Are Your Clients Taking Advantage of the Best Zero Tax Planning Tools? Zero Tax Planning Presented By: Tim Voorhees, JD, MBA 695 Town Center Drive | 7 th Floor | Costa Mesa, CA 92626 Tel: 800. 447. 7090 | Fax: 866. 447. 7090 info@vfos. com | www. vfos. com 1 © January, 2013, Voorhees Intellectual Property LLC
Timothy L. Voorhees Designed and Implemented Hundreds of Zero Tax Plans 34 years of experience developing and implementing Zero Tax Plans. President of the Registered Investment Advisory firm at Voorhees Family Office Services. com and the managing partner of its affiliated tax law firm, Matsen Voorhees LLP JD - Southern Methodist University - Corporate & Estate Planning Law; MBA Arizona State University - Finance & Accounting Authored two books. Published in Estate Planning Magazine, the Journal of Practical Estate Planning, Insurance News, the elite advisor website of Financial Planning Magazine, and other leading publications. Instructs at Best Tools Workshops for advisers interested in learning how to integrate the most effective zero tax planning tools into financial and estate plans. He also conducts Best Practices Workshops for advisers who seek to integrate advanced Wealth Counseling technologies into their practices Speaks at national conferences of the National Network of Estate Planning Attorneys, ALI-ABA, Kingdom Advisors, the Southern California Tax & Estate Planning Forum, etc. He has also presented at annual conferences for numerous financial advisory firms. Provides mediation and arbitration services as a Certified Christian Conciliator™ Leads teams that have developed hundreds of Family Wealth Blueprints® for high net worth clients 2 © January, 2013, Voorhees Intellectual Property LLC
7 Highly Practical Topics 1. 2. 3. 4. 5. 6. 7. 3 Why Public Policy Promotes Zero Tax Planning Why Zero Tax Planning Is More Attractive Than Ever Why Everyone Needs a Plan With Integrated Financial and Tax Solutions Why Most Clients Prefer to Start With a Tactical Plan Which Deliverables Are Best How to Establish a Process How to Communicate the Message © January, 2013, Voorhees Intellectual Property LLC
#1 Why Public Policy Promotes Zero Tax Planning 4 © January, 2013, Voorhees Intellectual Property LLC
…. If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion. If, however, I drive the extra mile and drive outside the city of Washington, I am using a legitimate, logical and suitable method of tax avoidance, and I am performing a useful social service by doing so. For my tax evasion, I should be punished. For my tax avoidance, I should be commended. The tragedy of life today is that so few people know that the free bridge even exists. ” --U. S. Supreme Court Justice Louis D. Brandeis 5 © January, 2013, Voorhees Intellectual Property LLC
Synergistically Combine Charitable and Non-Charitable Tools Convert involuntary philanthropy into voluntary philanthropy • Integrate complementary tools • Low-interest loans • Charitable gifts • Discounting • Life insurance • 6 © January, 2013, Voorhees Intellectual Property LLC
Free Book! 7
#2 Why Zero Tax Planning Is More Attractive Than Ever 8 © January, 2013, Voorhees Intellectual Property LLC
Key Concepts Clients can choose voluntary versus involuntary philanthropy Clients can control 100% of their wealth Estate tax is easily eliminated when combining charitable and non-charitable planning tools Income, capital gains, IRD, and other taxes can be discounted and/or deferred by integrating charitable and other wealth transfer tools 9 © January, 2013, Voorhees Intellectual Property LLC
Advantages to Clients Addresses personal and family needs Reduces complexity Maintains more family control over wealth Increases opportunity and means to pursue Family values Family unity Community improvement 10 Reduces taxes Integrates with Values-Based Planning © January, 2013, Voorhees Intellectual Property LLC
www. Why. Plan. Now. info • See 10 reasons why clients should plan now. • Exploit new opportunities to move assets to irrevocable trusts 11 © January, 2013, Voorhees Intellectual Property LLC
Implement More Trusts • • • 12 Learn ways to super-charge trust strategies Use web-based software to produce customized client illustrations Present marketing materials for business owners, retired couples, and elderly clients Serve attorney referral sources more effectively Provide trust funding services to attorneys Position yourself as the quarterback on every case © January, 2013, Voorhees Intellectual Property LLC
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#3 Why Everyone Needs a Plan With Integrated Financial and Tax Solutions 14 © January, 2013, Voorhees Intellectual Property LLC
8, 000+ Millionaires Served by Financial Planners 800, 000+ Deci-Millionaires Served by MFOs $10, 000+ Net Worth = Deci-millionaire $100, 000+ Net Worth = Centi-millionaire 80, 000+ Centi-Millionaires Served by MFOs & SFOs MFO = Multi-Family Office SFO = Single Family Office 900+ Billionaires Served by SFOs 15 © January, 2013, Voorhees Intellectual Property LLC
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#4 Why Most Clients Prefer to Start With a Tactical Plan 18 © January, 2013, Voorhees Intellectual Property LLC
Popular Strategies in 2012 Dynasty Trust Insurance as an Asset Class ESOPs Insurance Trust Review Premium Financing Annuity Income Maximization Spousal Lifetime Access Trusts IRA Maximizer Intellectual Property Strategy Sale of Partnership Interests to a Family Grantor Trust Qualified Money Conversion Defined Benefit Combo Financed Indexed UL Equity Appreciation Sharing Annuity Arbitrage Pension Rescue Tax-Efficient Buy-Sells 19 Cost Segregation Study Private Split Dollar Captive Insurance Company Tax-Efficient Squeeze Freeze Zero Tax Estate Planning © January, 2013, Voorhees Intellectual Property LLC
Illustrate Advanced Trust Design Techniques A) Annuity Arbitrage. Transfer extra wealth to heirs taxefficiently B) Leveraged ILIT. Facilitate the tax-efficient funding of premium financing strategies C) IDIT with Insurance. Monitor cash flows and inheritance amounts year-to-year 20 © January, 2013, Voorhees Intellectual Property LLC
A) Annuity Arbitrage TAX ADVICE DISCLOSURE To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U. S. federal tax advice contained in this communication (including any attachments), unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any matters addressed herein. 21 © January, 2013, Voorhees Intellectual Property LLC
22 © January, 2013, Voorhees Intellectual Property LLC
$1 Million Annuity or IRA Value 23 © January, 2013, Voorhees Intellectual Property LLC
How Does Annuity Income Maximization For Deferred Annuities Work? 24 © January, 2013, Voorhees Intellectual Property LLC
How Do The Scenarios Compare? 25 © January, 2013, Voorhees Intellectual Property LLC
Who Should Consider This Idea? 26 Individuals age 65 -80 in fair health or better Confident of adequate retirement income from other sources Adequate personal liquidity Desire to preserve estate for family Willingness to initiate transfers now Suitable assets © January, 2013, Voorhees Intellectual Property LLC
B) Leveraged ILIT TAX ADVICE DISCLOSURE To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U. S. federal tax advice contained in this communication (including any attachments), unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any matters addressed herein 27 © January, 2013, Voorhees Intellectual Property LLC
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How Does Premium Financing Work? 29 © January, 2013, Voorhees Intellectual Property LLC
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Insurance Funding For Large Illiquid Estates The Challenge Many affluent individuals would like to acquire life insurance for estate planning but face significant obstacles. 31 Their assets are illiquid If sold a capital gain tax would be due If gifted a gift tax would be due They believe their strategic assets would be better if left at work © January, 2013, Voorhees Intellectual Property LLC
Double Taxation Of Traditional Premium Payments 32 © January, 2013, Voorhees Intellectual Property LLC
Solution 33 © January, 2013, Voorhees Intellectual Property LLC
How Does Premium Financing Work? Case History 34 © January, 2013, Voorhees Intellectual Property LLC
Assumptions Summary 35 © January, 2013, Voorhees Intellectual Property LLC
Internal Rates Of Return At Death 36 © January, 2013, Voorhees Intellectual Property LLC
Who Should Consider This Idea? 37 Individuals age 50 -85 Average to good health Net worth $10 million or more Desire to acquire insurance coverage now but current cash flow and/or annual gifting capacity is limited Desire to maintain long position in assets with significant growth and/or income potential Sophisticated investor comfortable knowledge about the benefits and risks of leverage © January, 2013, Voorhees Intellectual Property LLC
Benefits Increase benefits to family Enhance estate liquidity Acquire insurance coverage now without need to liquidate assets or allocate significant and immediate cash flow Keep strategic assets at work longer 38 © January, 2013, Voorhees Intellectual Property LLC
C) Dynasty Trust TAX ADVICE DISCLOSURE To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U. S. federal tax advice contained in this communication (including any attachments), unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any matters addressed herein. 39 © January, 2013, Voorhees Intellectual Property LLC
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How Does The Dynasty Trust Work? 41 © January, 2013, Voorhees Intellectual Property LLC
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Goals And Objectives Find ways to pass more wealth to our heirs during our lifetime without incurring gift taxes. We are currently gifting as much as we can annually to an Insurance Trust. 2. Maximize inheritance to heirs. We would consider additional insurance if we could find a way to own the insurance outside of our estate. 3. Reduce or eliminate gift and estate taxes. 1. 43 © January, 2013, Voorhees Intellectual Property LLC
Comparison Of Benefits Dollars in Millions 44 © January, 2013, Voorhees Intellectual Property LLC
IDIT Strategy Advantage 45 © January, 2013, Voorhees Intellectual Property LLC
Comparison Of Benefits To Heirs By Year 46 © January, 2013, Voorhees Intellectual Property LLC
Installment Sale To IDIT 47 © January, 2013, Voorhees Intellectual Property LLC
#5 Which Deliverables Are Best 48 © January, 2013, Voorhees Intellectual Property LLC
Summarize the Value Proposition Sample Diagram Example: Proposed Estate Taxes $14, 300, 000 $100, 000 Benefit to Heirs $15, 200, 000 $18, 900, 000 Income Tax Savings $0 $200, 000 Benefit to Charity 49 Current $0 $21, 300, 000 © January, 2013, Voorhees Intellectual Property LLC
Clarify Roles 50 © January, 2013, Voorhees Intellectual Property LLC
Offer Services Linked to Deliverables
#6 How to Establish a Process for: Delivering value during each engagement phase Generating More Fee Income • Implementing More Investment and Insurance Cases • Documenting More Gifts for Charities • Consistently Collecting More Positive Client Satisfaction Surveys 52 © January, 2013, Voorhees Intellectual Property LLC
Hi-Tech, Hi-Touch Cornerstones See www. v. Dashboard. info Marketing Training/ Coaching Business Plan Administrative Workflows Planning/ Production Tools 53 © January, 2013, Voorhees Intellectual Property LLC
#7 How to Communicate the Message Estate tax practitioners need to know how to build the following concepts into estate plans: • Income tax plans • Business transition plans • Business formation design/drafting • Asset protection • Will contest prevention • Legacy planning to equip heirs • Trust planning • Special needs trust design/planning 54 © January, 2013, Voorhees Intellectual Property LLC
What Kind of Client is Suitable for Implementing the Concepts? 55 Has a potential estate or IRD tax liability at death Has excessive income or capital gains taxes now Is moderately or very charitably inclined Is willing to begin transferring some wealth now Cares about what will happen after he or she dies © January, 2013, Voorhees Intellectual Property LLC
Strategy Flyers, Case Studies, Sample Plans, and Books 56 © January, 2013, Voorhees Intellectual Property LLC
Benefits to Advisers 57 Differentiates you in the market Attractive to higher net worth clients Creative Simple New fee-based design opportunities New document drafting opportunities New trust funding opportunities New referral opportunities © January, 2013, Voorhees Intellectual Property LLC
7 Highly Practical Topics #1 Why Public Policy Promotes Zero Tax Planning #2 Why Zero Tax Planning Is More Attractive Than Ever #3 Why Everyone Needs a Plan With Integrated Financial and Tax Solutions #4 Why Most Clients Prefer to Start with a Tactical Plan #5 Which Deliverables Are Best #6 How to Establish a Process #7 How to Communicate the Message 58 © January, 2013, Voorhees Intellectual Property LLC
Information Available: www. zerotaxcounsel. com – All • www. familyofficecounsel. com – Advisers and Attorneys • www. wealthcocounsel. com – Attorneys • www. webinarcounsel. com – Advisers and Attorneys • 59 © January, 2013, Voorhees Intellectual Property LLC
Free Webinars Email info@vfos. com for links to recordings 8 Essential Steps Every Estate Planning Lawyer and Financial Adviser Must Navigate to Close Big Cases – Feb • Integrating Zero-Tax and Values-Based Planning – March • Funding Insurance with Pre-Tax Dollars - April • Using Insurance to Fund More Tax-Efficient Lifetime Income – May • For Webinar Dates and Recordings, Call 1 -800 -447 -7090 or email info@vfos. com 60
Free Zero Tax Planning Book Buy on Kindle and email your receipt to info@vfos. com for reimbursement Email your address to info@vfos. com to have us send you a hard copy with a 2013 addendum 61
Free Reflecting God’s Character Book 62 Download from www. Legacies. info
Thank You! Zero Tax Planning Presented By: Tim Voorhees, JD, MBA 695 Town Center Drive | 7 th Floor | Costa Mesa, CA 92626 Toll Free: 888 -WSC-FIRM (972. 3476) |Tel: 800. 447. 7090 | Fax: 866. 447. 7090 tvoorhees@Matsen. Voorhees. com | www. Wealth. Strategies. Counsel. com 1 © January, 2013, Voorhees Intellectual Property LLC
Disclaimer Family Office Services, Inc. and Matsen Voorhees LLP do not give tax, accounting, regulatory, or legal advice to its clients unless clients have a current engagement defined in a signed retainer agreement. Clients must consult with advisers regarding the tax, accounting, and legal implications of these proposed strategies before any strategy is implemented. The effectiveness of any of the strategies described will depend on a client’s individual situation and on a number of complex factors. Nothing in this presentation is intended to offer securities or investment advice. Any discussion in this presentation relating to tax, accounting, regulatory, or legal matters is based on our understanding as of the date of this presentation. Rules in these areas are constantly changing and are open to varying interpretations. 64
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