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PFG University 2011 For LFG National Sales Conference use only. LCN 201105-2054720 Keystone Planning with Lincoln UL Valerie Staublin Sales V.P.

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Presentation on theme: "PFG University 2011 For LFG National Sales Conference use only. LCN 201105-2054720 Keystone Planning with Lincoln UL Valerie Staublin Sales V.P."— Presentation transcript:

1 PFG University 2011 For LFG National Sales Conference use only. LCN 201105-2054720 Keystone Planning with Lincoln UL Valerie Staublin Sales V.P.

2 Valerie Staublin Sales Vice President Lincoln National

3 Important Disclosure: Policies: Lincoln LifeElements Term, policy form TRM5060 and state variations; TRM5060N in NY Lincoln LifeGuarantee® UL, policy form UL5049 and state variations; UL5049N in NY Lincoln LifeGuarantee® SUL, policy form SUL5066 and state variations; SUL5066N in NY (when approved) Lincoln LifeGuarantee® Plus UL policy form UL5049; UL5049N in NY Lincoln LifeReserve Indexed UL policy form UL5041 Lincoln DurationGuarantee® UL policy form UL5026 and state variations; UL5026N in NY Lincoln PreservationEdgeSM SVUL is issued on policy form LN699 and state variations; LN699 in NY. Lincoln VULONE is issued on policy form LN696 and state variations Lincoln variable universal life insurance is sold by prospectus. Carefully consider the investment objectives, risks, and charges and expenses of the policy and its underlying investment options. This and other important information can be found in the prospectus for the variable universal life policy and the prospectus for the underlying investment options. Prospectuses are available upon request and should be read carefully before investing or sending money. For a current prospectus, please call 800 444-2363 or go to www.LincolnFinancial.com. Issuers: The Lincoln National Life Insurance Company, Fort Wayne, IN. Lincoln Life & Annuity Company of New York, Syracuse, NY. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not backed by the broker/dealer and/or insurance agency selling the policy, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer. In some states, contract terms are set out and coverage may be provided in the form of certificates issued under a group policy issued by The Lincoln National Life Insurance Company to a group life insurance trust. Products and features are subject to state availability. The insurance policy and riders have limitations, exclusions, and/or reductions. Distributor: Lincoln Financial Distributors, Inc., a broker/dealer This seminar is for educational purposes only. It is intended to be accurate and authoritative in regard to the subject matter covered. It is presented with the understanding that I am not engaged in rendering legal or tax advice. Lincoln Financial Group provides the sales concepts we’ll discuss for information purposes only. While this seminar discusses general tax aspects of planning with insurance, we make no representations as to suitability for individual clients. Interested parties should be strongly encouraged to seek separate tax and legal advice before implementing a plan of the type described in this presentation. Illustration numbers are for training purposes only and represent case studies of how to analyze products prior to sale to the client. Hypothetical illustrations, projected premiums and death benefits are based on the interest rate, mortality charges and other expenses illustrated in the life insurance policy used in this example. They are not guaranteed. This material was prepared to support the promotion and marketing of life insurance products. Lincoln Financial Group® affiliates, their distributors, and their perspective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state or local tax penalties. Clients should consult their own independent advisor as to any tax, accounting or legal statements made herein. IRS Circular 230 Disclosure:

4 " In fact, we haven't got an estate tax, what we have, you pay an estate tax if you want to; if you don't want to, you don't have to." - A. James Casner Harvard Law School Professor

5 Estate Tax IRS Form 706 filings 2001 2009 2011 (1) Estimated by the Congressional Budget Office $1M exemption $3.5M exemption $5M exemption Historical Estate Tax Laws Source: IRS Statistics of Income 2010 report 108,000 34,000 8,000 (1) Planning for “Intermediate” estates Keystone

6 2010 Rates (2) 2009 Rates (3) 2001 Rates (4) $ 2 M $ 4 M 2011 (1) Gross Estate 100% 97% 62% (1) Combined husband & wife 2011Gross Estate Value, assuming 4% growth, A/B Trust design, first death in 2034, second death in 2046 Tax Loss %Heirs % (4) Revert to 2001 legislation with sunset provisions (2) Use 2010 Tax Relief Act provisions in 2013 and beyond (3) Use 2009 estate tax legislation in 2013 and beyond $ 1 M $ 4 M $3,006,334 Tax Loss $200,740 Tax Loss $0 Tax Loss $7,304,994 Tax Loss $2,755,130 Tax Loss $604,078 Tax Loss $987,563 Tax Loss $0 Tax Loss $0 Tax Loss Defining the “Intermediate” size estate Planning for “Intermediate” estates Keystone

7 HeirsCharity Government Estate Distribution Options Self / Spouse Consumption Excess WealthDeterminates of Excess Wealth Retirement Age / Saving Rate / Spending Rate / Taxes Asset Yield / Inflation / Morbidity / Mortality Planning for “Intermediate” estates Keystone

8 Life expectancy (1) Male 27.8 years / Female 31.7 yrs Both alive 23.2 yrs / Either alive 36.3 years Couple age 50 Standard Non Tobacco Mortality Estate growth rate 4% A/B Testamentary Trust (1) Source: Lincoln DesignIt v12.0B Software / US Life Table (sex distinct rates) Planning for “Intermediate” estates Keystone

9 Husband Wife LAST LEGACY Heirs Allocated Lifetime Gifts SLAT Trust  Estate Tax Free  Investment Control  Lifetime Access  Creditor Protection pousal ifetime ccess rust SLATSLAT Private Letter Rulings 9748029 and 199903040 Lincoln TERM Lincoln TERM Lincoln TERM Lincoln TERM Lincoln TERM Lincoln TERM GRAT Sale to Defective Trust Private Split Dollar Private Premium Financing Planning for “Intermediate” estates Keystone

10 Income Tax Treatment of Universal Life Insurance *provided policy is not a modified endowment contract pousal ifetime ccess rust SLATSLAT The Lincoln National Life Insurance Company Lincoln LifeReserve SM Indexed UL SLAT  Tax Deferred Accumulation  Tax Free Death  Tax Free Loans* Grantor(Husband) Gifts Spouse(Wife) Lifetime Distributions Heirs(Children) Remainder Planning for “Intermediate” estates Keystone

11 Yr Remainder 30 $259,359 40 $136,674 50 $394,875 SLAT Grantor(Wife) Spouse(Husband) Heirs(Children) Gifts $10,000/20yrs Distributions $33,000 yrs 21-40 Lincoln LifeReserve SM Indexed UL form UL5041 $250,000 option 2 Example assuming 7% return (3.9% Fixed (10% allocation), 7.35% indexed gross (90% allocation) ) Assuming 1%gross returns no income is available $250,000 death benefit guaranteed at all ages. Example Female 50 Nonsmoker Planning for “Intermediate” estates Keystone

12 $26,000 annual premiums 20 years M&F 50 Standard Non Tobacco IRR 6.55 % @ JLE (1) Lincoln LifeGuarantee SUL (2011) $2,983,114 $6,000 $10,000 Lincoln LifeReserve Indexed UL $235,000 Increasing DB M50 Std Lincoln LifeGuarantee SUL (2011) w/ Flex Option $1,600,000 Lincoln LifeReserve Indexed UL $235,000 Increasing DB F50 Std Combined Total Death Proceeds $3,628,637 IRR 7.28 % @ JLE (1) (2) (1) JLE for male and female 50 is Joint Life Expectancy of 36.3 years, both alive of 23.3 years, male 27.8 years and female 31.7 years. Source US Life sex distinct tables (2) Assumes net rate of return of 7% on Lincoln LifeReserve Indexed UL accumulation and proceeds, that male dies first in year 24 and that female dies in year 37. Assuming 5.5% returns the combined total death proceeds equal $ 2,985,731, and assuming 1% returns, the combined total death proceeds equal $1,995,319. Lincoln LifeGuarantee premiums of $25,000 in years 21 through 50 paid by IUL policy proceeds. Lifetime Option Death Proceeds $2,983,114 IRR 6.55 % @ JLE (1) New Life Insurance Concepts Lifetime Option Combination w/ Flex Opt 0 30 year 165,734 112,215 10 year 161,434 298,445 20 year 308,363 Guaranteed Cash Values Lifetime Option Combination w/ Flex Opt 0 30 year 1,271,139 112,215 10 year 234,683 298,445 20 year 669,815 Current Cash Values Assumes 7% net returns on Lincoln LifeReserve Indexed UL

13 Husband Wife LAST SLAT LIUL on H LGSUL LIUL on W LEGACY Heirs LIUL on H LIUL on W LGSUL w/Flex Lifetime Access H Estate Husband dies FirstWife dies Second W Estate $ $ $ Estate Tax Free Investment Control Lifetime Access Creditor Protection *provided policy is not a modified endowment contract Tax Deferred Accumulation Tax Free Death Tax Free Loans* Planning for “Intermediate” estates Keystone

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