenses 3% 0% Distributions of Estate Assets John's Bequests $0 $0 Marital Deduction $10,748,451 $7,706,124 Includes Marital Trust $9,295,870 $6,253,543 Family Trust $8,510,000 $8,510,000 Other Distributions Value of Gifts $0 $1,665,410 Premiums may vary based on many factors, including the age, sex, and health of the insured. This presentation is not valid unless accompanied by an illustration of proposed policy values. 26 of 46 January 26, 2017

29 Estate Calculations Jane Dies Second in 2042 Estate at Jane's Death in 2042 Current Plan Proposed Plan Net Estate $15,015,324 $11,752,251 Jane's Gross Estate $15,015,432 $11,752,642 less Liabilities -$108 -$391 Includes Marital Trust $9,593,166 $6,386,610 Net Estate $15,015,324 $11,752,251 Total Expenses $121,223 $20,000 Probate and Administrative Fees $101,223 $0 Final Expenses $20,000 $20,000 Total Expenses $121,223 $20,000 Adjusted Gross Estate (A-B) $14,894,102 $11,732,251 Total Deductions $100,000 $243,451 Charitable Bequests $100,000 $243,451 Total Additions $0 $0 Tentative Tax Base (C-D+E) $14,794,102 $11,488,800 Total Net Taxes Due $2,453,641 $1,131,520 Federal Estate Tax before Credits $5,863,441 $4,541,320 less Applicable Unified Credit 1 -$3,409,800 -$3,409,800 State Tax $0 $0 Total Net Taxes Due $2,453,641 $1,131,520 Income Tax on Income in Respect of Decedent $351,705 $334,663 Distributions at Jane's Death (C-G-H) $12,088,756 $10,266,068 1 American Taxpayer Relief Act of 2012 provides for an Applicable Exclusion amount of $5,000,000, indexed for inflation after The Basic Unified Credit is $1,945,800, indexed for inflation after Unused Applicable Exclusion amounts may be passed to the surviving spouse ('portability'), provided an election is made on a timely filed estate tax return of the deceased spouse (DSUEA). The Applicable Unified Credit amount is the Basic Unified Credit plus 40% of the DSUEA used at death, if any. 27 of 46 January 26, 2017

30 Estate Transferred to Heirs Jane Dies Second in 2042 Distributions at Jane Death in 2042 Current Plan Proposed Plan Jane's Gross Estate $15,015,432 $11,752,642 less Liabilities -$108 -$391 less Total Expenses -$121,223 -$20,000 less Total Net Taxes Due -$2,453,641 -$1,131,520 less Income Tax on IRD -$351,705 -$334,663 After Tax Estate $12,088,756 $10,266,068 Reduction after Taxes and Expenses 19% 13% Distribution of Estate Assets Jane's Bequests $10,313,971 $8,591,283 Family Trust $8,945,388 $8,945,388 Other Distributions Life Insurance Available Irrevocable Life Insurance Trust $0 $3,053,566 Value of Gifts $0 $1,796,616 Charitable Bequests $100,000 $243,451 Other Transfers to Heirs $1,674,785 $1,408,334 Total Estate Transferred $21,034,144 $24,038,637 Increased Distributions to Heirs and Others from New Life Insurance and Additional Planning $3,004,493 Premiums may vary based on many factors, including the age, sex, and health of the insured. This presentation is not valid unless accompanied by an illustration of proposed policy values. 28 of 46 January 26, 2017

31 Asset Summary All Assets John Dies in 2041, Jane Dies in 2042 Current Plan End of Year Beginning of Year Assets Change in Asset Values End of Year Asset Value 1 Net Assets Used for Cash Flow $10,087,000 $494,695 $10,581,695 $15, ,581, ,938 11,070,633 50, ,070, ,770 11,554,402 86, ,554, ,952 11,900, , ,900, ,020 12,300, , ,300, ,338 12,710, , ,710, ,579 13,114, , ,114, ,416 13,538, , ,538, ,727 14,027, , ,027, ,902 14,509, , ,509, ,374 15,013, , ,013, ,070 15,538, , ,538, ,178 16,084, , ,084, ,101 16,653, , ,653, ,938 17,243, , ,243, ,962 17,858, , ,858, ,813 18,498, , ,498, ,227 19,165, , ,165, ,720 19,859, , ,859, ,686 20,584, , ,584, ,089 21,340, , ,340, ,986 22,129, , ,129, ,448 22,952, , ,952, ,830 23,812, , ,812,760-8,673,045 15,139, ,282 1 Assets equal total income less outgoing payments plus net effects of cash flow plus existing assets. 2 See Net Adjustments for Cash Flow page. 29 of 46 January 26, 2017

32 Income Summary Total Income Received John Dies in 2041, Jane Dies in 2042 Current Plan End of Year Salary Other Income 1 Social Security 2 Earnings (Cash, Dividends) Retirement Plan Distributions Total Expected Income 2017 $305,000 $0 $0 $0 $0 $305, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,255 1 Other Income includes any estimated tax refunds for the prior year. 2 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for John is age 66 and FRA for Jane is age 66 and 2 months. 30 of 46 January 26, 2017

33 Net Adjustments for Cash Flow Adjustments John Dies in 2041, Jane Dies in 2042 Current Plan End of Year Expected Income New Loan Proceeds Net Assets Used for Cash Flow Annual Shortfall Total Outgoing Payments 2017 $305,000 $0 $15, $320, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,255 15, , , of 46 January 26, 2017

34 Lifestyle Expenses Summary Outgoing Payments John Dies in 2041, Jane Dies in 2042 Current Plan End of Year Living Expenses Education Other Specific Needs Loan Payments Retirement Plan Contributions Lifestyle Expenses 2017 $200,004 $0 $0 $0 $0 $200, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , of 46 January 26, 2017

35 Outgoing Payments Summary Outgoing Payments John Dies in 2041, Jane Dies in 2042 Current Plan End of Year Lifestyle Expenses Gifts Not Including Life Insurance Life Insurance Premiums Tax Payments and Withholdings Discretionary Spending Outgoing Payments 2017 $200,004 $0 $4,089 $116,415 $0 $320, , , , , , , , , , ,089 38, , , ,089 34, , , ,089 54, , , ,089 79, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , of 46 January 26, 2017

36 Asset Summary All Assets John Dies in 2041, Jane Dies in 2042 Proposed Plan with New Life Insurance End of Year Beginning of Year Assets Change in Asset Values End of Year Asset Value 1 Net Assets Used for Cash Flow $10,087,000 $442,736 $10,529,736 $67, ,529, ,155 10,963, , ,963, ,635 11,392, , ,392, ,597 11,682, , ,682, ,510 11,996, , ,996, ,526 12,295, , ,295, ,836 12,599, , ,599, ,117 12,921, , ,921, ,365 13,300, , ,300, ,817 13,665, , ,665, ,083 14,045, , ,045, ,827 14,437, , ,437, ,380 14,842, , ,842, ,650 15,262, , ,262, ,358 15,694, , ,694, ,469 16,142, , ,142, ,214 16,605, , ,605, ,965 17,083, , ,083, ,929 17,579, , ,579, ,083 18,094, , ,094, ,024 18,627, , ,627, ,497 19,180, , ,180, ,041 19,753, , ,753, ,505 20,349, , ,349,319-8,586,619 11,914,848 0 Premiums may vary based on many factors, including the age, sex, and health of the insured. This presentation is not valid unless accompanied by an illustration of proposed policy values. 1 Assets equal total income less outgoing payments plus net effects of cash flow plus existing assets. 2 See Net Adjustments for Cash Flow page. 34 of 46 January 26, 2017

37 Income Summary Total Income Received John Dies in 2041, Jane Dies in 2042 Proposed Plan with New Life Insurance End of Year Salary Other Income 1 Social Security 2 Earnings (Cash, Dividends) Retirement Plan Distributions Total Expected Income 2017 $305,000 $0 $0 $0 $0 $305, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,255 1 Other Income includes any estimated tax refunds for the prior year. 2 Benefits may be reduced for earnings from current work prior to full retirement age (FRA). FRA for John is age 66 and FRA for Jane is age 66 and 2 months. 35 of 46 January 26, 2017