How to Make Your Estate Plan EPIC Financial Advisor.
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Transcript of How to Make Your Estate Plan EPIC Financial Advisor.
How to Make Your Estate Plan EPIC
<Advisor Name>
Financial Advisor
<Firm Name>
<Registered Branch Address>
This information may contain a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used
by any taxpayer for the purpose of avoiding federal tax penalties.
This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer.
Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their
specific circumstances.
What is EPIC estate planning?
Your Life. Your Legacy. Your EPIC.
Your estate planning concerns
Is my estate plan up-to-
date?
How much should I give to my kids?
Can I protect them?
What about taxes?
How much should I give to my community?
Do I have enough life insurance?
Traditional estate planning
• Traditional estate planning– Discussions centered on: • What is the status of estate taxes?• What is the newest estate planning strategies?• Is estate planning just planning after your death?
– These discussions are important but they may miss the central objective• How to help maximize your estate• During life and at death
Estate planning decisions
Faced with the repression of the “OR”
Do I live less today, in order to give more tomorrow?
OR
Do I live more today, and simply give less tomorrow?
What is EPIC estate planning?
• One definition of epic is:
Ep·ic adjective \ˈe-pik\ “extending beyond the usual or ordinary”
• EPIC estate planning– Process of helping make your estate plan extend beyond
traditional estate planning
Source: www.merriam-webster.com/dictionary/epic
EPIC estate planning decisions
EPIC embraces the brilliance of the AND
I want to maximize how i live today
and
I want to maximize what I give tomorrow
What is EPIC estate planning?
• Stands for Estate Planning Individually Centered– Planning centers around you• Maximizing the EPIC Circles• Minimizing the four estate planning threats
– An EPIC approach for EPIC Team:• You• Your advisor/agent/CPA/tax professional• Your estate planning attorney
The EPIC Circles
Your Life. Your Legacy. Your EPIC.
It begins with…
Next, comes…
Your Descendants
Children
Grandchildren
Other beneficiaries
Children with Special Needs
“… person should leave his kids enough to do anything but not enough to do nothing.”
Warren Buffet
It ends with…
Community Foundations
GovernmentFederal
StateLocal
EPIC circle
However, not all families are the same…
• Single parents• Blended families• Non-citizen spouses• Partners (unmarried couples)
Four Estate Planning Threats
Your Life. Your Legacy. Your EPIC.
Taxes
Taxes
Old paradigm – get it out
• Large gap between federal transfer and income tax rates• In 2001:
– Unified credit was $675,000 and top tax rate was 55%– Long term capital gains was 20%
Estate Tax 55%
Capital Gains Tax 20%
Gap is 35%
Source: Internal Revenue Service
New paradigm – tax basis opportunities
• Smaller gap between federal transfer and income tax rates• In 2014:
– Basic exclusion is $5.34 M and top tax rate was 40%– Long term capital gains was 20% + 3.8% Health Care Surtax
Estate Tax 40%
Capital Gains Tax 23.8%
Gap is 16.2%
Source: Internal Revenue Service
Creditors
Taxes Creditors
Protections
Three areas of protections
1.Client– Retirement income, long term care costs, asset protection
2.Spouse or Partner– Income replacement, remarriage, retirement income, asset
protection
3.Descendants– Asset protection, divorce, spending, special needs, blended
families
Spending
Taxes Creditors
Spending
Three buckets of assets
Capital assets
Retirement income assets
Legacy assets
Capital asset taxation
Timing Tax consequences
Purchase After tax
Income generated Ordinary income
Sale Capital gains• Long term • Short term
Disposition at death Fair market value at date of death• Can get a step-up or step-down in
basis
Retirement income assets
Timing Tax consequences
Contribution Qualified - before taxNon-qualified - after tax
Growth Tax-deferred
Distributions Ordinary income• Qualified – all ordinary income• Non-qualified – exclusion ratio
Disposition at death No step-up
Legacy assets
Timing Tax consequences
Purchase After tax
Growth Tax-deferred
Distributions Tax-preferred
Dispositions at death Automatic step-up in basis
EPIC retirement spending
• Use retirement income assets• Efficient use of capital assets• Efficient use of legacy assets
EPIC estate planning
• Use retirement income assets as an income source for the surviving spouse• Maximize capital assets at death with estate
inclusion to receive step-up in basis• Use legacy assets for income tax-free death
benefit
Death
Taxes Creditors
Spending Death
Why is life insurance important?
• Periodic small gift transfers of premium can provide larger death benefits • Income tax-free financial support for clients’ families upon
their death • Cash value – valuable tool if client needs to withdraw a
portion for any reason• Additional agreements may enhance the life insurance
policy
Agreements may be subject to additional costs and restrictions. Policy loans and withdrawals may create an adverse tax result in the event of a lapse or policy surrender, and will reduce both the cash value and death benefit.
EPIC
Taxes Creditors
Spending Death
Definition of an EPIC estate plan
• I want to maximize how live today – By tax-efficient spending
• In order to maximize what I give tomorrow– By protecting my family if an unexpected event happens– By passing my estate in the most tax-efficient manner
possible– By protecting my legacy for my descendants– By turning tax dollars into charitable dollars
Other side of EPIC Estate Planning
• Another definition of an epicEp·ic noun\ˈe-pik\ “a narrative poem in elevated language celebrating the adventures and achievements of a legendary or traditional hero.”
• The other side of EPIC estate planning is:– Estate planning is more than passing material wealth– It’s your values, hopes, and dreams– It’s the memories you create
Source: www.merriam-webster.com/dictionary/epic
Next Step
• Please take our EPIC fact finder• Take some time to reflect and answer the questions• Set up an initial meeting with your advisor(s) to start the
EPIC process
Make it EPIC!
Any questions?
Securian Financial Group, Inc.www.securian.com400 Robert Street North, St. Paul, MN 55101-20981-800-820-4205Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Both companies are headquartered in Saint Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. 400 Robert Street North, St. Paul, MN 55101-2098 • 1-800-820-4205 2014 Securian Financial Group, Inc. All rights reserved.A04764-0914 DOFU 12-2014
Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. One can lose money in this product.Guarantees are based on the claims-paying ability of the issuing insurance company.