Estate Planning Techniques

1. David A. Kossak, C.E.P. William A. Gibbs, III Gilbert McLemore Janet A. Shirley D A V I D A. K O S S A K P R E S E N T S

3. Scheduled Appointment Date:_______________ Time: _____________ ADVANCED ESTATE PLANNING SEMINAR CONFIDENTIAL REGISTRATION FORM PROGRAMS THAT INTEREST ME I WOULD RATE THIS SEMINAR  IRA Family Trust  Insurance Review  Long Term Care Insurance  529 Plans  Wills & Trust Review  Charitable Remainder Trust  Insured Estate Plan  Life Insurance Rescue Plan  Qualified Personal Residence Trust  Annuity Rescue Plan  Zero Estate Plan  Family Legacy Trust™  I AM NOT INTERESTED IN SCHEDULING AN APPOINTMENT AT THIS TIME  I AM INTERESTED IN SCHEDULING AN APPOINTMENT IN THE NEAR FUTURE  I WOULD LIKE TO SCHEDULE AN APPOINTMENT AT THIS TIME COMMENTS:  GOOD  FAIR  EXCELLENT  OVER $10,000,000  $2,000,000 - $4,000,000  $4,000,000 - $10,000,000  UNDER $2,000,000 ESTIMATED NET WORTH:   Newspaper  Client Referral HOW DID YOU HEAR ABOUT US? (Please check all that apply.) SEMINAR LOCATION WORK PHONE # PHONE # WORK PHONE HOME PHONE PRIMARY ADDRESS AGE SPOUSE AGE NAME  The Legacy IRA™

4. Estate Tax Unified Credit Exemption Levels HR 1836 and after the Sunset Provisions

5. Maximum Estate Tax Rates HR 1836 and after the Sunset Provisions 50 49 48 47 46 45 44 43 55 55 55 55 55 55 55 55 55 55

7. What Happens To a Dollar at Your Death? $.18 $.18 $.18 Is it fair that the IRS receives more than each of your children? $.46 to the IRS Children *There is an applicable exclusion amount. In 2005 it is $2 million, increasing to $3.5 million in 2009. Estate Tax is repealed in 2010 but scheduled to return in 2011 with a $1 million exclusion. •• There is an applicable exclusion amount. Also, notate that the 2nd million is taxed at a rate lower than 46%.

8. How much will your grandchildren receive from the next dollar?

9. .175 NET TO GRANDCHILDREN (.175) Generation Skipping Tax (50%) …… .35 Net To Children ……………………… (.29) Estate Tax (46%) ……………………. Income Tax (36%) …………………… Current Earnings …………………….. . 64 (.36) $1.00 82.5% Shrinkage

10. The estate and GST taxes are Paying the Tax due within 9 months after the date of the decedent's death... Please write the decedent's name, social security number and "Form 706" on the check to assist in posting it to the proper account. Make the check payable to the Internal Revenue Service. Source: Instructions for Form 706

11. “I WANT YOU!”

12. “I WANT YOUR MONEY!”

13. 44 PAGES LONG! Source: IRS Form 706 Form 706 (Rev. August 1993) Department of the Treasury Internal Revenue Service United States Estate (and Generation-Skipping Transfer) Tax Return Estate of a citizen or resident of the United States (see separate instructions). To be filed for decedents dying after October 8, 1990. For Paperwork Reduction Act Notice, see page 1 of the Instructions. Total Gross Estate (from Recapitulation p.3) Total allowable deductions (from p.3 item 20) Taxable Estate (subtract line 2 line 1) Adjusted taxable gifts (total taxable gifts from Section 2503) made by decedent after 1976 Add lines 3 and 4.................................. Decedent's first name Domicile at time of death Name of Executor Executor's social security # Decedent's first name Year domicile established Executor's address (number and street including apartment or suite) 1b 3b 6b Name and location of court where the estate was probated 1 2 3 4 5 1a 3a 6a 6c 7a

14. $ 9,780,194 NET ESTATE $17,124,988 TOTAL COSTS $26,905,182 GROSS ESTATE Rockefeller gave away $531,000,000 during his lifetime for educational, religious and charitable purposes. $17,124,988 TOTAL COSTS 12,245,000 *Federal Estate Tax 4,385,644 New York Estate Tax 75,000 Executor's Fee 200,000 Attorney’s Fee 85,996 Administration Expense $133,348 Debts SETTLEMENT COSTS OVER 64% SHRINKAGE * No marital deduction John D. Rockefeller, Sr. Founder, Standard Oil Co., Industrialist & Philanthropist Pocantico Hills, Tarrytown, New York

15. $4,103,216 NET ESTATE $8,672,315 TOTAL COSTS $12,775,531 GROSS ESTATE Cash in Estate - $1,347,886 DEBTS AFTER DEATH $8,672,315 TOTAL COSTS 6,042,272 *Federal Estate Tax 1,603,810 New York Estate Tax 450,000 Executor's Fee 300,000 Attorney’s Fee 259,287 Administration Expense $16,946 Debts DEBTS BEFORE DEATH SETTLEMENT COSTS *No marital deduction; no surviving spouse. Charitable bequests more than $600,000 Alta Rockefeller Prentice Last Surviving Child of John D Rockefeller, Sr. New York, New York OVER 68% SHRINKAGE

16. Do You Know the Difference Between . . . Tax Avoidance & Tax Evasion?

17. 10 Years in Leavenworth

18. What Are The Legal Ways To Eliminate All Estate Taxes Today?

19. The Legal Ways to Eliminate All Estate Taxes Today… 1. GIVE IT TO CHARITY 2. SPEND IT ALL 3. EXPATRIATE AND LIVE FOR 10 YEARS

20. Estate Planning Solutions Revocable Living Trust Credit Shelter Trust Living Will QTIP Trust Asset Titling Powers of Attorney BASIC

21. The Typical Estate Plan 80% OF ALL INHERITANCES ARE SQUANDERED WITHIN THREE YEARS $1,380,000 Estate Tax $5,000,000 $724,000 $2,896,000 Squandered $3,620,000 Source & Date: LA Times 1999

22. Estate Planning Solutions Revocable Living Trust Credit Shelter Trust Living Will QTIP Trust Asset Titling Powers of Attorney Irrevocable Trust Annual Gifts Life Insurance BASIC

23. Estate Planning Solutions ADVANCED Qualified Personal Residence Trust Family Foundation Trust Zero Estate Tax Plan The Family Legacy Trust TM Annuity Rescue Plan Life Insurance Rescue Plan BASIC Revocable Living Trust Credit Shelter Trust Living Will QTIP Trust Asset Titling Powers of Attorney Irrevocable Trust Annual Gifts Life Insurance

24. Estate Planning Solutions ADVANCED Qualified Personal Residence Trust Charitable Remainder Trust Charitable Life Insurance Plan Zero Estate Tax Plan The Family Legacy Trust TM Annuity Rescue Plan Life Insurance Rescue Plan 529 Plans The Legacy IRA Donor of Valor BASIC Revocable Living Trust Credit Shelter Trust Living Will QTIP Trust Asset Titling Powers of Attorney Irrevocable Trust Annual Gifts Life Insurance

25. The Four Most Important Words in Estate Planning Gifting Discounting Leverage Control

29. QPRT Example Client Age 70/75 Home Value $500,000 Term of Trust 10 years Growth Rate 4% Home Value in 10 Years $740,122 Discounted Value $247,813 $226,461 Potential Tax Savings

30. Grantor Retained Annuity Trust $226,840 PRESENT VALUE GIFT G RANTOR Age 65 $1,000,000 GRAT 15 YR T RUST 10% I NCOME C HILDREN OR T RUST GRAT $447,922 Total Savings $1,500,000 Income Received

31. The Family Legacy Trust ™ The Most Important Estate Planning Tool Family Wealth Creation Trust 5 in 1 Tax Free Inheritance Trust Generation Skipping Trust Estate Tax Funding Trust Asset Protection Trust

34. The Family Legacy Trust™ Joint Donor Trust $11,000 annual gifts (per child and grandchild) or $1,000,000 exemption $1,120,000 per donor GST Trust Creators Husband & Wife Trustee Children or Professional

35. The Family Legacy Trust™ Joint Donor Trust Trust grows to $3,000,000 by the time you die $11,000 annual gifts (per child and grandchild) or $1,000,000 exemption $1,120,000 per donor GST Trust Creators Husband & Wife Trustee Children or Professional

36. The Family Legacy Trust ™ Joint Donor Trust Trust grows to $3,000,000 by the time you die Trustee Child #2 $1,000,000 Trustee Child #1 $1,000,000 Trustee Child #3 $1,000,000 NO TAX Trust Creators Husband & Wife Trustee Children or Professional NO TAX NO TAX Great Grandchildren Great Grandchildren Great Grandchildren Grandchildren Grandchildren Grandchildren

37. The Family Legacy Trust ™ Personal Access Version Trust Creators Wife Trustee Husband Limited access to trust assets Trust grows to $3,000,000 by the time you die NO TAX NO TAX NO TAX Trustee Child #2 $1,000,000 Trustee Child #1 $1,000,000 Trustee Child #3 $1,000,000 Great Grandchildren Great Grandchildren Great Grandchildren Grandchildren Grandchildren Grandchildren

39. Typical Irrevocable Trust Family Legacy Trust ™ Children’s Inheritance $3,000,000 Grandchildren’s Inheritance $4, 865,096 Great-Grandchildren’s Inheritance $7,889,722 Grandchildren’s Inheritance $9,730,193 Great-Grandchildren’s Inheritance $31,558,884 TAXED TAXED NO TAX NO TAX * Over 90 years not 360 years $23,669,162 Increased Wealth to Heirs Children’s Inheritance $3,000,000

40. Life Insurance Rescue Plan Source: Bragg Life Tables for 2000, 1991, 1986 Changes In Mortality Rates

41. Changes In Mortality Rates - 49% Female, age 80, non-smoker - 46% Female, age 50, non-smoker - 50% Male, age 80, non-smoker - 49% Male, age 50, non-smoker 2005 vs. 1986 Source: Bragg Life Tables for 2000, 1991, 1986

42. Life Insurance Rescue Plan Family Receives Death Benefit Income , Capital Gains and Estate Tax-Free Gift Annuity Payments FLT Old Life In .Policy Second -to-Die Immediate Annuity IRC 1035

43. Life Insurance Rescue Plan Family Receives Death Benefit Income , Capital Gains and Estate Tax-Free Gift Annuity Payments Gain to the family $550,000 No out of pocket expense FLT $650,000 Male Age 82 Female Age 79 $30,000 Income IRC 1035 $200K DB $150K CV

44. Annuities How are tax deferred annuities as a wealth preservation tool?

45. “GREAT”

47. Current Annuity at Your Death 61% Percent Lost to Taxes Estate Tax 50% Income Tax 11% Net To Family 39%

50. Annuity Rescue Plan O RIGINAL I NVESTMENT $100,000 C URRENT V ALUE $250,000

51. Annuity Rescue Plan Comparison at Death $902,500 GAIN TO FAMILY

52. “ There is no such thing as a perfect child ... but there are perfect grandchildren”

53. Section 529 Plans

57. The Power of Gifting $5,000,000 taxable estate Grandpa & Grandma Filing Jointly Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Son & Wife Son & Wife Daughter & Husband $880,000 in assets removed, saving over $440,000 in estate taxes PLUS APPRECIATION!

60. Comparison of Options *This is accelerating 5 years of annual gifts. ** Under current law, after 2010, earnings will be taxable when distributed even if for qualified expenses. Yes Product Specific No Yes Change of Beneficiaries Owner of Account Owner of Account Transfer to child at legal age Owner of Account Ownership / Control Tax-Free for Qual. Expenses** Taxable to Owner Taxable (Kiddie Tax) Tax-Free for Qual. Expenses Account Earnings $55,000* None $11,000 $2,000 Max Annual Contribution None None None Limits apply AGI Limit Section 529 Plan Taxable Inv . UGMA /UTMA Coverdell Education Savings Account

63. Thanks Grandpa!

67. Charitable Planning Techniques

68. Charitable Remainder Trust How It Works Donor’s Retain Income Family Legacy Trust ™ Wealth Replacement Charitable Remainder Trust FAMILY CHARITY Tax Savings DONOR

69. To create a CRT or to not create a CRT, WHY NOT CONSIDER IT? Appreciated Asset Capital Gains Tax Net Asset Income Income Tax (36%) Net Income Life Insurance Life Insurance Premium Net Income Estate Tax Net to Children Net to Charity Your Choice Retain Asset Sell Asset Use a CRT Assumptions: Appreciated asset is Corporate stock generating 7% dividend yield. * 7% rate of return. ** Savings on income tax used to offset insurance premium. $165,930 income tax deduction, resulting in a $66,400 tax saving. $1,000,000 $ 0 $1,000,000 $ 70,000 $ 25,200 $ 44,800 $ 44,800 $ 460,000 $ 540,000 $ 0 $1,000,000 $ 200,000 $ 800,000 $ 56,000 $ 20,160 $ 35,840 $ 35,840 $ 368,000 $ 422,000 $ 0 $1,000,000 $ 0 $1,000,000 $ 70,000* $ 13,800** $ 56,200 $1,000,000 $ 8,280** $ 47,920 $ 0 $1,000,000 $1,000,000 Do not create a Charitable Remainder Trust

70. Comparison of Options

73. Zero Estate Tax Plan Potential With a Private Foundation Trust Estate $7,000,000 Private Foundation $3,000,000 Basic Tax Efficient Plan $4,000,000* Children $7,000,000 IRS $ 0 IRA $2,000,000 Non-IRA Assets $5,000,000 Family Legacy Trust ™ With Insurance $3,000,000 Distributions $31,000 After Tax (1.2%) * This figure is based on HR1836 as of January 1, 2002

74. Zero Estate Tax Plan Potential Comparison IRS $460,000 C HILDREN $4,540,000 Private Foundation $1,000,000 Children $6,000,000 $5,000,000 ESTATE Z ERO E STATE T AX P LAN All life insurance figures are based on a male age 65, a female age 63 and current assumptions N O P LAN

77. What Are The Three Best Assets To Invest In The Family Legacy Trust? Tax Free Bonds Growth Stocks Life Insurance

78. The Family Legacy Trust™ $40,000 P ER Y EAR F OR A H USBAND A ND W IFE A GES 65 A ND 63 $239,012 $558,865 $986,901 $1,559,709 INVESTMENT AT 10% LESS INCOME TAXES FAMILY LEGACY TRUST TM $2,326,255 AGE INVESTMENT AT 10% LESS INCOME AND ESTATE TAXES NO GIFT 90 70 75 80 85 $251,489 $444,105 $701,869 $1,046,815 $107,556 $3,250,000 $3,250,000 $3,250,000 $3,250,000 $3,250,000 FAMILY LEGACY TRUST TM LIFE INSURANCE

79. Family Legacy Trust™ Income At Your Death $3,250,000 Children over 30 years $9,750,000 Grandchildren over 30 years $9,750,000 Great grandchildren over 30 years $9,750,000 Total Benefits $32,500,000

80. Five Ways To Pay a $1,000,000 Estate Tax Life insurance figures are based on current assumptions and may vary *These are hypothetical premium amounts that do no reflect the premiums of a particular product & they are just being used to help the reader understand the concept.

81. Annual Funding Needed To Pay $1,000,000 Tax 60/58 70/68 80/78 $16,000 $40,000 $73,000 $9,840 $9,040 $37,360 $1,000,000 20 year Survivorship (makeup provision) $1,000,000 Guaranteed Death Benefit Investment (10% Before Tax) Male/Female Assumed Age $1,983 $7,565 $25,111 *These are hypothetical premium amounts that do no reflect the premiums of a particular product & they are just being used to help the reader understand the concept.

82. Sample Second-To Die Comparisons 1,000,000 Death Benefit Figures are based on current assumptions and may vary

83. Case Studies Mr. & Mrs. Smith Age 70/64 Income IRA $38,167 M.B. $25,000 Ann. $25,000 $88,167 $1,825,000 Net to IRS $4,925,000 Net to Heirs $460,000 Income Tax $100,000 Capital Gains $1,265,000 Estate Tax $2, 750,000 Taxable Estate $4,000,000 U.C. $6,750,000 Total Estate $50,000 $500,000 Raw Land $1,000,000 Life Insurance $1,500,000 IRA $250,000 $750,000 Annuities $750,000 Muni-Bonds $250,000 $500,000 Vacation Home $200,000 $1,750,000 Home Cost Basis Value

84. $37,500 $50,000 $152,667 $38,167 IRA $7,000 $20,000 Annuity L.R.P. M.B . CRT Income $0 Net to IRS $6,080,549 Net to Heirs $100,000 Net to Charity $0 Capital Gains $0 Estate Tax $0 Taxable Estate $4,000,000 -$1,228,904 U.C. $2,315,512 Total Estate $750,000 Muni-Bond $1,000,000 Ø Annuity Rescue Plan $1,000,000 $2,000,000 Legacy IRA & Stretch $750,000 Ø Life Ins. Rescue Plan Ø CRT (Raw Land) $273,090 $ 740,122 Q.P.R.T. 10yrs. $955,814 $ 2, 590,427 Q.P.R.T. 10 yrs. Heirs Estate Value

85. You Can Make More Money By Saving Estate Taxes Than You Can By Making More Money

86. The Best Money Manager in the World Can Not Even Come Close to Equaling the Rate of Return of an A DVANCED E STATE P LAN

87. .175 NET TO GRANDCHILDREN (.175) Generation Skipping Tax (50%) …… .35 Net To Children ……………………… (.29) Estate Tax (46%) ……………………. Income Tax (36%) …………………… Current Earnings …………………….. . 64 (.36) $1.00 82.5% Shrinkage

88. Why do people not plan? Seminars Books Radio & Television

89. The fear of taxation is not nearly as great as the fear of running out of money

91. If you think this is a little complex, there is a simpler approach.....

92. Pay the Tax!

93. The estate tax is like a … 5100 point drop in the Dow!

94. Scheduled Appointment Date:_______________ Time: _____________ ADVANCED ESTATE PLANNING SEMINAR CONFIDENTIAL REGISTRATION FORM PROGRAMS THAT INTEREST ME I WOULD RATE THIS SEMINAR  IRA Family Trust  Insurance Review  Long Term Care Insurance  529 Plans  Wills & Trust Review  Charitable Remainder Trust  Insured Estate Plan  Life Insurance Rescue Plan  Qualified Personal Residence Trust  Annuity Rescue Plan  Zero Estate Plan  Family Legacy Trust™  I AM NOT INTERESTED IN SCHEDULING AN APPOINTMENT AT THIS TIME  I AM INTERESTED IN SCHEDULING AN APPOINTMENT IN THE NEAR FUTURE  I WOULD LIKE TO SCHEDULE AN APPOINTMENT AT THIS TIME COMMENTS:  GOOD  FAIR  EXCELLENT  OVER $10,000,000  $2,000,000 - $4,000,000  $4,000,000 - $10,000,000  UNDER $2,000,000 ESTIMATED NET WORTH:  Client  Newspaper/television  Client Referral HOW DID YOU HEAR ABOUT US? (Please check all that apply.) SEMINAR LOCATION WORK PHONE # PHONE # WORK PHONE HOME PHONE PRIMARY ADDRESS AGE SPOUSE AGE NAME  The Legacy IRA™

95. T HANK Y OU F OR A TTENDING ! Please be sure to schedule your free personal consultation before leaving today!