Reward & Retain with Simplicity Direct Gifts Using Life Insurance ©2014 Voya Services Company. All rights reserved. CN An Efficient Way To Preserve Family Wealth Direct Gifts Using Life Insurance 1

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Disclosures  The Voya™ Life Companies and their agents and representatives do not give tax or legal advice. The strategies suggested may not be suitable for everyone and you should consult with your tax and legal advisors before implementing any of the strategies suggested here.  These materials are not intended to and cannot be used to avoid tax penalties, and were prepared to support the promotion or marketing of the matter addressed in this document. The taxpayer should seek advice from an independent tax advisor.  Life insurance products are issued by ReliaStar Life Insurance Company (Minneapolis, MN), ReliaStar Life Insurance Company of New York (Woodbury, NY) and Security Life of Denver Insurance Company (Denver, CO). Within the state of New York, only ReliaStar Life Insurance Company of New York is admitted and its products issued. Securities and investment advisory services offered through Voya Financial Advisors, member SIPC. All are members of the Voya™ family of companies.  All guarantees are based on the financial strength and claims paying ability of the issuing insurance company who is solely responsible for all obligations under its policies.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Two Questions Are you planning to leave an inheritance to your children or grandchildren?

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Two Questions Are you planning to leave an inheritance to your children or grandchildren? If so, how are you planning to do it?

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Passing on money at death can be difficult:  Estate taxes  Claims of creditors  The expenses of settling your estate  Asset transfer expenses (fees & commissions)  Potential investment losses

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN One way to be sure of passing on money to your children and grandchildren is to make gifts to them while you are alive.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Lifetime gifts have several potential advantages:  Potential growth in the value of the gift  Potential to reduce your federal income taxes  Potential to reduce your estate taxes  You can watch the gift being used

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN But there may also be disadvantages:  Assets may be poorly invested and lose value  Creditors may be able to take over the funds  If there’s a divorce, some or all of the funds may wind up in the hands of an ex-spouse  When you make a gift, you lose control of what you’ve given

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN How can you make gifts and retain enough control to keep the value of the assets in the family?

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Make your gifts to a trust where the trust agreement and a trustee control the assets

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Gifts to a Trust  The trust is set up to benefit your children; it should be irrevocable.  While the assets are in the trust, they may potentially be protected from creditors’ claims.  A trustee is appointed to manage the property in the trust for the benefit of the beneficiaries.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Some Advantages of Making Gifts to a Trust 1. The trust document helps you retain some control even though you no longer own what you’ve given away  You name the trustee(s)  The trust agreement tells the trustee how to manage and distribute the assets

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Some Advantages of Making Gifts to a Trust 1. The trust document helps you retain some control even though you no longer own what you’ve given away  You name the trustee(s)  The trust agreement tells the trustee how to manage and distribute the assets 2. It tells the trustee:  What investments can be used  What investments to avoid  When to pay out benefits  How to treat claims from creditors and ex-spouses

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN How do you make gifts to a trust without paying gift taxes?

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN How do you make gifts to a trust without paying gift taxes? Two possible strategies

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Minimizing Gift Taxes Option #1 — The Gift Tax Annual Exclusion  The gift tax applies to large gifts; small gifts are exempt  The annual exclusion is $14,000 per recipient per year  The recipient must have the right to take the gift immediately (a “present interest” e.g. recipient is granted a temporary withdrawal power, sometimes called a “Crummey Power”)

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Minimizing Gift Taxes Option #1 — The Gift Tax Annual Exclusion Option #2 — The Lifetime Gift Tax Exemption  Each person has one  Applies to gifts that don’t qualify for the gift tax annual exclusion  The lifetime exemption is currently capped at $5,340,000 per donor  When the total of your lifetime exemption gifts exceeds $5,340,000, you begin to pay gift taxes

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN It Can Be Difficult to Grow Wealth in a Trust Problem #1 — Investment Growth  Trustee may not have much money management experience  Even trustees with experience may not do well  Long-term investment growth can be difficult to achieve

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN It Can Be Difficult to Grow Wealth in a Trust Problem #1 — Investment Growth  Trustee may not have much money management experience  Even trustees with experience may not do well  Long-term investment growth can be difficult to achieve Problem #2 — Federal Income Taxes  The federal income tax rates for trusts are severe  The federal income tax rates are compressed; the maximum rate (39.6%) is applied to all taxable income in excess of $11,950

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Is there a way to potentially minimize federal income taxes the trust pays and possibly increase its long term value to the beneficiaries?

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Consider using Life Insurance to help grow the Long-Term Value of The Trust

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Why Use Life Insurance?  Life Insurance can be an efficient way to grow the funds given to a trust for two reasons:  Reason #1 — Potential For Growth –Gross policy death benefits usually exceed the total premiums paid –The difference between total premiums and policy death benefits represents additional assets that may be paid to policy beneficiaries

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Why Use Life Insurance?  Life Insurance can be an efficient way to grow the funds given to a trust for two reasons:  Reason #1 — Potential For Growth –Gross policy death benefits usually exceed the total premiums paid –The difference between total premiums and policy death benefits represents additional assets that may be paid to policy beneficiaries  Reason #2 — Tax Benefits –Policy cash values grow income tax deferred –Proceeds from a life insurance policy are generally income tax free, and if properly structured, may also be free from estate tax

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN An Irrevocable Life Insurance Trust that uses part of its assets to purchase life insurance is called an “ILIT”

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Direct Gifts In Action - John and Louise Wells*  John and Louise Wells are both age 70 and in standard health; they have five children, ten grandchildren and a $4 million net worth.  They are confident they won’t need more than $2,000,000 of the their estate to live on for the rest of their lives.  They are willing to make annual exclusion gifts to increase what they pass on to their children. * The hypothetical investment results are for illustrative purposes only and should not be deemed a representation of past or future results. This example does not represent any specific product, nor does it reflect sales charges or other expenses that may be required.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN John and Louise Wells 1  John and Louise have their attorney draft an Irrevocable Life Insurance Trust (ILIT).

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN John and Louise Wells 2 1  John and Louise have their attorney draft an Irrevocable Life Insurance Trust (ILIT).  John will be the grantor and will make annual gifts of $70,000 to the ILIT; these gifts are designed to qualify for the gift tax annual exclusion ($14,000 for each of the five children).

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN John and Louise Wells  John and Louise have their attorney draft an Irrevocable Life Insurance Trust (ILIT).  John will be the grantor and will make annual gifts of $70,000 to the ILIT; these gifts are designed to qualify for the gift tax annual exclusion ($14,000 for each of the five children).  The ILIT purchases a $3,000,000 life insurance policy on John’s life.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN John and Louise Wells  John and Louise have their attorney draft an Irrevocable Life Insurance Trust (ILIT).  John will be the grantor and will make annual gifts of $70,000 to the ILIT; these gifts are designed to qualify for the gift tax annual exclusion ($14,000 for each of the five children).  The ILIT purchases a $3,000,000 life insurance policy on John’s life.  John dies after 20 years. The ILIT receives the $3,000,000 policy death benefit

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN John and Louise Wells What John and Louise accomplished:  John leveraged his $1,400,000 of gifts into $3,000,000 of life insurance death benefits.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN John and Louise Wells What John and Louise accomplished:  John leveraged his $1,400,000 of gifts into $3,000,000 of life insurance death benefits.  The $3,000,000 death benefit was paid free of federal income taxes.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN John and Louise Wells What John and Louise accomplished:  John leveraged his $1,400,000 of gifts into $3,000,000 of life insurance death benefits.  The $3,000,000 death benefit was paid free of federal income taxes.  The $3,000,000 death benefit is passed on free of estate taxes.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN John and Louise Wells What John and Louise accomplished:  John leveraged his $1,400,000 of gifts into $3,000,000 of life insurance death benefits.  The $3,000,000 death benefit was paid free of federal income taxes.  The $3,000,000 death benefit is passed on free of estate taxes.  The trust protected the gifts and the policy from loss due to claims. from any of the children’s creditors.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Your Voya representative can show how this idea might work in your situation. Ask for a proposal customized to fit your situation.