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Blueprint the Foundation for Your Vision and Fund Your Vision
Tax-Efficiently
“If you have built castles in the sky, your work need not be lost;
that is where they should be.Now put the foundations under them.”
Henry David Thoreau
Your Wealth Counselor ClarifiesYour Vision and Determines Which Images Will Combine to Create an Inspiring “Castle in the Sky” for You.
Your Wealth Design Consultants Develop a Blueprint to Realize Your Vision and Put a Firm Foundation Beneath Your Envisioned Castle in the Sky
Tim Voorhees JD, MBA
Tom Jarrett, CFPTM
Dave Holaday, ChFC
Greg Trump, CFP®
Your Wealth BlueprintBehind the beautiful picture on your high definition TV is a detailed wiring schematic. You can focus on the TV picture because circuit board architects (as well as lawyers, accountants, and other professionals) thought through technical issues related to the schematic. Likewise, as you picture your future “castle in the sky,” a team of advisers must agree on a schematic (or blueprint) summarizing legal, financial, and other technical issues affecting the picture of your future.
You can free up capital and minimize risk if you develop your schematic with input from professionals who understand all of the tax issues. Your tax lawyers may consider 43 quintillion issues, as shown below. Considering these issues is similar to thinking through the 43 quintillion possible combinations when solving Rubik’s Cube®. Your professionals must evaluate interrelated planning options while not losing sight of your envisioned “Castle in the Sky”. When seeking to make each side of your “Castle” look perfect, be sure that you look at the other sides depicted below.
Only a Wealth Blueprint effectively analyzes the interrelated cash flow, tax, and wealthtransfer issues affecting your vision.
Business Lawyer Guides Executives Philanthropic Planner Redirects Tax Money Investment Adviser Designs Portfolios Insurance Agent Manages RiskAccountant Files Tax ReturnsTax Lawyer Implements Tax Strategies
Minimize AMT TaxesMinimize Property TaxesMinimize Capital Gains TaxesMinimize Estate TaxesMinimize Gift/GST TaxesMinimize Income Taxes
VIRGINIA
$6,000,000
THOMAS AND VIRGINIA SMITH
$10,700,000
Initial annual income of $80,000
Testamentary gifts
$115,150annualincome
$5,750,000 assets contributed
$4,025,000 GP and LP units received
$350,000 LP units g ifted,$2,500,000 sold
Installment payments
Contribution of $1,175,000 of LP units
Assets distributed per terms of GDOT
Initial contribution of $1,000,000
DEATH OCCURS IN 2006PROPOSED PLAN DISTRIBUTION DIAGRAM
2nd estate
1st estate
Income
TAXES AND EXPENSES
$58,000
MARITAL TRUST
$1,916,207
HEIRS
$11,082,548
FOUNDATION
$7,684,089
Income
$1,725,793
FAMILY TRUST
TAXES AND EXPENSES
$183,324
FLPCLAT
TESTAMENTARYCLAT
9.76% Payout rate for 15 years. Remainder paid to
Heirs
CRT
$1,000,000
GDOT
Wealth Blueprint Benefits1. Illustrates 300+ customized tools (not a “cookie cutter” software program using standard
templates). The software helps you choose and customize tools most consistent with your vision
2. Summarizes results on one client-friendly flow chart with support details easily referenced
3. Tracks which assets fund each planning tool and guards against funding legal tools with the wrong financial assets
4. Produces a master flow chart with hyperlink to all supporting tax returns, legal documents, financial calculations, and summaries of goals.
5. Easily updated. Recalculates all planning scenarios and future projections as assumptions change
6. Implementation-focused. Necessary details given to licensed investment advisers, lawyers, and insurance agents
7. Precise. Allows for adjustment of many variables to study possible solutions
8. Tracks basis, ownership, yield, structure, beneficiaries, intentions, debt, and proxies for each asset in the client portfolio in order to create accurate cash flow and wealth transfer projections
9. Creates a balance sheet for each stakeholder each time we update the balance sheet for an entity, such as a FLP or LLC that is owned by several stake holders.
Salary and Other Earned Income AssumptionsAnnual increase in client earned income 3%
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Lifestyle Need Assumptionssdeen elytsefil rof yaltuo launna teN 000,042$
%3sdeen elytsefil ni esaercni launnA
htworGdleiYsnruteR stessA fo seirogetaC teehS ecnalaB%0.0%0.3stnelaviuqE dna hsaC%6.2%4.7Taxable Marketable Securities%0.0%9.5seitiruceS elbatekraM elbaxaT-noN%0.5%0.3stnemtsevnI rehtO%0.0%0.8snalP tnemeriteR deifilauQ%0.4%0.4etatsE laeR tnemtsevnI%0.3%0.0secnediseR lanosreP%0.4%0.0ytreporp lanosreP%0.8%0.0stsurT redniameR elbatirahC
THOMAS VIRGINIA JOINT TOTALINVESTMENT REAL ESTATE
000,057llaM pirtS teertS nocaeB $ -$ -$ 750,000$000,005xelpmoc eciffo teertS etatS - - 500,000
Total of Real Estate Holdings 1,250,000 - 1,250,000
PERSONAL RESIDENCES000,000,1evirD yvI 93354 - - 1,000,000000,005odnoC imaiM - - 500,000
Total of Personal Residences 1,500,000 - 1,500,000
PERSONAL PROPERTY000,009trA - - 900,000000,009ytreporP lanosreP fo latoT - - 900,000
TOTAL ASSETS 10,550,000 4,400,000 - 14,950,000
LIABILITIES000,007egagtrom emoH - - 700,000000,052egagtrom odnoC - - 250,000
TOTAL LIABILITIES 950,000 - - 950,000
NET WORTH 9,600,000$ 4,400,000$ -$ 14,000,000$
Wealth Blueprint Benefits10. Fully-integrated. Shows annual bottom line cash flow and tax impact to the client
11. Illustrates annual cash flow and net worth summaries while considering impact of six types of taxes: income, capital gains, estate, gift, AMT, and property taxes.
12. Integrates with tax preparation software13. Allows “what if ” calculations to study changes in rates of return, tax rates, cash flow needs, or other assumptions in order to study the impact on annual income or wealth transfers.
14. Minimizes taxes on schedules B, D, and E of the IRS Form 1040 using a Tax-Efficient Asset Management Solution (“TEAM SolutionTM”). After calculating proper investment income for each tool in the proposed plan, creates integrated lifetime cash flows and then illustrates amounts available for heirs under different return and risk assumptions.
YEAR
Benefits to Family
Residual Estate
Family Trust
Value of GDOT
GDOT InsuranceProceeds
NPV of CLATsRemainder Interest
Total Assests to Heirs
Current
$ 1,725,793
1,725,793
350,000
6,000,000
1,280,962
$ 11,082,548
2006
1,725,793
1,725,793
585,646
6,000,000
1,617,185
11,654,416
2007
1,725,793
1,725,793
674,965
6,000,000
1,736,345
11,862,896
2008
1,725,793
1,725,793
774,780
6,000,000
1,861,598
12,087,963
2009
3,225,793
3,225,793
885,995
6,000,000
1,552,563
14,890,144
2010
6,681,988
-
1,009,593
6,000,000
1,545,213
15,236,795
2015
725,793
725,793
1,741,922
6,000,000
3,231,373
12,424,881
2025
725,793
725,793
5,582,554
6,000,000
6,583,815
19,617,955
2035
725,793
725,793
13,243,885
6,000,000
13,701,539
34,397,010
Efficient Frontier.
Current Optinal 1Optinal 2
Asset Allocation Comparison
Risk
Ret
urn
30
29
28
26
24
22
2012 14 15 16 18 20
Current
Volatility=18.38%. Return=29.66%
CurrentReturn
Risk
Class 1Class 2Class 3Class 4
Class 5Class 6Class 7Class 8
26%
18%
20%14%12%14%
16%8%4%
12%
29%
18%
17%11%9%
11%
19%11%7%
15%
26%
15%
23%17%15%13%
17%5%1%9%
Optimal 1 Optiman 2
Wealth Blueprint Benefits15. Illustrates a cash flow time line that corresponds to goals and family
vision
16. Proven on hundreds of cases developed for clients with net worths ranging from $1 Million to over $1 Billion.
17. Displays benefits of each case with tables and bar charts
18. Integrates cash flows into a year-by-year “sources and uses of cash” and liability summaries
19. Shows reinvestment of surplus cash each year to project amount available for heirs at the death of Generation 1 and also during the lifetime of G2 and/or G3.
Sources of CashIncome from assets Tax exempt incomeDistribution from CRTInterest payment on GDOT noteEarned and other incomeTotal sources of cash
Use of CashLiving expensesIncome taxTotal outlay
Surplus/(Shortage)(+ or - to marketable securities)
73,25087,00080,000
150,000155,000545,250
240,00151,041391,041
$ 154,209
100,13387,00080,800
150,000159,650577,583
247,200243,009490,209
$ 87,374
111,47287,00081,608
150,000164,440594,520
245,616252,382506,998
$ 87,522
123,17387,00082,424
150,000169,373611,970
262,254262,122524,376
$ 87,593
135,24387,00083,248
150,000174,454629,945
270,122272,246542,368
$87,576
201,34487,00087,495
150,000-
525,838
313,146130,910444,055
$ 81,783
820,23887,00096,649
150,000-
1,153,887
420,841378,741799,582
$ 354,304
1,816,27387,000
106,760150,000
-2,160,033
565,576780,248
1,345,824
$ 814,210
-SNOITCUDED XAT EMOCNI 030,171 $ $
HEIRS RECEIVE IMMEDIATELY 8,201,822 685,108,9 $ $
PV OF FUTURE BENEFITS TO HEIRS FROM CLATs - 269,082,1 $ $
-NOITADNUOF YLIMAF 980,486,7 $ $
ESTATE TAX 5,461,638 0 $ $
INCREASED INCOME TAX DEDUCTIONS 171,030$
INCREASED NET TO HEIRS 2,880,725$
INCREASE TO FAMILY FOUNDATION 7,684,089$
ESTATE TAX SAVINGS 5,461,638$
EXISTING PLAN PROPOSED PLAN
PROPOSED PLAN SUMMARY
*
Family Legacy Status $8,201,822
FinancialIndependence
Status $8,780,000
Family Legacy Goal $10,000,000
FinancialIndependence
Goal $5,792,652
SOCIALCAPITALLEGACY
Decrease Tax by $5,461,638Increase Gift by $6,000,000
FAMILY LEGACY
Increase Gift by $1,798,178
FINANCIALINDEPENDENCE
Available Planning Resources $2,987,348
FINANCIAL INDEPENDENCE TRIANGLE
Social Capital Legacy StatusTax $5,461,638Gift -Total $5,461,638
Social Capital Legacy GoalTax $ -Gift $6,000,000Total $6,000,000
Wealth Blueprint Benefits20. Reveals math for each strategy - not a black-box with no clear connection between
inputs and outputs
21. Calculates taxes and cash flows from each of 300+ planning tools (ILITs, QPRTs, Partnerships, Hedge Funds, etc.)
22 Explains each tool with clear graphics and legal document summaries throughout each phase of the planning process
23. Please contact us to discuss how a Family Wealth Blueprint can most effectively communicate your vision to your loved ones and advisers. We can show you how to reduce six types of taxes while generating more cash flow for your lifetime income, transfers to families, and gifts to your favorite causes. We can summarize tax savings and increased benefits for you, your family, and your favorite causes with simple graphics like those on the following page.
Testamentary Charitable Lead Annuity Trust STRATEGY # 7
THOMAS AND VIRGINIA
Contribute $1,707,090 off assets to TCLAT
FOUNDATION
Makes distribution to charity as Determind by Board of Directors
TESTAMENTARY CHRITABLE LEAD
Makes 15 anual distributions of$ 166,995 to the
Smith Foundation. Reminder Interest Press to Heirs
HEIRS
Receives the assets remaining in the TCLAT at the date
of termination
TOTAL RETURN 8.0% PAYOUT RATE 9.76%DEDUCTION FACTOR 100.0% TERM 15CURRENT 7520 RATE 5.2%
Net GrossValue of Value of
Contribution Assets In Assets In Distribution DistributionYear (BOY) TCLAT TCLAT to Charity to Heirs
1 1,707,090 1,676,962 1,676,962 166,695 -2 - 1,644,424 1,644,424 166,695 -3 - 1,609,283 1,609,283 166,695 -4 - 1,571,331 1,571,331 166,695 -5 - 1,530,342 1,530,342 166,695 -6 - 1,486,075 1,486,075 166,695 -7 - 1,438,266 1,438,266 166,695 -8 - 1,386,632 1,386,632 166,695 -9 - 1,330,867 1,330,867 166,695 -
10 - 1,270,642 1,270,642 166,695 -11 - 1,205,598 1,205,598 166,695 -12 - 1,135,351 1,135,351 166,695 -13 - 1,059,484 1,059,484 166,695 -14 - 977,548 977,548 166,695 -15 - 889,057 889,057 166,695 889,057
Totals 1,707,090 424,005,2 889,057389,816,1VPN 370,972
ASSUMPTIONS
TESTAMENTARY CHARITABLE LEAD ANNUITY TRUSTPROJECTED VALUES
