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Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN0509-9955-0616 Fundamentals of Estate Planning ©2014.

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Presentation on theme: "Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN0509-9955-0616 Fundamentals of Estate Planning ©2014."— Presentation transcript:

1 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Fundamentals of Estate Planning ©2014 Voya Services Company. All rights reserved. CN

2 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. This information is general in nature and not comprehensive, the applicable laws may change and the strategies suggested may not be suitable for everyone. You should seek advice from your tax and legal advisors regarding your individual situation.  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.  Life insurance products are issued by Security Life of Denver Insurance Company (Denver, CO), ReliaStar Life Insurance Company (Minneapolis, MN), and ReliaStar Life Insurance Company of New York (Woodbury, NY). Within the state of New York, only ReliaStar Life Insurance Company of New York is admitted, and its products issued. All companies are members of the Voya™ family of companies.

3 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Why is an Estate Plan Important? An Estate Plan can help you to:  Preserve assets and wealth.  Ensure your assets are distributed according to your wishes to the right people at the right time.  Minimize or defer taxation.

4 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Overview of Estate Planning  What’s included in my estate?  How much to whom?  How is my estate transferred?  What are the costs of settling my estate?

5 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Your estate consists of everything you own or control, including…

6 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Tangible Assets  Your home and other real estate  Your vehicles, boats and recreational vehicles  Jewelry and other valuables  Precious metals, coins and collectibles  Personal possessions, furniture, etc.  Business holdings

7 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Intangible Assets  Your bank accounts  Annuities  Stocks and bonds  Mutual funds  Retirement plan proceeds  Life insurance death benefits

8 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN How Much to Whom? CharityYour FamilyThe Government Private PropertyReal EstateFinancial PortfolioBusiness Holdings

9 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN How is my estate transferred?

10 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN When you die your assets are legally transferred in 4 ways:  By direct transfer  By joint ownership  Through probate  Through trusts

11 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Direct Transfer Assets Assets that have a beneficiary designation or a payable-on-death clause are transferred directly to the new owner:  Savings accounts  Certificates of deposit  401(k) and other retirement plans  Traditional and Roth IRAs  Tax-deferred annuities  Life insurance

12 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Joint Ownership Joint Tenancy with Right of Survivorship (JTWROS): Two or more people own the same asset with an undivided interest. Tenants in Common: Two or more people own the same asset, often in different percentages. Community Property: Assets are owned equally by the husband and wife if the assets were acquired during marriage while living in a community property state.* *Community property states are AZ, CA, ID, LA, NV, NM, TX, WA and WI. 100% x % y %

13 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Probate Probate is the court-supervised process that identifies what you own at death and distributes your assets according to your wishes if you left a will, or else according to state law.

14 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Probate If you die without a will:  The Probate Court determines who administers your estate and cares for your minor children.  A Court appointed conservator manages the assets for minor children and the children will get the assets at age 18.  All children are treated equally, even if they have different needs.  Stepchildren may be excluded.  Remote relatives may receive assets that you wanted to leave to friends or charity.  Your estate may pay unnecessary taxes and expenses.

15 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Probate If you die with a will, your will allows you to:  Designate the person or institution you want to handle your affairs.  Indicate which people or organizations you want to receive specific assets.  Control the terms of asset distribution.  Indicate who you want to care for your minor children.  Take advantage of estate tax-saving strategies.

16 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Probate In most states, the probate process consists of:  Establishing whether a valid will exists.  Appointing an executor or personal representative to manage your estate during probate.  Valuing everything you owned at your death.  Receiving claims against the estate.  Paying taxes and claims.  Settling disputes about asset distribution.  Distributing the remaining assets.

17 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Trusts An Intervivos or Living Trust:  Is established during your lifetime.  Takes effect when funded.  Provides lifetime financial management of assets owned by the trust.  Transfers assets at death.  Avoids probate.

18 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Trusts A Testamentary Trust:  Is established as part of your will.  Takes effect when you die.  Allows you to own and control the assets until your death.  Establishes the conditions under which the beneficiaries will receive the assets (e.g., age).  Can be used to reduce or defer estate taxes.

19 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Transfer of Assets to a Trust GrantorTrusteeBeneficiaries  Transfers ownership of assets to the trust.  Legally owns trust assets.  Follows trust instructions.  Manages assets for the benefit of the beneficiaries.  Receive trust assets as specified in the trust document.

20 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN What are the costs of Estate settlement?

21 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Death triggers a long list of costs that must be paid from your estate Estate Settlement Costs

22 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Funeral, medical, and burial expenses Estate Settlement Costs

23 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Funeral, medical, and burial expenses Estate Settlement Costs  Appraisals  Court Costs  Business Valuation Estate Valuation & Distribution Costs  Legal & Accounting Fees  Executor/Administrator Expenses

24 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Payment of Debts  Funeral, medical, and burial expenses  Estate valuation and distribution costs Estate Settlement Costs  Appraisals  Court Costs  Business Valuation  Legal & Accounting Fees  Executor/Administrator Expenses

25 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Estate Settlement Costs Federal & State Estate Taxes  Funeral, medical, and burial expenses  Estate valuation and distribution costs  Appraisals  Court Costs  Business Valuation  Legal & Accounting Fees  Executor/Administrator Expenses  Payment of Debts

26 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Highest Federal Estate Tax Bracket YearPercent 2001=55% 2002=50% 2003=49% 2004=48% 2005=47% 2006=46% YearPercent 2007=45% 2008=45% 2009=45% 2010=0% 2011=35% Today=40%

27 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Estate Settlement Costs Sources of funds to pay estate settlement costs:  Use cash  Sell assets  Borrow money  Pre-pay with life insurance

28 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Estate Settlement Costs  Cash –Estate must have sufficient cash available. –Assets may have to be sold quickly. –Substantial loss to heirs.  Estate Borrows the Money –Loans must be repaid with interest. –Estate assets might have to be used as collateral. –Substantial portion of the estate may not be available to your heirs.

29 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Estate Settlement Costs  IRS Installment Payments –IRS code section 6166 allows payments of taxes plus interest over 14 years. –Closely held business must be a large portion of the estate. –Debt payments could be a substantial burden.  Life Insurance –Plan ahead to pay the taxes. –A small portion of the existing estate provides for settlement costs and taxes. –Settlement costs and taxes are paid without reducing the value to the heirs.

30 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Estate Taxes - A Burden for Heirs  Paid from the estate before any distribution occurs.  Must be paid in cash.  Due in 9 months.  Interest charged on any late payment.

31 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Pay with Discounted Dollars Life insurance provides:  Cash payment at death  “Immediate liquidity”  A dollar of death benefit may be obtained for a reasonable cost per year  Benefits are received income-tax free  Benefits may be subject to estate taxes if included in the estate ** Proceeds from an insurance policy are generally income tax free and if properly structured, may also be free from estate tax

32 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Risks of Failing to Plan  Your heirs may owe more money because: –You missed annual exclusion gifting opportunities. –You missed estate tax reduction strategies.  You may lack life insurance because: –You die before purchasing. –You are too old or ill to purchase insurance at a reasonable cost.  Your heirs may have to liquidate assets.

33 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Estate Planning Objectives  Minimize or defer taxation.  Have cash available to pay estate taxes, debts and claims.  Use all available exemptions.  Efficiently transfer your personal capital.

34 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Estate Planning Strategy  Select proper tools and techniques.  Avoid paying estate taxes at first death.  Provide estate liquidity at survivor’s death: –Establish irrevocable life insurance trust (ILIT)

35 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Typical Plan:  Use marital deduction to transfer remaining estate to survivor without federal estate tax at first spouse’s death.  Take advantage of the amount exempt from federal estate taxes.

36 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Typical Plan: Irrevocable Life Insurance Trust (ILIT):  Ownership of life insurance to remove policy proceeds from federal estate taxation at the insured(s)’ death(s).  Policy proceeds are estate tax-free source of funds to provide estate liquidity. Owns

37 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN The ILIT Irrevocable Life Insurance Trust Heirs Executor Grantor U.S. Treasury

38 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN What Is Being Accomplished? For You:  Removes life insurance proceeds from taxable estate.  Provides support for heirs after your death.  Preserves bulk of your estate for your heirs.

39 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN What Is Being Accomplished? For the Executor of Your Estate:  Obtains money from trustee to help pay estate taxes and other settlement costs. Trustee Receives Death Benefit

40 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN What Is Being Accomplished? For Your Heirs:  Removes life insurance death benefit proceeds from taxable estate. Outside of Estate

41 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Conclusion Consider Estate Planning if you:  Want to choose who receives your estate.  Want to maximize the wealth passing to your heirs.

42 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Conclusion Consider life insurance owned by an ILIT if you:  Want to pass estate tax-free death benefit to your heirs Owns

43 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Next Steps  Review your current ownership of assets.  Review existing beneficiary designations of life insurance or qualified plans.  Review employer provided benefits.  Review (or create) your will.  Consult with your attorney and CPA and create your estate plan: –Restructure ownership of assets if needed. –Create trusts if needed. –Change ownership and beneficiary designations if needed. –Revise your will, if needed. –Consider purchasing life insurance.


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