Presentation on theme: "A Smart Way to Preserve Your Estate for Future Generations OLA 1620 0613 DYNASTY TRUST/INCENTIVE TRUST."— Presentation transcript:
A Smart Way to Preserve Your Estate for Future Generations OLA DYNASTY TRUST/INCENTIVE TRUST
2 This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code. This material was written to support the promotion or marketing of the products, services, and/or concepts addressed in this material. Clients and other interested parties to whom this material is promoted, marketed, or recommended should be advised to consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here.
3 Wealth is lost from generation to generation due to: Transfer taxes Divorce Creditors Beneficiaries lack of asset management skills Did You Know?
4 Income tax Gift tax Estate tax Generation-Skipping Transfer Tax Types of Transfer Taxes
5 GSTT applies to: Gifts to grandchildren or later generations Gifts made to unrelated persons who are at least 37½ years younger than the person making the gift What is the Generation-Skipping Transfer Tax (GSTT)?
6 The GSTT is a flat tax equal to the highest estate tax rate applicable at the time of the gift. This amount is 40% for GSTT exemption is available to each taxpayer which allows GSTT-free transfers of $5.25 Million in 2013 How Much Will GSTT Affect My Estate?
7 The Loved Ones You Hope to Benefit! Are they all: Financially conservative? Savvy investors? Skilled in asset management? The Overlooked Threat to Wealth Preservation
8 By establishing a Dynasty Trust, you can erect a wall around your wealth Minimize transfer taxes Provide asset protection for many generations Problem Solved: Dynasty Trust
9 A trust with a long term Offers tax and non-tax advantages Tax advantages are maximized when trust is funded with life insurance Leverage GSTT exemption which is based on premiums, not death benefit Death benefit received income tax-free What is a Dynasty Trust?
10 Creditor protection for loved ones Continuity of asset management Non-Tax Advantages
11 Incentive Provisions can be included in trust Intended to promote positive behavior in beneficiaries Beneficiaries required to meet certain standards to be entitled to trust distributions The Incentive Trust
12 Consult an experienced estate-planning attorney If you establish the trust in a state that allows trusts to exist indefinitely, your trust assets will have fertile ground to grow and benefit many successive family generations How Do I get Started?
13 Bill and Barbara Bucks, both 65 years old Have substantial net worth Have one daughter, Susan, and three teenage grandchildren: Tom, Eileen, and James Example: The Bucks
14 Bill and Barbara want to: Pass their wealth on to their grandchildren without paying federal transfer taxes Use their wealth to promote specific goals and values in future generations The Bucks: Goals and Objectives
15 Bill and Barbara create a Dynasty Trust/Incentive Trust They transfer $10.5 Million to trust (each using $5.25 Million of lifetime gift tax and GSTT exemptions) Trust structured to pay income to grandchildren for their lifetimes and to successive generations thereafter The Bucks Family: Action Steps
16 $10.5 Million + $72,000 annual gifts buys $50 Million life insurance policy Thereby maximizing the legacy they are able to leave to children, grandchildren and future generations The Bucks: Action Steps
17 The Bucks include the following incentive provisions: Trust will pay $50,000 to each grandchild or future descendant who graduates from college Trust will match 50% of grandchildrens or future descendants earnings Trust will gift $100,000 to each grandchild or future descendant who marries The Bucks: Trust Incentives
18 A Dynasty Trust/Incentive Trust funded with life insurance can help: Provide a legacy for future generations Minimize impact of transfer taxes such as GSTT Encourage descendants to meet certain educational, career, and/or lifestyle-related goals Summary
19 What to do next? Contact a Transamerica insurance agent or financial advisor to see if the Dynasty Trust/Incentive Trust is right for you. Next Step
20 Life insurance products are issued by Transamerica Life Insurance Company, Cedar Rapids, IA 52499, or Transamerica Financial Life Insurance Company, Harrison, NY All products may not be available in all jurisdictions. Transamerica Life Insurance Company, Transamerica Financial Life Insurance Company (collectively Transamerica), and their representatives do not give tax or legal advice. This material is provided for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties should rely solely upon their own independent advisors regarding their particular situation and the concepts presented here. Discussions of the various planning strategies and issues are based on our understanding of the applicable federal laws in effect at the time of publication. However, these laws are subject to interpretation and change, and there is no guarantee that the relevant authorities will accept Transamericas interpretations. Additionally, this material does not consider the impact of applicable state laws upon clients and prospects. Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information is current as of June Transamerica Financial Life Insurance Company is authorized to conduct business in New York. Transamerica Life Insurance Company is authorized to conduct business in all other states. OLA
A Smart Way to Preserve Your Estate for Future Generations DYNASTY TRUST/INCENTIVE TRUST OLA