SPECIAL NEEDS PLANNING Ensuring Your Wishes for Their Future Name, title(s), designation(s) The Principal Financial Group  Date

SPECIAL NEEDS PLANNING BB I 06/2014 | t ay © Principal Financial Services, Inc. Des Moines, Iowa All rights reserved. No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system without prior written permission from the Principal Financial Group®. While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance products issued by Principal National Life Insurance Co. (except in NY), Principal Life Insurance Co. and the companies available through the Preferred Product Network, Inc. Securities offered through Princor Financial Services Corporation, , Member SIPC. Principal National, Principal Life, the Preferred Product Network, and Princor®, are members of the Principal Financial Group®, Des Moines, IA

SPECIAL NEEDS PLANNING BB I 06/2014 | t ay © Principal Financial Services, Inc. Des Moines, Iowa All rights reserved. No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system without prior written permission from the Principal Financial Group®. is not an affiliate of any member company of the Principal Financial Group ®. is not an affiliate of any member company of the Principal Financial Group ®. While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance products issued by Principal National Life Insurance Co. (except in NY), Principal Life Insurance Co. and the companies available through the Preferred Product Network, Inc. Securities offered through Princor Financial Services Corporation, , Member SIPC. Principal National, Principal Life, the Preferred Product Network, and Princor®, are members of the Principal Financial Group®, Des Moines, IA

* 4 Who I am…and why I am here today. SPECIAL NEEDS PLANNING

 The basics  Understanding government benefits  Difference in estate planning (General vs. Special needs)  What is important to you  How to communicate your goals (Letter of Intent)  Funding the trust  Starting the planning process TODAY’S AGENDA SPECIAL NEEDS PLANNING

 The government offers a number of programs that offer financial assistance for things such as: o Medical care o Group housing o Personal attendant care o Vocational rehabilitation o Job coaching o Transportation assistance, and more.  However, eligibility may be based on financial need. THE BASICS SPECIAL NEEDS PLANNING

 Standard provisions in your will (bequest, life insurance or qualified plan beneficiary) may jeopardize eligibility for government benefits.  Assets in excess of statutory limits impact: o Entitlement benefits under Medicaid o Financial support under Supplemental Securities Income (SSI) THE BASICS SPECIAL NEEDS PLANNING

Let’s begin with the end in mind. THE BASICS Struggle between “Need” and “Affordability.” Lifetime of Care Quality of Life SPECIAL NEEDS PLANNING

Medicaid provides health benefits. Supplemental Security Income (SSI) provides a small monthly income to be used exclusively for basic survival (i.e., food and shelter). Medicaid maximums vary by state. UNDERSTANDING GOVERNMENT BENEFITS SPECIAL NEEDS PLANNING

ESTATE PLANNING SPECIAL NEEDS PLANNING Special needs estate planning General estate planning Legally Financially Legally

LEGAL CONCERNS Wills Guardianships Guardian Ad Litem SPECIAL NEEDS PLANNING Trusts Revocable Irrevocable

THE ANSWER IS… SPECIAL NEEDS PLANNING The Special Needs Trust Irrevocable Supplementary Beneficiary vs. Owner

 Is specific without being restrictive  Helps you to be prepared for a future you can’t control: o Divorce o Assets levels o Fiduciary name and characteristics o If beneficiary dies THE SPECIAL NEEDS TRUST SPECIAL NEEDS PLANNING

COMMUNICATING YOUR PRINCIPLES SPECIAL NEEDS PLANNING Making certain our values are communicated to the next caregiver.

 Think of it as the “Owner’s Manual” for the beneficiary  How to communicate your goals o Diagnosis o Medical and nutritional needs o Marriage o Religion o Housing o Important names and addresses LETTER OF INTENT SPECIAL NEEDS PLANNING

FUNDING YOUR SPECIAL NEEDS TRUST The financial side:  Real estate?  Investments?  Retirement funds?  Life insurance? SPECIAL NEEDS PLANNING

WHY LIFE INSURANCE? SPECIAL NEEDS PLANNING The Special Needs Trust Irrevocable Supplementary Beneficiary vs. Owner Life Insurance Fulfills: Transfer Wealth Net Worth remains Affordable Income replacement Meet the financial needs

FUNDING YOUR SPECIAL NEEDS TRUST One option: Survivorship Life Insurance  Equalizing inheritance  Wealth transfer solution for retirement accounts  Underwriting advantages for uninsurable  Buy-sell planning  Estate tax relief  Charitable giving SPECIAL NEEDS PLANNING

Final expenses and cash needs Long-term financial obligations Living expenses Current financial resources The industry standard recommends that the death benefit, or payout amount, of your life insurance policy should be seven to 10 times your annual income.* Source: Bankrate.com, Jan. 27, 2014 Source: Bankrate.com, Jan. 27, 2014 HOW MUCH LIFE INSURANCE DO YOU NEED? SPECIAL NEEDS PLANNING

FROM HERE TO SECURITY Not everyone wants or needs a complete analysis. Some may prefer an examination of specific needs. For them, we offer a free From Here to Security SM check-up to examine their life and disability insurance needs. SPECIAL NEEDS PLANNING

FROM HERE TO SECURITY SPECIAL NEEDS PLANNING

It protects your assets against the cost of long-term care. It can cover the cost of assistance due to injury and aging. Your beneficiaries are more secure because you are more secure. HOW LONG-TERM CARE CAN HELP SPECIAL NEEDS PLANNING

HOW DO I GET STARTED? SPECIAL NEEDS PLANNING With special needs professionals Estate planning attorneys Financial advisors

 Beneficial relationships are grounded in good communication.  Communicate these concepts to family members so that they don’t accidently jeopardize eligibility.  Name the trust, not the child, as the beneficiary. COMMUNICATION IS THE KEY SPECIAL NEEDS PLANNING

 Work with special needs planning specialists: o Legal special needs estate planners o Financial professionals that specialize in special needs estate planning STARTING THE PLANNING PROCESS SPECIAL NEEDS PLANNING

 You are the expert!  Always remember: o Quality of life o Lifetime of care START WITH WHAT IS IMPORTANT TO YOU SPECIAL NEEDS PLANNING

HOW CAN I HELP YOU? SPECIAL NEEDS PLANNING Financial specialty Introduction to Special Needs organizations and resources Referral to Special Needs estate planning attorneys

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