The Farm Bureau Estate Planning Program The Farm Bureau Estate Planning Program A Service-to-Member Program Since 1974 A Service-to-Member Program Since.

Slides:



Advertisements
Similar presentations
Buy Sell Agreements For Agent Use Only Not for Distribution to the Public Buy / Sell Agreements.
Advertisements

Business Continuation Planning.  Is the business readily marketable?  Can the assets be easily converted to cash for the benefit of your family?  Is.
WEALTH MANAGEMENT AND ESTATE PLANNING Robert Moore Wright & Moore Law Co. LPA Delaware, Ohio.
Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Premium Financing Leveraging Assets.
Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN The Irrevocable Life Insurance Trust:
Achieving More Together Top 10 Insurance Planning Opportunities.
Living Wills, Health Care Proxies,
1 Mike Halloran. 2 Business Continuation – general  Sooner or later, the day will come when the current owner of the business no longer owns it.  What.
ESTATE PLANNING. Three questions you probably want answered: How much tax will I owe? When do I pay the tax? How do I pay the tax?
Demystifying Corporate Owned Life Insurance
Personal Relationships…Professional Solutions Comprehensive Wealth Management Presented By Reliance Trust Company John A. Rodgers, III.
Wealth Transfer & Estate Planning with IRA Assets Create A Legacy with Individual Retirement Accounts For Producer Use Only. Not to be Used with Existing.
Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Leaving a legacy while retaining some.
Investing in your small business success. Agenda  Protecting your business  Banking outside the box  Investing in the future.
Reward & Retain with Simplicity Direct Gifts Using Life Insurance ©2014 Voya Services Company. All rights reserved. CN An Efficient Way To.
Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Walton GRAT: Preserving Family Wealth.
Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Protecting Your Family’s Inheritance.
Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Creating an inheritance with tax-efficient.
The Buy Sell Agreement For Private Corporations and Partnerships Insurance Concepts.
Planned Gift Definitions Compiled by Maureen Mahoney Hill, CFRE April 2011.
Advising Business Owners Instructor: Dwight Drake Problem 16 Parties Objectives Jason: - Be assured control of business – not accountable to siblings.
Business Continuation Using Life Insurance to Help Ensure the Continuation of Your Business INDIVIDUAL LIFE INSURANCE NOT INSURED BY FDIC OR ANY FEDERAL.
Presented by: Business Continuity Planning Tom Pilkington CA CFP TEP National Estate and Tax Planning Consultant Ontario Regional Marketing Centre Keyperson.
1 Section 79 Plans with SecurePlus Advantage 79 TAX-ADVANTAGED LIFE INSURANCE FOR BUSINESS OWNERS AND EMPLOYEES TC42529(0808) This information is not intended.
Coverage for Loans Coverage for Loans Insurance Concepts.
 Special Elections And Post Mortem Planning.  Estate Planning after Death o Decisions made on the estate that Impact heirs Impact taxes Impact executor.
Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com 6-1 Objectives of Buy-Sell.
Facts About Life Insurance  Purpose  What You Are Paying For  Who Needs It?
Life Insurance in Estate Planning
Owner Succession Planning Presenters: Scott A. Isdaner, CPA, JD Jim Hamlet, CPA, MT Isdaner & Company, LLC (610)
Well, I’ll Get Around to it.... WHO NEEDS AN ESTATE PLAN? EVERYONE!
Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Building family wealth while retaining.
Planned Giving – An Essential Fundraising Vehicle Michele Thomas Dole, MS, CFP ® Faculty, The Fund Raising School.
Planned Giving. While Annual gifts and Major gifts are given “outright”, Planned gifts are established in a way that is typically fulfilled after a term.
Trust Basics By Jingang Xu (internal training use for Anna Li’s team only)
Business Succession Planning Can your business survive without you?
FOR BROKER/DEALER AND GENERAL AGENT USE ONLY.1 Gifting Using Gifting to discover the power of lifetime giving Manulife Financial and the block design are.
Life Insurance Premium Financing
Planned Giving Frank M Jacobs,CLU, ChFC James M Gambaccini, CFP Acorn Financial Services, Inc Chain Bridge Road Fairfax, Va
Buy-Sell Agreements Chapter 27 Tools & Techniques of Life Insurance Planning  What is it?  legal contract restricting the right to dispose of.
© 2004 ME™ (Your Money Education Resource™) 1 Estate Planning Chapter 12: Special Elections and Post Mortem Planning.
Attract & Retain Your Employees Build & Preserve Your Business Protect Your Family Larry Ricke and Mike Ricke are registered representatives offering securities.
FOR BROKER/DEALER AND GENERAL AGENT USE ONLY.1 Dynasty Trust Analysis (GSTT Planning Strategies) Maximizing Family Wealth and Avoiding Transfer Tax for.
Split Interest Charitable Trusts, Private Foundations and Donor Advised Funds Fran M. DeMaris Executive Vice President Cannon Financial Institute, Inc.
 Characteristics  Provides protection for the entire lifetime  Level or fixed periodic premiums payable for the lifetime of the insured  Level.
RETIREMENT INVESTMENTS INSURANCE Private Loans: Building Family Wealth While Retaining Some Control SMART TOOLS FOR CREATING FINANCIAL BLUEPRINTS.
Copyright Go Navy! Copyright 2003 ASSET ACCUMULATION, PROTECTION, PRESERVATION, and TRANSFER, LLC Registered Investment Advisory Firm John A. Cory,
Estate Planning: Concepts and Strategies
FOR PRODUCER USE ONLY – NOT FOR DISSEMINATION TO THE PUBLIC All the information contained herein is confidential and proprietary and belongs solely to.
Survivorship Life  Characteristics  Also called second-to-die, last-to-die, joint life  Pays a death benefit upon the death of two or more insured’s.
1 1 Creating a Wealth Preservation Blueprint for your Loved Ones Private Trustee Services RHB Trustees Berhad (formerly known as OSK Trustees Berhad)
RETIREMENT INVESTMENTS INSURANCE © 2013ING North America Insurance Corporation. CN Walton GRAT: Preserving Family Wealth with an Estate.
Irrevocable Life Insurance Trust Chapter 31 Tools & Techniques of Estate Planning Copyright 2011, The National Underwriter Company1 A vehicle for owning.
Cash and Cash Equivalents Chapter 1 Tools & Techniques of Investment Planning Life Insurance and the Generation-Skipping Transfer Tax Chapter 25 Tools.
BUSINESS SUCCESSION & FAMILY LEGACY: KEEPING THE DREAM ALIVE Preserving Your Hard Earned Family Wealth & Creating a Legacy Presented by Freedom Broker.
Defective Trust Chapter 27 Tools & Techniques of Estate Planning Copyright 2011, The National Underwriter Company1 An irrevocable trust in which: –Transfers.
Contingent Liability Structuring the contingent liability solution.
Charitable Split Interest Trusts Chapter 33 Tools & Techniques of Estate Planning Copyright 2011, The National Underwriter Company1 A trust that has both.
Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company. Business Continuation Planning.
Term Insurance  Characteristics  Payments at death only  Contract expires at the end of the term  When is the use of this tool indicated  Provide.
Charitable Remainder Trusts presented by Tim Mezhlumov, EA, CFP, CLU, CFS, CLTC.
Buy/Sell Agreements. If you had died last night…how would these questions be answered today? Who is running the business? To whom do they report? How.
Business Succession Strategies Buy-Sell Agreements: Considerations and Common Mistakes.
Estate Planning Kim Scouller
The One For Three Solution Making Retained Earnings Work For You Trying on the Solution [Trying on the solution is a tool for use with a client during.
By Jingang Xu (internal training use for Anna Li’s team only)
Business Continuation Planning
INVEST Trust Services Trust School 101.
Problem 11-A: Adoft Inc Issues for Jane, Lewis and Peter
Yesterday a dream Today a thriving business Tomorrow a legacy
Presentation transcript:

The Farm Bureau Estate Planning Program The Farm Bureau Estate Planning Program A Service-to-Member Program Since 1974 A Service-to-Member Program Since 1974 Southern Farm Bureau Life Insurance Company Jackson, Mississippi (601) Southern Farm Bureau Life Insurance Company Jackson, Mississippi (601) EPSIMG1 REVISED 11/01

Uses of Life Insurance In Estate Planning I.Policy Types II. Life Insurance Trusts (“Family Private Bank Fund”) III. Dividing The Estate (Distribution Planning) IV. Business Transfer (The Buy/Sell) V. Charitable Gifts

Policy Types I. Term Insurance A. Insures For a Limited Period (5,10,20 years). B. Useful for Family Protection: Income Replacement and Debt Payment. C. Used Only in “Special Strategies” in Estate-tax Planning. D. Big Coverage Amounts/Modest Price

Policy Types II. Whole Life Insurance A. Best For “Long Term” Needs B. Develops Cash Value (Savings) C. May Pay Dividends (Benefit Growth) D. Delivers Money at “Indeterminate Time” E. Very Useful in Estate Planning

Policy Types III. Survivorship Life Insurance (“Last Survivor” Life) A. Insures Two People (Mom & Dad) B. Pays Benefit at Death of Survivor C. Provides Largest Amount of Death Benefit per Premium Dollar. D. Excellent for Estate Liquidity & Tax E. Often Funds Trust for Tax Payment

Your Life Insurance Can: 1.Fund bequests for children and grandchildren outright or in trust. 2.Equalize estate distributions to your heirs. 3.Fund tax-free charitable bequests to your favorite charity. You might receive an income-tax deduction for the premiums. 4.Pay estate taxes and transfer costs. 5.Provide Security For surviving Spouse 6.Provide Liquidity to Continuing Business

Irrevocable Life Insurance Trust (ILIT) I. Why Use A Trust ? A. Privacy B. Removes Life Policy Death Benefit From Estate Tax C. Provides Funds to Pay Estate taxes From “Outside” D. Provides Liquidity for Other Estate Needs Without Increasing Estate Size I. Why Use A Trust ? A. Privacy B. Removes Life Policy Death Benefit From Estate Tax C. Provides Funds to Pay Estate taxes From “Outside” D. Provides Liquidity for Other Estate Needs Without Increasing Estate Size

Irrevocable Life Insurance Trust (ILIT) II. The Trust Acts Like a “Family Private Bank” A. Can Make Loans to Estate B. Can Purchase Assets From the Estate C. Can Divide Property to Heirs D. Can Execute Continuing Management Instructions E. May Protect Against Creditors II. The Trust Acts Like a “Family Private Bank” A. Can Make Loans to Estate B. Can Purchase Assets From the Estate C. Can Divide Property to Heirs D. Can Execute Continuing Management Instructions E. May Protect Against Creditors

Irrevocable Life Insurance Trust (ILIT) III. How To Set Up An ILIT A. Estate Attorney Drafts Trust B. You Choose a Trustee C. You Transfer an Existing Policy to the Trust (3-Year Rule) or Trustee Applies for New Policy D. You Make Money Gifts to Trust to Fund Policy E. Trustee Handles Administrative Duties III. How To Set Up An ILIT A. Estate Attorney Drafts Trust B. You Choose a Trustee C. You Transfer an Existing Policy to the Trust (3-Year Rule) or Trustee Applies for New Policy D. You Make Money Gifts to Trust to Fund Policy E. Trustee Handles Administrative Duties

Irrevocable Life Insurance Trust (ILIT) IV. The ILIT Funded With Life Insurance in Summary: A. “Leverages” Relatively Small Cash Gifts into Large Amounts of Tax-Free Funds When Funded with Life Insurance B. Funds Pay Taxes or Replaces Estate Money Lost to Taxes C. Funds Available to Solve Estate Distribution “Problems” IV. The ILIT Funded With Life Insurance in Summary: A. “Leverages” Relatively Small Cash Gifts into Large Amounts of Tax-Free Funds When Funded with Life Insurance B. Funds Pay Taxes or Replaces Estate Money Lost to Taxes C. Funds Available to Solve Estate Distribution “Problems”

Estate Distribution Problems I. The “Equitable Split” Problem A.Children/Child In the Family Business Need/s Most of the Value of the Estate Represented by the Capital Assets B.How do You Make an “Equitable” Distribution? C.Life Insurance Proceeds (Often Survivor Life) Can Provide Cash Distributions to Children Not in the Family Business A.Children/Child In the Family Business Need/s Most of the Value of the Estate Represented by the Capital Assets B.How do You Make an “Equitable” Distribution? C.Life Insurance Proceeds (Often Survivor Life) Can Provide Cash Distributions to Children Not in the Family Business

Estate Distribution Problems II. "Surviving Mom/Business Risk” Problem A.Mom Has Participated In the Business or Farming Operation Risk With Dad All Her Life. B.At Dad’s Death, There is/are Child/Children in the Business Who Need the Business Assets to Continue. C.Therefore, Mom Cannot Liquidate the Equipment and Other Assets for Her Security. D.Mom Is Forced to Continue to “Ride” the Business Risk With the Child/Children. A.Mom Has Participated In the Business or Farming Operation Risk With Dad All Her Life. B.At Dad’s Death, There is/are Child/Children in the Business Who Need the Business Assets to Continue. C.Therefore, Mom Cannot Liquidate the Equipment and Other Assets for Her Security. D.Mom Is Forced to Continue to “Ride” the Business Risk With the Child/Children.

Estate Distribution Problems II. "Surviving Mom/Business Risk” Solution A.Child/Children Who Will Continue the Family Business Purchase and Own Life Insurance On the Primary Business Operator (Often Dad). B.At the Primary Owner’s Death, Child Purchases Business Interest or Needed Assets From Owner’s Estate. C.Mom Has Cash for Security, May Continue to Lease Land to Children, and Children Have Assets They Need. Mom Relieved of Risk. A.Child/Children Who Will Continue the Family Business Purchase and Own Life Insurance On the Primary Business Operator (Often Dad). B.At the Primary Owner’s Death, Child Purchases Business Interest or Needed Assets From Owner’s Estate. C.Mom Has Cash for Security, May Continue to Lease Land to Children, and Children Have Assets They Need. Mom Relieved of Risk.

Estate Distribution Problems II. "Surviving Mom/Business Risk” Solution D. The Estate Size Is Not Increased by This Purchase Since Cash is EXCHANGED for Assets. E. The Cash Paid to Mom Can Be Used, at Her Death to Help With “Equitable Distribution Problem” for Children Not In the Business. F. Kids “Not In the Business” Know Children “In the Business” Paid For some of the Assets They Received. D. The Estate Size Is Not Increased by This Purchase Since Cash is EXCHANGED for Assets. E. The Cash Paid to Mom Can Be Used, at Her Death to Help With “Equitable Distribution Problem” for Children Not In the Business. F. Kids “Not In the Business” Know Children “In the Business” Paid For some of the Assets They Received.

Business Transition Planning 1. As We Just Discussed, Have a Plan for Business Transfer to Children or Business Partners. 2. Formalize business relationship with children as soon as it’s sure they’re committed to the business. 3. Formalize the Transfer Terms with Other Partners, Whether Family or Not, with a “Buy/Sell” agreement: A. Preserves the value/establishes market B. Protects Business Value & Relationships

The Buy/Sell Agreement Benefits to Deceased’s Heirs & New Owners: 1. Everyone Knows How the Business Will Be Valued and What’s Going to Happen 2. Heirs have an Opportunity to Receive Cash vs. Partial Interest in the Business: A. The estate can be settled promptly and efficiently B. Heirs are not burdened with business responsibilities 3. Surviving Owner/s Not “In Business” With the Deceased’s Heirs 4. Surviving Owners Can Set New Goals Unimpeded

The Buy/Sell Agreement Basic Kinds of Buy/Sell Agreements: 1. Entity-Purchase Plans The agreement is between the Corporation, Partnership, LLC and the Stockholders or Partners 2. Cross-Purchase Plans The agreement is between the Stockholders or Partners and AVOIDS Potential Tax Problems 3. “Wait and See” Plans Are a combination of “Entity” and “Cross-Purchase” 4. Buy/Sell plans should address Death, Disability, and Retirement.

Funding The Buy/Sell 1. Assets of The Business Might Be Used A. Business Loses Assets B. There May Be Income-Tax Problems 2. Loans Might Be Obtained A. Have to Pay Back Principal & Interest B. Cash Flow of the Business Is Impaired 3. Installment Buyout A. Payee Continues In the Business Risk B. Continuing Drain on Earnings & Cash 4. Life Insurance Is an Inexpensive Way

Funding The Buy/Sell 1.Term Insurance: Low-Cost Funding Option A. Premium Fixed for 10,20,30 Years B. Can Be Used When the Coverage Time Period is Known & Cash Flow Critical 2. Whole Life Can Be Used When the Coverage Period is indefinite or Cash Value Desired 3. Deceased’s Family Is Immediately Paid or Receives a Large Down Payment 4. Entity Buyout: Business Owns & Pays Policy 5. Cross Purchase: Owners Insure Each Other

Charitable Gifting With Life Insurance 1.Giving Life Insurance Allows You To make Larger Gifts than Otherwise 2.Government Encourages Charitable Gifts 3.Therefore, You and Charity Get Benefit 4.Several Ways to Make Insurance Gifts: A.Make the Charity the Beneficiary 1. You retain control of policy & Cash Value 2. You don’t get an Income-Tax deduction 3. Your Estate gets Charitable Deduction for death benefit.

Charitable Gifting With Life Insurance Ways to Make Insurance Gifts (Cont.) B. Transfer An Existing Policy to Charity 1. You Give Up Control of Policy 2. You Gift Money for Premium to Charity 3. You get Charitable Income-Tax Deduction for Gift. C. Charity Takes Out New Policy on You 1. You Gift Premium Money to Charity 2. Charity Owns Policy & All Rights 3. You get Charitable Tax Deduction

Charitable Gifting With Life Insurance Ways to Make Insurance Gifts (Cont.) D. Gift Dividends of An Existing Policy to Charity 1. You get Income-Tax Deduction for Dividend Amount 2. Deduction gets Larger if Dividend Increases 3. You control Cash Value & Death Benefit still goes to Your Family E. Larger Income-Tax Deductions May Result from Premium Gifts to Charity Rather than Your Paying Insurance Company Directly F. Whole Life or Survivor Life Policies Best

Poor Planning May Equal Unnecessary Estate Taxes And Inefficient Distribution Poor Planning May Equal Unnecessary Estate Taxes And Inefficient Distribution

Farm Bureau Estate Planning Service For FB Members Since 1974 Farm Bureau Estate Planning Service For FB Members Since EPSIMG1

No information presented should be viewed as tax advice. A tax advisor should be consulted to review your particular circumstances.