Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Protecting Your Family’s Inheritance The Credit Shelter Trust:

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Important Disclosures 2  These materials are not intended to and cannot be used to avoid tax penalties and they were prepared to support the promotion or marketing of the matters addressed in this document. Each taxpayer should seek advice from an independent tax advisor.  The Voya ™ Life Companies and their agents and representatives do not give tax or legal advice. This information is general in nature and not comprehensive, the applicable laws change frequently and the strategies suggested may not be suitable for everyone. You should seek advice from your tax and legal advisors regarding your individual situation.  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 it’s products issued. 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 Congress designed the federal estate tax to reduce what families can pass on to their heirs.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN But Congress adopted a number of exclusions to the tax; people who use those exclusions wisely may be able to reduce its impact.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN One way to avoid federal estate taxes is to pass your entire estate to your spouse. Transfers to your spouse often qualify for the estate tax “marital deduction.”

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN But leaving everything to your spouse may increase the estate taxes due when your spouse dies. The marital deduction only postpones estate taxes. Those assets remaining at your spouse’s death may be taxed.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Another option is to use a tax credit that may offset some federal estate taxes. Congress created a large estate tax credit that can reduce the taxes on assets that most often pass to someone other than a surviving spouse.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN  Tax advisors often advise well-to-do married couples to have a strategy for using the estate tax credit when the first spouse dies. The Estate Tax Credit

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN  Trusts are often used because: The assets can be managed together in a single pool. The trust assets can be available to add to the surviving spouse’s financial security. –The surviving spouse can be a limited trust beneficiary. –The trustee can make discretionary distributions to the spouse. Assets Using the Credit Are Often Held in a Trust

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN These trusts are known as “credit shelter trusts.” At the first spouse’s death, assets equal to the property value of the credit are transferred to the trust.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Credit Shelter Trusts Have Two Objectives #1: Protect the surviving spouse’s financial security Act as a financial “reserve.” May make distributions if the spouse’s other assets are used up.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Credit Shelter Trusts Accomplish Two Objectives #1: Protect the surviving spouse’s financial security #2: Maximize family wealth – Transfer as much money to future generations as possible Preserve a valuable tax benefit. Manage trust funds efficiently until they are distributed (often after the surviving spouse’s death).

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN The trustee needs to analyze how much of the trust should be kept in reserve for the spouse.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Funds the spouse is not expected to need may be invested to produce growth for other beneficiaries.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Life insurance on the spouse may potentially grow the trust for the children.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN  Life insurance coverage on the spouse has the potential to grow the trust’s assets for two reasons: Why Use Life Insurance?

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN  Life insurance coverage on the spouse has the potential to grow the trust’s assets for two reasons: Reason #1: Potential For Growth –Policy death benefits usually exceed the total premiums paid. –The difference between total premiums paid and policy death benefits represents additional assets available at the time of the insured’s death to be paid to policy beneficiaries. Why Use Life Insurance?

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Why Use Life Insurance?  Life insurance coverage on the spouse has the potential to grow the trust’s assets for two reasons: Reason #1: Potential For Growth Reason #2: Income and Estate Tax Benefits –Policy cash values grow income tax deferred. –Life insurance death benefits are generally income tax free. –Structured correctly, policy death benefits paid to the trust should not be subject to federal estate taxes in the spouse’s estate.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Determining if Life Insurance is a Viable Option  Does the trustee have the power to purchase policy?  Is the spouse insurable at reasonable rates?  How much of the trust should be used to pay premiums?

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Potential Advantages of Using Life Insurance in a Credit Shelter Trust  Policy death benefits may potentially increase the wealth the trust can create for the children.  Death benefits are paid at the time the trustee may need to make distributions to the children (at spouse’s death).

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Some Disadvantages of Using Life Insurance in a Credit Shelter Trust  Spouse must be insurable at reasonable rates.  The policy needs to be managed.  Often the spouse will not be the trustee.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN The Credit Shelter Trust in Action: Mary Wells*  Mary Wells (age 70) is a discretionary beneficiary of the credit shelter trust her husband David created in his will.  Mary has five children, ten grandchildren and a $2 million net worth.  David passed away last year.  David’s credit shelter trust is currently worth $1,000,000.  Mary is unlikely to need any distributions from the trust.  She would like the trust to produce as much value for her children as possible. * These hypothetical investment results are based on current assumptions, are for illustrative purposes only and should not be deemed a representation of past or future results. The results would generally be lower using guaranteed assumptions, including earlier policy lapse. This example does not represent any specific product.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Mary Wells  The trustee asks Mary if she will allow the trust to purchase a life insurance policy on her life.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Mary Wells  Mary meets with the trustee.  The trustee determines that trust assets can be used to purchase a $2,000,000 life insurance policy on Mary’s life.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Mary Wells  Mary meets with the trustee.  The trustee determines that trust assets can be used to purchase a $2,000,000 life insurance policy on Mary’s life.  Mary is in standard health, so the trustee purchases the policy and pays the $50,000 premium annually; the policy is designed to carry until Mary is 93.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Mary Wells  Mary meets with the trustee.  The trustee determines that trust assets can be used to purchase a $2,000,000 life insurance policy on Mary’s life.  The trustee purchases the policy and pays the $50,000 premium annually; the policy is designed to carry until Mary is 93.  After 20 years, Mary dies and the trustee receives the $2,000,000 death benefit.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Mary Wells  Mary meets with the trustee.  The trustee determines that trust assets can be used to purchase a $2,000,000 life insurance policy on Mary’s life.  The trustee purchases the policy and pays the $50,000 annual premiums.  After 20 years, Mary dies and the trustee receives the $2,000,000 death benefit.  The trustee distributes assets (including the policy death benefits) as the trust requires.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN What Mary Accomplished  Mary helped the trust to grow its assets from $1,000,000 into $2,000,000.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN What Mary Accomplished  Mary helped the trust to grow its assets from $1,000,000 into $2,000,000.  Because it was delivered through a life insurance death benefit, this growth is usually income tax free.* *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 What Mary Accomplished  Mary helped the trust to grow its assets from $1,000,000 into $2,000,000.  Because it was delivered through a life insurance death benefit, this growth is usually income tax free.*  Assuming proper structuring, the $2,000,000 of policy death benefits were not subjected to estate taxes at Mary’s death. *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 What Mary Accomplished  Mary helped the trust to grow its assets from $1,000,000 into $2,000,000.  Because it was delivered through a life insurance death benefit, this growth is usually income tax free.*  All assets the trust distributes (including the death policy benefits) should be estate tax free.  If Mary needs discretionary distributions from the trust during her lifetime, the trustee may use any of the trust’s assets (including the life insurance policy) as a source of funds.** *Proceeds from a life insurance policy are generally income tax free, and if properly structured, may also be free from estate tax. ** Income tax free distributions are achieved by withdrawing to the cost basis (premiums paid) then using policy loans. Loans and withdrawals may generate an income tax liability, reduce available cash value and reduce the death benefit or cause the policy to lapse. This assumes the policy qualifies as life insurance and is not a modified endowment contract.

Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Summary 32  A credit shelter trust may protect the estate from taxes and grow assets for younger generations.  Life insurance can potentially help increase the assets the trust may be able to distribute.  The tax advantages of life insurance can make it attractive as a long term growth tool.

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 solution.