Center for Financial Advisor Education FA 271 Workbook · Center for Financial Advisor Education FA 271 ... the Graduate Financial Planning Track (another CFP ... enable you to understand

Center for Financial Advisor Education

FA 271 Workbook

Foundations of Estate Planning

WB271-01-1

The American College The American College® is an independent, nonprofit, accredited institution founded in 1927. Through a continuum of education programs, The College offers professional certification and graduate-degree distance education to men and women seeking career growth in financial services. At the beginning of the continuum, the Center for Financial Advisor Education at The American College offers the LUTC Fellow (LUTCF) professional designation jointly with the National Association of Insurance and Financial Advisors (NAIFA) and the Financial Services Specialist (FSS) professional designation. The Center’s curriculum is designed to introduce students to the technical side of financial services while at the same time providing them with the requisite sales training skills. In the middle of the continuum, the Solomon S. Huebner School® of The American College administers the Chartered Life Underwriter (CLU®); the Chartered Financial Consultant (ChFC®); the Chartered Advisor for Senior Living (CASL™); the Registered Health Underwriter (RHU®); the Registered Employee Benefits Consultant (REBC®); and the Chartered Leadership Fellow® (CLF®) professional designation programs. In addition, the Huebner School also administers The College’s CFP Board-registered education program, the CFP Certification Curriculum, for those individuals interested in pursuing CFP® certification. Finally, at the advanced end of the continuum, the Richard D. Irwin Graduate School® of The American College offers the master of science in financial services (MSFS) degree; the master of science in management (MSM) degree with an emphasis in leadership; the Chartered Advisor in Philanthropy (CAP™) professional designation; the Graduate Financial Planning Track (another CFP Board-registered education program), and several graduate-level certificates that concentrate on specific subject areas. The National Association of Estate Planners & Councils has named The College as the provider of the education required to earn its prestigious Accredited Estate Planner (AEP) designation. The American College is accredited by the Commission on Higher Education of the Middle States Association of Colleges and Schools, 3624 Market Street, Philadelphia, PA 19104; telephone number: (215) 662-5606. The Commission on Higher Education is an institutional accrediting agency recognized by the U.S. Secretary of Education and the Commission on Recognition of Postsecondary Accreditation. The American College does not discriminate on the basis of race, religion, sex, handicap, or national and ethnic origin in its admissions policies, educational programs and activities, or employment policies. The American College is located at 270 S. Bryn Mawr Avenue, Bryn Mawr, PA 19010. The toll-free telephone number of the Office of Student Services is (888) AMERCOL (263-7265); the fax number is (610) 526-1465; and the home page address is http://www.theamericancollege.edu. ______________________________________________________________________________ Certified Financial Planner Board of Standards, Inc., owns the marks CFP®, CERTIFIED FINANCIAL PLANNERTM, and CFP (with flame logo®), which it awards to individuals who successfully complete initial and ongoing certification requirements.

Copyright © 2006 The American College Press

All rights reserved

Workbook W-3

Foundations of Estate Planning Assignment Schedule

This workbook contains quizzes, exercises, projects, and case studies intended to supplement the material in chapters 1 through 8 of the FA 271 textbook, Foundations of Estate Planning.

Class

Assignments

Page in Text

Page in Workbook

1

____ Date

Estate Planning: An Overview Readings: Learning Objectives What Is Estate Planning? How Is Estate Planning Conducted? Overview of the Selling/Planning Process Prospecting and Marketing Methods for Estate Planning Chapter One Review Course Overview and Expectations (Read before Class 2) Acknowledgment of Course Requirements (Due Class 2) Breakout—Class 1 Sales Planning Project 1—Create Your Ideal Client Profile (Begin, Due Class 2) Most Valuable Concepts

1.1 1.2 1.15 1.21 1.26 1.44

W-9 W-15 W-17 W-19 W-111

2

_____ Date

Types of Property and Ownership Interests and Approaching Prospects Readings: Learning Objectives Three Primary Questions in Estate Planning Types of Property Major Types of Ownership Interests Property Transfer at Death Three Approaches to Estate Planning Prospects Chapter Two Review Acknowledgment of Course Requirements (Due) Breakout—Class 2 Quiz—Class 1 (Due) Quiz—Class 2 (Due) Sales Planning Project 1—Create Your Ideal Client Profile (Due) Sales Planning Project 2—Developing an Inventory of Estate

Planning Prospects (Begin, Due Class 4) Most Valuable Concepts

2.1 2.2 2.3 2.6 2.20 2.29 2.41

W-15 W-27 W-29 W-33 W-19 W-37 W-111

W-4 Foundations of Estate Planning

3

____ Date

Transfers by Gift, Trusts, and the Initial Interview Readings: Learning Objectives Current Status of Estate Taxation The Tax System: An Overview Lifetime Transfers: Gifts Gift Tax Transfers at Death: Trusts Initial Estate Planning Interview Chapter Three Review Breakout—Class 3 Quiz—Class 3 (Due) Action Project 1—Approaching Your Prospects (Begin, Due Class 5) Sales Planning Project 3—Interview an Experienced Advisor

(Begin, Due Class 5) Most Valuable Concepts

3.1 3.2 3.5 3.8 3.13 3.23 3.30 3.52

W-41 W-43 W-45 W-53 W-111

4

____ Date

Estate Administration and Fact Finding Readings: Learning Objectives Estate Administration

Probate Property and the Probate Process Steps in the Probate Process Estate Valuation Fact Finding for Estate Planning

Chapter Four Review Breakout—Class 4 Quiz—Class 4 (Due) Sales Planning Project 2—Developing an Inventory of Estate Planning Prospects (Due) Sales Planning Project 4—Assembling Your Estate Planning

Team (Begin, Due Class 6) Most Valuable Concepts

4.1 4.2 4.3 4.5 4.12 4.24 4.33

W-57 W-59 W-37 W-63 W-111

Workbook W-5

5

____ Date

Calculating Federal Estate Tax, Analyzing the Client’s Estate, and Seminars Readings: Learning Objectives The Federal Estate Tax Calculating the Gross Estate Calculating the Taxable Estate The Unlimited Marital Deduction The Charitable Deduction State Death and Inheritance Taxes Computation and Payment of the Federal Estate Tax Generation-Skipping Transfer Tax Evaluating Clients’ Estate Planning Needs Seminar Marketing Chapter Five Review Breakout—Class 5 Quiz—Class 5 (Due) Action Project 1—Approaching Your Prospects (Due) Sales Planning Project 3—Interview an Experienced Advisor

(Due) Action Project 2—The Initial Interview: Starting the Process

(Begin, Due Class 7) Sales Planning Project 5—Estate Planning Case Studies:

Analyzing Information and Developing Recommendations (Begin, Due Class 8)

Most Valuable Concepts

5.1 5.2 5.3 5.10 5.11 5.13 5.14 5.18 5.25 5.26 5.30 5.43

W-67 W-69 W-45 W-53 W-73 W-77 W-111

6

____ Date

Estate Planning Techniques and the Presentation Readings: Learning Objectives Estate Planning Techniques for the Marital Deduction Four Ways to Qualify for the Marital Deduction Coordinating the Marital Deduction and the Applicable

Credit Amount Heath Care Planning Estate Planning Reduction Techniques The Presentation Sample Presentation Chapter Six Review Breakout—Class 6 Quiz—Class 6 (Due) Sales Planning Project 4—Assembling Your Estate Planning

Team (Due) Action Project 3—Fact-Finding: “What’s Important to You?”

(Begin, Due Class 8) Most Valuable Concepts

6.1 6.2 6.4

6.9 6.13 6.16 6.23 6.30 6.42

W-85 W-87 W-63 W-91 W-111


7

____ Date

Estate Planning Solutions and Implementing the Plan Readings: Learning Objectives The Role of Life Insurance in Estate Planning Life Insurance Policy Provisions Life Insurance Product Solutions Federal Estate and Gift Taxation of Life Insurance Estate Planning for Business Owners Implementing the Estate Plan Chapter Seven Review Breakout—Class 7 Quiz—Class 7 (Due) Action Project 2—The Initial Interview: Starting the Process

(Due) Most Valuable Concepts

7.1 7.2 7.13 7.18 7.20 7.31 7.45 7.47

W-97 W-99 W-73 W-111

8

____ Date

Special Needs, Ethics, Professionalism, and Client Service Readings: Learning Objectives Planning for Special Needs Estate Planning for Life Stages and Living Arrangements Ethics and Professionalism Common Ethical Issues for the Estate Planner Servicing the Plan Chapter Eight Review Breakout—Class 8 Quiz—Class 8 (Due) Sales Planning Project 5—Estate Planning Case Studies:

Analyzing Information and Developing Recommendations (Due)

Action Project 3—Fact-Finding: “What’s Important to You?” (Due)


8.1 8.2 8.18 8.27 8.32 8.37 8.42

W-103 W-107 W-77 W-91 W-111

____ Date

Review Session for the Final Examination

____ Date

Final Examination This is a closed-book exam. You cannot refer to your textbook or any other materials during the exam. The exam will consist of 50 multiple-choice questions.

Workbook W-7

Special Notes to Advisors

Workbook Materials Disclaimer While every precaution has been taken in the preparation of this material to ensure that it is both accurate and up-to-date, it is still possible that some errors eluded detection. The authors and The American College assume no liability for damages resulting from the use of the information contained in this workbook. The American College is not engaged in rendering legal, accounting, or other professional advice. If legal or other expert advice is required, the services of an appropriate professional should be sought.

Caution Regarding Use of Illustrations The illustrations, sales ideas, and approaches in this workbook are not to be used with the public unless you have obtained approval from your company. Your company’s general support of The American College’s programs for training and educational purposes does not constitute blanket approval of the sales ideas and approaches presented in this workbook, unless so communicated in writing by your company.

Use of the Term Financial Advisor or Advisor Use of the term “Financial Advisor” as it appears in this workbook is intended as the generic reference to professional members of our reading audience. It is used interchangeably with the term “Advisor” to avoid redundancy. Financial Advisor takes the place of the following terms: Account Executive Agent Associate Broker (stock or insurance) Financial Consultant Financial Planner Financial Planning Professional Financial Services Professional Financial Services Specialist Health Underwriter

Insurance Professional Life Insurance Agent Life Underwriter Planner Practitioner Producer Property & Casualty Agent Registered Investment Advisor Registered Representative Senior Advisor

Answers to the Questions in the Course

The answers to all essay and multiple choice questions in this course are based on the text materials as written.

Course Comments The American College welcomes your comments about this course, particularly suggestions for its improvement. The blue comment cards at the end of this workbook can be used for this purpose.

Workbook W-9

Course Overview and Expectations Welcome to FA 271, Foundations of Estate Planning. This introductory section begins with an overview of the course objectives. Then it discusses the components of the course, and reviews the various assignments and activities that will help you apply what you learn. Finally, it closes with a discussion of what is expected from you.

Overall Course Objectives

The Financial Services Specialist (FSS) is a new designation offered by The American College. The FSS builds on the enormously successful and quality training courses associated with the LUTCF designation. The American College and National Association of Insurance and Financial Advisors (NAIFA) have partnered to offer these courses, which enable students to gain the necessary skills associated with being a competent and ethical financial advisor. (See page W-7 for an explanation of the meaning of the terms “financial advisor” or “advisor” as used throughout the materials of this course.)

The goal of this course is to introduce you to the estate planning process and the concepts and planning strategies that make up this area of financial services. The finer points of estate planning go well beyond the scope of this course. However, the readings and activities in this course will enable you to understand your own practice in the larger context of the estate planning profession. By the end of the course you should be able to

• describe the selling/planning process as it applies to estate planning • identify and approach prospects for estate planning needs • gather client information and establish goals, needs, and priorities • explain the tools and techniques related to estate planning such as a will, estate and gift

taxes, trusts, property ownership, the uses of life insurance, and estate administration • analyze client information • develop and present recommendations to clients to achieve financial and life goals • implement and service the estate planning recommendations Achieving these objectives depends on the time and energy you invest in completing the

assignments in this course. The next section provides an overview of the course components and the assignments related to them.


Course Components and Assignments

The American College’s LUTC and FSS courses offer practical on-the-job training. Therefore, they require students to take action and participate fully. Except for the final examination, each component of the course is designed to facilitate action and participation, which can translate into more new clients and better client relationships. The course components include

• the classroom • the text • the workbook • the final examination

The Classroom The classroom is where the idea sharing that gives FSS and LUTC courses their unique value takes place. Of course, the value you receive in the classroom depends on your preparation and participation.

The students in an FSS and LUTC classroom represent various levels of knowledge and experience in the financial services industry. Sharing with one another provides everyone an opportunity to grow in proficiency, professionalism, and productivity. In fact, the classroom’s “magic” only happens if everyone is prepared and participates.

The Text The discussions in the classroom focus on applying the concepts discussed in the textbook. Thus, you are expected to complete the reading assignment before class. In addition to the regular textbook information, chapters also contain a chapter review and some may have a case history to read. TChapter Review— TIn order to reinforce what you learn, each chapter in the text includes a chapter review that includes key terms and concepts, review questions, and self-test questions that consist of short-answer, multiple-choice, and matching questions. You are not required to complete these before class. Many students use these questions to review for the final examination. The answers are provided in the back of the text. TCase History— TA chapter may contain a case history, which can be an actual sales situation or a description of how a successful advisor markets, prospects, interviews, services, and so forth. It is designed to stimulate thinking about and discussing selling and planning ideas and activities. As you read a case history, think about how you would handle a similar situation. Does it suggest a method you want to adopt or avoid? Why? The case history will be discussed in class at your moderator’s discretion.

The Workbook The workbook contains an assignment schedule and all of the mandatory assignments that must be completed for each class. The assignments are primarily breakouts (discussion questions), case studies, quizzes, sales planning projects, and action projects.

Workbook W-11

TAssignment Schedule— TThe assignment schedule located in the front of the workbook lists your assignments for the entire course. There is a space on the assignment schedule to write the date for each class session, which your moderator will announce at the first class. By following the schedule, you can readily determine the material that is to be covered in every class and the work that is expected of you.

Except for the assigned readings in the textbook and assignments your moderator gives to you, all other activities can be found in the workbook. Let’s take a look at them.

TBreakouts— TFor each class there is a breakout, a set of questions and/or exercises designed to focus your attention on the topics your moderator will most likely cover in class. The breakouts ask you to apply what you learn. For example, many ask you to explain a concept as you would explain it to a client or prospect. You may then be asked to participate in a role-playing exercise based on your answer to the breakout. You are expected to have breakouts completed for each class. TCase Studies— TSome classes may use case studies. A case study provides a specific set of facts and circumstances about a sales situation. You are then asked to make specific recommendations and support your rationale for them. The case studies are a part of the class discussion at the moderator’s discretion. You are expected to have them completed for any class for which they are assigned. TQuizzes— TThere is a quiz that must be completed for each class except Class 1. The question type may be true/false, multiple choice, fill-in-the-blank, matching, and so forth. Quizzes are due at the beginning of each class. TSales Planning Projects—TSales planning projects focus on the behind-the-scenes activities that support and enable successful interaction with prospects. They explore the planning involved with marketing, prospecting, interviewing, and servicing financial services products. In addition, a sales planning project can also provide learning experiences that sharpen your ability to advise prospects and design appropriate plans for them. Thus, possible activities could include market research, record keeping, interviews of other financial advisors and professionals, and so forth.

Forms are provided for each project. You will be given one week or more to complete each assignment. Begin working on the project the day it is assigned. If you wait until the last minute, you can miss its purpose and lose a real benefit.

TAction Projects—TAction projects focus on the skills and techniques to use when working directly with a prospect. They explore contacting the prospect for an appointment, working with a prospect during an interview, and asking for referrals. In every action project, there is a specific, brief assignment that calls for personal contact with a number of prospects for a definite purpose. Sometimes an approach is suggested.

Action projects typically fit into a financial advisor’s daily routine. Very little preparation or extra research is involved. Sales are inevitable, but they are not required for completion of the action project. Most Valuable Concepts—Reflection is an important part of the learning process. This activity is designed to allow you to think about what you have learned in each class and write the most


valuable concept, sales idea, marketing strategy, and so forth that you learned in the class. Your moderator may ask you to share those ideas with the class.

Project Assignment Summary

Sales Planning Project Title

Assigned Class

Due Class Page

1 Create Your Ideal Client Profile 1 2 W-19 2 Developing an Inventory of Estate Planning

Prospects 2

4

W-37

3 Interview an Experienced Advisor 3 5 W-53 4 Assembling Your Estate Planning Team 4 6 W-63 5 Estate Planning Case Studies:

Analyzing Information and Developing Recommendations

5

8

W-77

Action Project Title

Assigned Class

Due Class Page

1 Approaching Your Prospects 3 5 W-45 2 The Initial Interview: Starting the Process 5 7 W-73 3 Fact-Finding: “What’s Important to You?” 6 8 W-91

The Final Examination At the end of the course, you will take a 50-question multiple-choice examination that consists of the three multiple-choice formats (straight answer, Roman numeral, and EXCEPT) found in

Passing Requirements

Attendance—Your participation in the classroom discussion is crucial to the effectiveness of an FSS or LUTC class. Therefore, your attendance is vital. To complete the course successfully, you must attend at least six of the eight regular classes. Lateness of more than 20 minutes is half an absence; so is leaving early. Missing more than 40 minutes is a full absence. Two absences are permitted. If you end the course with two and one-half absences, you have exceeded the allowable limit. Moderator’s Grade—The moderator records grades for quizzes, projects, and participation in class sessions. These grades are combined to obtain the average grade for all classroom-related work. This average grade is called the Moderator’s Grade. Examination Grade—There is a 50-question final examination at the end of the course. The questions are multiple choice. A grade of 70 percent or higher is necessary to pass the exam. Term Grade—The average of the Moderator’s Grade and the final examination score must be no less than 70 percent to obtain credit. This average is called the Term Grade. Three Requirements—In summary, to qualify for successful completion of the course, you must meet each of the following three requirements: 1. Satisfy the attendance requirement for your course. 2. Score 70 percent or more on the final examination. 3. Score 70 percent or more for the Term Grade.

Workbook W-13

the quizzes in the workbook and the self-test questions at the end of each chapter in the text. All answers are based on the material in the text. The final examination will not be difficult if you have read the text and completed all of the quizzes and chapter reviews. In order to pass the course, you must pass the final examination with a score of at least 70 percent.

Expectations

Before Class Complete all assignments before the class meets. The average amount of time you should plan to spend on completing these activities is at least 2½ hours per class—about the same amount of time spent in classroom discussion. Some classes will require more time, others less.

Activities include the following: • Read and study the assigned pages in the text. • Complete any breakouts and case studies. • Complete the class quizzes. • Complete any sales planning project assigned. • Complete any action project assigned. • Complete all other assignments required by the moderator.

During Class Students—Turn in your assignments at the beginning of each class. The moderator has been directed to penalize late assignments by 50 percent. If more than a week late, papers receive a zero. TSSSSSSSSSSS TModerator— TThe moderator is an individual nominated by the local NAIFA association and appointed by The American College. He or she is not a teacher by profession, but a full-time financial advisor or manager. The moderator shares with you the demands of self-discipline and the constant pressure of time. Consequently, the moderator cannot afford the luxury of catering to anyone who is negligent about completing work on time, maintaining reasonable order, or respecting the rights of others. The moderator needs and deserves the full cooperation of every student.


Performance of Action Projects by Non-Sales Students and Managers

You are expected to do the action projects. This applies to students who are nonproducers and to those in management. It includes, for example, students who are office staff, home office executives, finance officers on a military base, and others who may not be licensed to sell insurance.

If you cannot do the projects yourself, you are expected to handle them in one of the following ways (listed in order of preference): 1. Select an FSS or LUTC student who is with your company or in your community to work with

on the project. Base your reports on your joint work. 2. If there is no local FSS or LUTC student from your company to work with, do joint work with

one of your company’s advisors who is not taking the course. This can be a former FSS or LUTC student or someone without any FSS or LUTC experience.

3. If you are in management and it is not possible to work with an advisor/student, assign the project(s) to one or more of the advisors under your supervision, and report these results.

4. If you have no advisors to work with and none under your supervision, arrange to interview one or more advisors each week, and use the interview as the basis of the project report. Write what the advisor did on the project reporting form.

5. If the four preceding options are unworkable for you, it is up to you to suggest alternative solutions on which you and your moderator can agree. For example, you may develop two presentations to write or present to the class during the course. These may be on special topics or you may research a particular insurance sales topic to write about. Give photocopies to all class members. Topics can include state laws, statistical information about insurance, actuarial studies, articles in insurance magazines, self-improvement topics, relationship insights, or a question that came up in class that needed research.

Keep in mind that these five alternatives are special options for isolated instances. In almost all

situations every student in the class is expected to complete the action projects as assigned for a passing grade. You are expected to do the field activity and make the follow-up approaches yourself. Most projects can be done in a meaningful way by persons who are not producers.

If you need to do the projects in one of the ways suggested above, discuss it in advance with the moderator and reach agreement on how to proceed. As a safeguard, put your agreement in writing, include both of your signatures, and file the agreement.

Workbook W-15

Note to FSS and LUTC Students Please read this page carefully, sign at the bottom, and return it to your moderator in class. Occasionally there are misunderstandings concerning the requirements for the successful completion of the course. The purpose of this memorandum is to insure that the requirements and the ground rules laid down by the moderator are clearly understood. Failure to sign this form does not relieve you from these requirements.

Acknowledgment of Course Requirements –To be signed by student–

It is my understanding, from the explanation received in the first class session and outlined in the Course Overview and Guidelines section of the workbook, that successful completion of this course requires meeting the attendance requirements, achieving a passing examination score (70 percent), and earning an overall average (term grade) of 70 percent on all work for the course. Specifically, I understand that 1. Credit for the course will not be given to any student who fails to attend at least six of eight class

sessions. The maximum number of absences is two. Missing more than 20 minutes of class is a half-absence. Missing more than 40 minutes of class is a full absence. It does not matter whether absences are due to illness, injury, business appointments, company or agency meetings, vacations, or conflicts in personal schedules. No attendance credit is given for attendance at an exam review session. I further understand that neither the local NAIFA officers nor the moderator has authority to excuse absences because the requirement applies impartially to all students.

2. Grades are assigned during the course by the moderator. Grades for participation in class discussions (and preparation for them), and scores made on action projects, sales planning projects, and quizzes are averaged. That number is then averaged with the final examination to arrive at the Term Grade.

3. Written assignments are to be handed in at the beginning of the class session in which they are due. Papers up to one week late are automatically reduced by 50 percent and to zero after that.

4. To receive credit for the course, I must sit for and receive a passing grade on a final examination acceptable for any course offered by The American College. The correct answers to the final examination questions are based solely on the information found in the text. The American College reserves the right to set aside the final examination of any class and require another examination.

5. Course results will be mailed out within 4 weeks after the final exam date, assuming all course requirements have been met, including payment of tuition. These reports will indicate a “passing” or “not passing” status only. No numerical grade is assigned.

I have read the course requirements and understand them. I further understand that recruiting or attempted recruiting of personnel of another company is not permitted in any American College course or in connection therewith. Finally, I understand that any student whose behavior adversely affects reasonable order and harmony in the classroom will not be allowed to continue with the course. There will be no tuition refund, and the student may be barred from future participation in FSS and LUTC courses. Print your name Date Sign your name

Workbook W-17

Breakout—Class 1 1-1. What does estate planning mean to you?

_____

1-2. What do you think is most important about the estate planning process? What do you talk

to your prospects and clients about?

1-3. How do you prospect for estate planning clients?


1-4. What is your impression of the eight-step selling/planning process?

1-5. What would you like to learn from this course?

Workbook W-19

Sales Planning Project 1 Create Your Ideal Client Profile

(Assigned Class 1—Due Class 2)

Purpose You need to identify your ideal client. The importance of this activity cannot be overstated. Operating without a clear idea of whom you can work with best is like a blind squirrel searching for nuts. By deliberately describing the type of client with whom you want to work, you will give your marketing and prospecting efforts focus and you will work with the right prospects—those who will become long-term clients. The advantages include:

• You will enjoy the clients with whom you work and can avoid those clients with whom a relationship would be difficult.

• You will receive more referrals, which makes your job easier, more profitable, and more enjoyable. In addition, prospects will probably be much like the client who referred them to you.

• You will work with prospects who have the best probability of becoming clients.

Assignment This project requires you to analyze your current clients in order to identify and define your ideal client profile, as discussed in Chapter 1.

Procedure This is a brainstorming exercise, which means there are no right or wrong answers. Thus, consider all the possibilities, even those that at first may seem unrelated to the task at hand. Here are the suggested steps for working through the report forms that follow:

1. Make a list of your 20 best clients. Think in terms of profitability as well as how much you enjoy working with them. Also, focus on those clients who you feel might be open to an estate planning approach.

2. Identify their financial value to you in terms of the income and referrals they provide your practice.

3. List some of their basic demographic information that makes working with them enjoyable. Your ideal client profile should reflect any changes you want to make to your practice (to emphasize financial or estate planning, for example) and the type of client with whom you want to work. Consider demographics such as the following:

• age • gender • marital status • family size • religion


4. Identify personal attributes that make working with these clients enjoyable. Here are some questions to answer:

• What personality traits make working with them enjoyable? • How are what you value and think important to life match-up? • What are their attitudes toward financial planning and related topics? • What type of lifestyle do they have (modest, luxurious)? • What needs of theirs were you able to satisfy? What problems did you solve? What

goals did you help them achieve?

5. Consider the ideal client in terms of characteristics and attributes they do not have. Analyze your least-rewarding clients or prospects, and note their demographics and personal attributes as well, to determine why you did not enjoy working with them.

6. Complete the following activity, indicating both what you want and what you don’t want in a client. Look for trends of demographic and personal attributes that show up repeatedly.

7. Finally, put together your ideal client profile. An example follows:

My ideal client is someone who

• Has a household income of $65,000 or more • Has investable assets of $70,000 or more • Has young children • Understands basic principles of investing • Wants a face-to-face relationship • Desires advice from a competent professional about retirement and educational

planning • Is family-oriented • Appreciates the value of good advice and is willing to pay for it • Is reliable and honest

Workbook W-21

Pers

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Workbook W-23

Pers

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Workbook W-25

Name ____________________________________________________ Date ______________

Sales Planning Project 1 Create Your Ideal Client Profile

Report Form

1. Analyze the worksheets you completed and identify those characteristics that you would like or not like to see in your ideal client.

What I Want What I Don’t Want

2. Create an ideal client profile based on the above characteristics and your own background, personal attributes, and values.

My ideal client is someone who:


3. How do you plan on using the ideal client profile in your practice?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

4. What knowledge, skills, and ideas do you have that would appeal to your ideal client?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

5. What intangibles (personality, life experiences, hobbies, and so forth) do you have that would

appeal to your ideal client?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

6. What prestige-building activities will work with your ideal client?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

7. What prospecting methods will work best for finding your ideal client?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

Workbook W-27

Breakout—Class 2 2-1. How do you effectively communicate the need for estate planning with clients?

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________ 2-2. How do you approach a prospect about estate planning?

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________ 2-3. What questions do you use in each part of the selling/planning process to identify the

client’s needs and goals and to develop a solution for him or her? Give some examples.

1. Identify the prospect.

______________________________________________________________________

______________________________________________________________________

2. Approach the prospect.

______________________________________________________________________

______________________________________________________________________

3. Meet the prospect.

______________________________________________________________________

______________________________________________________________________


4. Gather information and establish goals.

______________________________________________________________________

______________________________________________________________________

5. Analyze the information.

______________________________________________________________________

______________________________________________________________________

6. Present the plan.

______________________________________________________________________

______________________________________________________________________

7. Implement the plan.

______________________________________________________________________

______________________________________________________________________

8. Service the plan.

______________________________________________________________________

______________________________________________________________________

Workbook W-29

Name ____________________________________________________ Date ______________

Quiz—Class 1 (Due Class 2)

Instructions: This quiz covers the reading material found in Class 1. Study the reading assignments, then circle the correct answer for each of the following questions. Each question is worth 10 points (100 points total). 1-1. Which of the following statements concerning estate planning is correct?

(A) Estate planning involves the creation, conservation, and distribution of an estate. (B) Estate planning is primarily concerned with the conservation of assets. (C) The best estate plan is always the one that minimizes taxes and expenses. (D) Estate planning is the eight-step process to complete the sale and service the client.

1-2. Identifying conditions that are preventing a prospect from achieving his or her goals is

accomplished in which step of the selling/planning process?

(A) Gather information and establish goals. (B) Analyze the information. (C) Develop and present the plan. (D) Service the plan.

1-3. Which of the following is a group of people with common characteristics and common

needs?

(A) natural market (B) prospect list (C) strategic alliance (D) target market

1-4. The most basic legal instrument of all estate plans is which of the following?

(A) health care proxy (B) power of attorney (C) trust (D) will


1-5. Which of the following represent(s) objectives of estate conservation? I. to provide adequate liquidity in order to avoid forced sale of estate assets II. to maximize taxes and other transfer costs in order to minimize the estate that heirs

will inherit

(A) I only (B) II only (C) Both I and II (D) Neither I nor II

1-6. Which of the following statements regarding estate planning is (are) correct? I. Lack of estate liquidity may force an estate to sell assets under disadvantageous

conditions. II. A client’s failure to deal with the inevitability of death may be an obstacle to the

estate planning process.


1-7. Which of following statements is (are) correct regarding the purposes of estate conser-

vation? I. to pass on income-producing property to replace the income of the breadwinner II. to minimize taxes and other transfer costs in order to maximize the estate for heirs


1-8. All of the following are steps in the selling/planning process EXCEPT:

(A) Identify the prospect. (B) Obtain referrals. (C) Implement the plan. (D) Meet the prospect.

1-9. All of the following statements regarding a center of influence (COI) are correct EXCEPT:

(A) A COI must be a client before he or she can be a center of influence. (B) A COI is active in the community or sphere of influence. (C) A COI is an influential person who knows you favorably. (D) A COI agrees to introduce or recommend you to others.

Workbook W-31

1-10. All of the following statements regarding estate planning are correct EXCEPT:

(A) Estate planning is only concerned with the conservation of assets. (B) Inflation makes it necessary to periodically review existing estate plans. (C) Everyone has an estate plan established by the intestate succession statutes. (D) A common reason for procrastination in estate planning is the feeling that the task is

too overwhelming to accomplish.

Workbook W-33

Name ____________________________________________________ Date ______________


Instructions: This quiz covers the reading material found in Class 2. Study the reading assignments, then circle the correct answer for each of the following questions. Each question is worth 10 points (100 points total). 2-1. Which of the following statements regarding intestate succession statutes is correct?

(A) Their primary purpose is to minimize taxes. (B) They are a statutory scheme for the disposition of property at death if that resident

dies without a valid will. (C) They are legal instruments a person can use to dispose of his or her property at death. (D) They allow a decedent to leave property at his or her death to a charity or a friend.

2-2. Which of the following statements regarding a reversionary interest is correct?

(A) It gives the owner (grantor) the right to have all or part of the property that he or she originally owned returned to his or her estate.

(B) It is a present interest in property that gives an immediate right to use and enjoy it. (C) The holder of a reversionary interest has the current right to income from the

property. (D) The grantor has a present right to possess and enjoy the property concurrently with

the present estate owner. 2-3. If you are not an attorney, giving your prospects and clients legal advice is considered

(A) a good way to build rapport and credibility (B) illegal and unethical (C) unavoidable in estate planning (D) an undesirable but necessary sales practice

2-4. Which of the following statements concerning naming a decedent’s estate as the

beneficiary of life insurance proceeds is correct?

(A) The proceeds are beyond the claims of the estate’s creditors. (B) The proceeds are not subject to the cost of administration. (C) The proceeds are not subject to an executor’s fee. (D) The proceeds are considered to be probate property.


2-5. A life insurance policy death benefit paid to a named beneficiary is an example of a transfer of property by operation of

(A) will (B) law (C) contract (D) intestacy

2-6. Which of the following statements concerning tenancy by the entirety is correct?

(A) It is limited to co-ownership of property held by a husband and wife. (B) It is available for use only with personal property. (C) During his or her lifetime, a co-owner may convey his or her interest to a third party

without the consent of the other tenant. (D) At the first co-owner’s death, that co-owner’s interest can pass by will to someone

other than the other co-owner. 2-7. Which of the following statements regarding property ownership is (are) correct? I. All property that is not real property is personal property. II. A fee simple estate may not be left to a property owner’s heirs.


2-8. Which of the following statements concerning joint tenancy with right of survivorship is

(are) correct? I. Property held jointly with right of survivorship passes to the survivor by operation

of law, rather than under a will. II. All joint tenants with right of survivorship must have equal rights and obligations

with respect to the property.


2-9. All of the following are ways that property can be transferred EXCEPT

(A) sold or exchanged for valuable consideration (B) made as a gift of either present or future interest (C) distributed at death (D) a promise to sell the property in the future

Workbook W-35

2-10. A will’s simultaneous death and survivor provisions in the event that both wife and husband die in a common accident does all of the following EXCEPT:

(A) The simultaneous death provision allows the will to define who will be considered

the “survivor” when it is impossible to determine who died first. (B) Simultaneous death and survivor provisions can have a significant tax effect by

controlling the way assets are distributed. (C) A will’s survivor provision deals with cases in which the husband and wife do not die

simultaneously but within a few hours, days, or weeks of each other. (D) The survivor provision forces the estates of both husband and wife to be probated.

Workbook W-37

Sales Planning Project 2 Developing an Inventory of Estate Planning Prospects


Purpose The objective of this sales planning project is to identify prospects who meet your ideal client profile and pinpoint potential estate planning needs and goals with which you can help.

Assignment In this project, you will identify prospects whom you will contact in an upcoming action project to obtain an appointment for an initial meeting. In addition, you will identify potential target markets you may want to explore later. Identify prospects whom you think would be interested in taking a broad planning approach to their financial needs and goals.

Procedure 1. Look at your ideal client profile from Sales Planning Project 1. Make a list of five prospects

who fit the profile. These should be people you think would be interested in an estate planning approach to their financial needs and goals.

2. For each prospect, describe relevant characteristics such as age, estimated income, esti-mated net worth, marital status, family status, hobbies, and so forth. Include any current life events such as a marriage, divorce, new baby, or promotion.

3. Then, identify the prospect’s possible financial goals and needs. 4. Finally, analyze your prospects for possible target markets that they may represent. All of

your prospects do not need to come from the same target market. Also, a prospect may represent two or more potential target markets.

5. Complete the chart, identifying the target market, its common characteristics, its common needs and goals, and how members communicate with each other. For the communication system, be specific. Do they have a newsletter? Do they meet once per quarter? Do they simply talk with one another via e-mail or telephone?

Workbook W-39

Name ____________________________________________________ Date ______________

Sales Planning Project 2 Developing an Inventory of Estate Planning Prospects

Report Form

Prospect’s

Initials

Information on This Prospect Possible Needs or Goals Based on Your

Information on This Prospect (1)

(2)

(3)

(4)

(5)


Analyze your prospects. What target markets do they represent? Complete the chart below. Remember, members of a target market must communicate with one another, whether formally or informally.

Target Market

Common Characteristics

Common Needs and Goals

How They Communicate

Workbook W-41

Breakout—Class 3 3-1. How do you develop rapport and credibility with a client?

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

3-2. What do you think will happen to federal estate planning legislation after EGTRRA sunsets in 2010? _________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

3-3. What do you do in your initial (estate planning) interview? _________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________


3-4. The Estate Planning Initial Interview

Successful interviews are a result of careful planning. Much of what happens in the interview depends on how you prepare for it. List the compliance-approved materials you use in the initial interview for an estate planning case to generate a prospect’s interest in estate planning. These materials must be provided and/or approved by your company. Be prepared to describe and explain your initial interview in class.

What You Use Why You Use It

____________________________________ _____________________________________

____________________________________ _____________________________________

____________________________________ _____________________________________

____________________________________ _____________________________________

3-5. Do you think understanding social styles will help you understand and relate to others? Explain your answer. _________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

Workbook W-43

Name ____________________________________________________ Date ______________


Instructions: Study the reading assignment from Class 3, then circle the correct answer for each of the following questions. Each question is worth 10 points (100 points total). 3-1. Taxable gifts are reported on which of the following tax forms?

(A) Form 706 (B) Form 709 (C) Form 1040 (D) Schedule G

3-2. If property is transferred for adequate consideration, it is considered

(A) a gift (B) a gratuitous transfer (C) a sale (D) income tax deductible for individual taxpayers

3-3. Which social style is generally outgoing and enthusiastic, enjoys telling about personal

projects and dreams, and wants to be recognized?

(A) a driver (B) an amiable (C) an analytical (D) an expressive

3-4. A wife makes outright gifts of $96,000 to her son, and her husband agrees to split the gifts

with her. Which of the following correctly states the amount of taxable gifts?

(A) wife $26,000, husband $26,000 (B) wife $36,000, husband $36,000 (C) wife $46,000, husband $46,000 (D) wife $72,000, husband $0

3-5. Which of the following statements concerning a testamentary trust is correct?

(A) It is an inter vivos trust. (B) It cannot exist for more than 5 years. (C) It is created by will. (D) At its termination the trust property must revert to the grantor.


3-6. Which of the following typically occur(s) in the initial interview? I. Uncover insurance and other financial needs and determine priorities. II. Obtain the prospect’s permission to proceed and commitment to work with you.


3-7. Which of the following statements concerning gifting is (are) correct? I. The donee generally receives a basis in gifted property equal to the fair market

value of the property at the time of the transfer. II. No gift tax return is currently required until a present-interest gift by one individual

to another individual in a calendar year exceeds $12,000.


3-8. All of the following are factors that help build credibility with the prospect EXCEPT

(A) perspective (B) commonality (C) competence (D) propriety

3-9. All of the following are considered gifts EXCEPT:

(A) A father lends his son $100,000 and later cancels the note. (B) A person pays bills or purchases food or clothing for a spouse or minor children. (C) A father gives his minor daughter a $50,000 ring. (D) A father makes payments on an adult son’s car.

3-10. All of the following statements concerning a simple trust are correct EXCEPT:

(A) Accumulation of trust income is allowed. (B) The trust is treated as a separate tax entity. (C) No charitable gifts can be made by this type of trust. (D) Beneficiaries are taxed on the distributed income.

Workbook W-45

Action Project 1 Approaching Your Prospects


Purpose The purpose of this project is to practice selecting appropriate preapproach materials and using effective telephone techniques to set appointments for estate planning. Successful completion of this action project requires you to approach three clients or prospects regarding estate needs. You can use the approaches discussed beginning on page 2.29 of the textbook or later in this assignment. Assignment The key to successfully setting appointments is basing your preapproach and approach on needs that the prospect has a strong emotional desire to address. Your preapproach and approach should reflect the prospect’s probable needs and your ability to communicate how you can meet them effectively.

In this action project, you will analyze five prospects from the list you made in Sales Planning Project 2 in order to select appropriate preapproach material and create an effective approach script. Then you will telephone or meet them face-to-face to schedule an initial appointment to determine if your financial planning services will benefit them. You can make these approaches as a follow-up to direct mail letters, a conference with the person directly, or a phone call without a preapproach. When making telephone approaches, be sure to comply with the Do-Not-Call regulations. Procedure 1. From the prospect list that you created in Sales Planning Project 2, select five or more

prospects who have similar needs. (Record their initials on the report form.) By selecting prospects with similar needs, you can use the same preapproach and approach for all of them.

2. Examine each prospect’s needs and choose the need or needs that you feel the prospect would have the greatest emotional desire to address. Record this on the report form in the “Needs” column.

3. (Optional) Select and send an appropriate preapproach for each prospect based on this need (or needs). For example, if the prospect is a professional with young children, an e-mail, postcard, letter, or magazine article about survivor planning would be appropriate. Or if a prospect does not have a will, you could discuss the implications of dying without one. Indicate which preapproach you use for each prospect by placing the corresponding letter in the “Pre” column on the report form; record a brief description of each one.

4. Review the information in Chapter 2 of the textbook regarding approaches. Outline a telephone script that is based on the prospect’s possible need. Refer to the preapproach (if you have used one) either directly or indirectly. A direct reference would be something like, “I’m following up on the postcard I sent you about estate planning.” An indirect reference would be repeating information in the postcard without mentioning that you sent it. Record the body of your script—where you describe the possible need and communicate


your ability to meet it—on the report form (or attach a copy to the report form). If you use different scripts for different prospects, indicate which script you use by placing the appropriate letter in the “App” column on the report form.

5. Make your approach and record what happened on the report form. Discuss the person’s goals and needs using a company fact finder or the questions that appear on the worksheet page of this assignment. At the end of the meeting ask the prospect for his or her reaction to the information and discussion.

6. Record your answers to the questions on the report form and submit it at the beginning of Class 5.

Sample Approaches in Textbook 1. Estate and Retirement Priority Approach, page 2.30. 2. Probing (Disturbing) Question Approach, page 2.33. 3. 12-minute Introduction Interview, page 2.37.

Below are several approaches to consider.

“Good afternoon, Prospect. How are you? Do you have a few minutes to speak? (Have I caught you at a good time?)

I am taking a class on estate planning. One of my assignments is to speak to people about their overall estate planning objectives and needs. This will take 20 minutes or so. Would you be able to help me out?”

“Prospect, I am taking a class on estate planning and one of my assignments is to survey people regarding the estate planning they have done. The survey will take about 5 to 15 minutes, depending on your situation. Would you be willing to help me?”

“(Prospect or Client), many people do not think of themselves as estate owners, yet anyone who owns property has an estate. I help people like you develop a plan to pass property to their heirs while minimizing estate settlement costs and state and federal taxes.

I would like to meet with you to ask you some questions and to talk about how you would like to see your property distributed. During our meeting, we can determine if you can benefit from the work that I do. If this is agreeable, how would next Wednesday…or would…be better?”

“Prospect, have you considered how much it costs to settle an estate? Even if no federal estate taxes are due, final expenses and state inheritance taxes often create an immediate need for cash. I like to discuss this with you and share some ideas about estate planning that should benefit you.

I’d like to take about 20 to 30 minutes of your time to talk to you about the estate planning you have done and things you might do to improve the situation for you and for your survivors. Is next Wednesday convenient or would next…be better?”

Workbook W-47

Write and Implement an Approach Script Keep in mind your objective for calling. Put together a script that has a greeting, creates

interest, asks for the appointment, and has a closing. In addition, be prepared for client resistance to your call. Be ready to exit gracefully should client resistance persist.

Your conversation should last only a few minutes. A good script is short and creates interest. As always, remember to follow company guidelines and get any necessary compliance approval. Observe all federal and state Do-Not-Call rules. Know the Objective

Your objective is to introduce yourself to the prospect and set the appointment. Obviously, you will not need to introduce yourself to an existing client, but you will want to re-establish rapport if you have not spoken to him or her for some time. Greet the Prospect

You want to make a good first impression. Begin your conversation with something upbeat like, “Good morning/Good afternoon.” Identify yourself and the company you represent. Consider adding a phrase such as “I will only take a moment of your time” or “Do you have a moment to speak?” This demonstrates that you are sensitive to the person’s busy schedule. Create Interest

Remember, you are trying to motivate prospects to see you. Tell them why you are calling. Give a unique benefit statement that describes the results you create for people like the prospect (your target market). Ask for the Appointment

This is why you are calling. Explain the purpose of the meeting in terms of the results you hope to achieve. Personalize these results. However, avoid using the word “appointment.” Use words like “meet,” “see,” or “get together.” Close

First and most recent impressions are memorable. It is important that you know how you will end the call. There are some things you must do, such as give directions if the prospect is unfamiliar with the location of your office. In addition, reconfirm the appointment and affirm your desire to meet the prospect.

Example of an Approach to a Preretiree

Good afternoon, Prospect, this is Joe Advisor from ABC Financial. I will only take a moment of your time. I work with people like you who are thinking about retirement, specifically about their goals for retirement and how they can achieve them. I would like to meet with you to see if you could benefit from working with me. Would that be possible and, if so, what would be a good time for you—days or evenings?


Practice, Practice, Practice Once you have written your scripts, it is time to practice them. Read them to other advisors and

get their feedback. You can also record yourself and see what you sound like. Does it sound like you are reading? Implement the Approach

After you have practiced your script and sent out applicable preapproach letters, it is time to pick up the phone and call. Once you have set the appointment, send out a confirmation letter along with your personal brochure (if you have not done so already). A few days prior to the appointment, call to confirm it.

Workbook W-49

Identifying Client Objectives and Needs Worksheet

At the end of your life when you look back, what do you want to have achieved and accomplished? What legacy do you

want to leave?

Do you have a last will and testament? Yes Date of will: No

Does your spouse have a last will and testament? Yes Date of will: No

Do you and/or your spouse have a living will? Client: Yes No Spouse: Yes No

Do you and/or your spouse have a power of attorney for health care? Client: Yes No Spouse: Yes No

If yes, who is named as the power of attorney for: Client? _____________________ Spouse?______________________

Do you have a basic estate plan? Yes No

Ignoring taxes, describe briefly how you want your estate distributed in the following instances:

Client dies first:

Spouse dies first:

Both die in a common disaster:

Are you familiar with the federal estate tax and state death and inheritance tax laws? Would you be interested in learning

more?

Are any specific provisions, preferences, bequests, or allowances to be made in your estate distribution plan? For example,

is it important to you to leave an inheritance to your heirs?

Client: Yes No If yes, explain:

Spouse: Yes No If yes, explain:

What would you like to leave to your dependents in the event of your death?

Do you anticipate that both principal and income will be used to provide financial support to your survivors from your

respective estate assets?

Client: both principal and income income only

Spouse: both principal and income income only

Who has been named as executor in your will? In your spouse’s will?

Name: Name:

How do you plan to pay estate settlement costs that can average about 5 percent of your estate?


Have guardians been named for your minor children? Yes No If yes, who?

Name: Address:

Have you or your spouse created any trusts? You? Spouse?

If so, complete the items below.

Grantor Type of Trust Trustee Beneficiary Value

Client

Spouse

Have you or your spouse ever made a gift under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act?

Client: Yes No Spouse: Yes No

If yes, in which state?

Who is the custodian?

Who are the beneficiaries?

Are you or any members of your immediate family beneficiaries of a trust? Yes No

If yes, who?

Amount expected:

Do you or your spouse expect to receive gifts/inheritances? Yes No If yes, who?

How much? From whom? When?

What would you like to provide to your dependents in the event of your death?

What plans do you have in place?

Do you want to give any of your assets to your heirs during your lifetime for tax reduction or other purposes?

Client: Yes No Spouse: Yes No If yes, please complete the items below.

Giver Recipient Gift Description Value When

Client

Spouse

Do you and/or your spouse intend to include bequests to charity in your will? Yes No

If yes, explain.

Workbook W-51

Name ____________________________________________________ Date ______________

Action Project 1 Approaching Your Prospects

Report Form

Preapproach Give a brief description of the preapproach you are sending. What are the main message points?

• _______________________________________________________________________ _______________________________________________________________________

• _______________________________________________________________________ _______________________________________________________________________

• _______________________________________________________________________ _______________________________________________________________________

Approach Script Write the body of your approach, the part of the script that describes the prospect’s possible needs and your ability to address them.

A. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________

B. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________

C. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________

______________________________________________________________________


Prospect Needs Pre App What Happened?

Workbook W-53

Sales Planning Project 3 Interview an Experienced Advisor


Purpose As an advisor interested in developing an estate planning approach with your prospects and clients, it is important for you to learn from successful experienced advisors. The information you will gain from interviewing them will help you move your practice in this direction. By tapping into the experience and knowledge of veteran advisors, you should gather ideas to increase the effectiveness of your marketing and planning process.

Assignment Interview an experienced financial advisor in your agency, association, or area who has a successful estate planning practice or does estate planning within the practice. Conduct an interview about his or her practice. Record and submit your results using the form provided in this assignment.

Procedure 1. Identify and contact the advisor and tell him or her that you are interested in estate planning.

Ask if he or she would be willing to discuss some aspects of the practice with you, such as how he or she got started and how the business is run. Make an appointment to conduct a face-to-face interview, if possible. A telephone interview should be a secondary option because you want to see the office and to conduct this interview in the work environment.

2. Use the questions provided on the worksheet that follows as a guide to your discussion. Create a list of questions based on the topics on the interview worksheet. Possible questions are listed under each heading. Out of your list, choose five to ten questions to ask. Try to ask a question for each of the five headings. Add relevant questions that you think will be helpful.

3. Conduct the interview. Wrap up your interview with question 6 on the report form. 4. Record the advisor’s answers to your questions under the appropriate heading on the report

form.



(Worksheet)

For each topic, select a question or create one of your own.

Identifying and Approaching Prospects • What are some characteristics that you look for in prospects? • How do you prospect? • What target market do you use to prospect for estate planning clients? How do you

position yourself strategically in your target markets? • How do you create awareness of your estate planning products and services? • What do you say to prospects to set an appointment? • How did you get started using an estate planning approach in your practice?

Interviewing the Prospect • How do you begin your discussion about estate planning? What do you do and say? • What questions do you ask to explore the prospect’s feelings about estate planning? • Do you ask disturbing or motivating questions? What are they? • What visuals do you use to discuss the estate planning need? When do you use them? • What topics do you cover in your initial interview with a client? • What type of fact finder do you use to gather information about a client’s financial

situation? • How do you design and present your proposals and recommendations to your prospects? • What types of training, continuing education, forums, publications, and associations do

you use to keep current in your practice?

Analyzing the Information • How do you know when certain needs are indicated? • How do you evaluate alternative courses of action? • What types of calculations and projections do you run? • What software do you use?

Developing and Presenting the Plan • Do you present a formal written plan? Why or why not? • What do you include in the formal written plan? • How do you present alternative courses of action? • What are some of the types of recommendations you make to prospects?

Implementing the Plan • What are the most common objections you hear? How do you handle them? • Describe how you work with other advisors whose products and/or services are needed

for implementing the recommendations you make. • Do you make any recommendations for products you do not offer? How do you do that?

How do you help the prospect implement those recommendations?

Workbook W-55

Name ____________________________________________________ Date ______________


Report Form

1. Identifying and Approaching Prospects

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

2. Interviewing the Prospect

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

3. Analyzing the Information

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________


4. Developing and Presenting the Plan

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

5. Implementing the Plan

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

6. What difficulties and challenges do you encounter when working with estate planning? How do you overcome them?

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

Workbook W-57

Breakout—Class 4 4-1. How do you introduce the fact-finding process? What do you say?

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

4-2. What do you say if a client resists or has concerns about the fact-finding process?

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

4-3. What do you think are the most important details resulting from the fact-finding process?

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________


4- 4. How do you determine a client’s risk tolerance?

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

4-5. What words would you use at the conclusion of the fact-finding meeting to describe the

purpose and content of the agreement letter that you will subsequently mail to the client?

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

4-6. What do you think are the most important details to extract from the fact-finding process?

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

Workbook W-59

Name ____________________________________________________ Date ______________


Instructions: Study the reading assignment from Class 4, then circle the correct answer for each of the following questions. Each question is worth 10 points (100 points total). 4-1. The prudent-person rule states that a fiduciary must

(A) provide the same judgment and care that a prudent person would for the disposition of his or her own property

(B) follow the advice and recommendations of a prudent attorney or accountant in disposing of estate property

(C) be prudent in protecting his or her own interest when acting in a fiduciary capacity (D) not make any misjudgments in acting for another person

4-2. Which of the following property items is usually the most difficult to value for estate

valuation purposes?

(A) patents (B) closely held corporations (C) marketable securities (D) pension funds

4-3. Which of the following statements about the income taxation of estates is correct?

(A) Estates are exempt from income taxation. (B) Estate income and expenses are reported as income in respect of a decedent. (C) Estates are entitled to itemize and take deductions if they exceed 2 percent of the

estate’s adjusted gross income. (D) Estates must report revenue generated by estate assets as income but are allowed to

deduct the expenses. 4-4. Unless an extension is granted, how long after the decedent’s death are estate taxes due?

(A) 3 months (B) 6 months (C) 9 months (D) 12 months


4-5. Which of the following statements concerning a fiduciary relationship is correct?

(A) A court does not regulate trusts, so there is no fiduciary relationship between the trustee and the beneficiary.

(B) An executor named in the will has no fiduciary relationship with the beneficiaries. (C) A trustee is generally given authority to act by the courts. (D) Violation of the trust held in the fiduciary can lead to the beneficiary taking legal

action. 4-6. John Williams bought XYZ stock for $50 a share. The XYZ stock is worth $125 a share

when John dies. How much of each share’s value is included in John’s gross estate for federal estate tax purposes?

(A) $50 (B) $75 (C) $125 (D) $175

4-7. Which of the following statements regarding probate is (are) correct? I. It provides a means of dispute resolution for estate issues, including guardianship

of minors. II. A lack of privacy exists because the decedent’s will, beneficiary information, and

the claims of creditors are a matter of public record.


4-8. Which of the following statements regarding the probate process is (are) correct? I. The will must be filed with the appropriate probate court in the state where the

deceased resided. II. The probate estate contains all the property owned solely by the decedent that is

distributed under the will.


Workbook W-61

4-9. In order to accomplish the goals of fact finding, you must involve the client in a process of establishing all of the following EXCEPT

(A) providing the data on assets (B) establishing priorities and setting realistic objectives for the distribution of the estate (C) understanding the problems that stand in the way of the client’s objectives (D) choosing and implementing the most appropriate solutions

4-10. All of the following are methods to avoid probate EXCEPT

(A) naming beneficiaries other than the decedent’s estate to receive insurance proceeds (B) using a self-proving will to transfer property owned by the decedent (C) titling property as joint tenants with right of survivorship (D) placing property in a revocable living trust

Workbook W-63

Sales Planning Project 4 Assembling Your Estate Planning Team


Purpose When you use an estate planning approach, you will often uncover needs that you cannot meet but nonetheless are important to your client’s financial success. You will most likely encounter situations in which you must recognize your limitations to avoid giving erroneous advice and exposing yourself to liability. Additionally, professional alliances can be an important component in your marketing and prospecting efforts. For these reasons, you should have a team of qualified advisors with whom you can consult or to whom you can refer clients. The objective of this project is to learn how to build that team or add to the one you already have. Assignment This project asks you to identify the types of advisors with whom you will need to work. Then you are asked to create a list of candidates to include on your team. It is critical that you exercise due diligence and are confident that other advisors are trustworthy, competent, and professional. You are asked to interview one of the advisors in order to gain practice qualifying team members. Procedure 1. Using the worksheet provided, create a list of the types of advisors whom you will include

on your team. Consider the specialists with whom you will need to work in the areas of insurance (life, health, property and casualty, commercial), investments, estate planning, retirement planning, taxation, and so forth. For example, in the area of estate planning you will need a life insurance agent and an estate planning attorney.

2. Next, create a list of names, addresses, and phone numbers of advisors whom you know or whom you can identify who work in these various areas. Consider discussing potential candidates with advisors, associates, clients, family, and friends to get qualified references.

3. Describe your expectations for the advisors on your team and for your relationship with them. For example, will you have a formal agreement with them (a strategic alliance)? What can you do for them? What do you expect from them? What should they expect from you?

4. Set up an appointment with one advisor from the list you created in step two to conduct a qualifying interview.

5. Make a list of questions to ask the advisor. Record them on the report form. See the report form for suggestions.

6. Conduct the interview and complete the rest of the report form.


Use the worksheet below to develop a list of potential professionals to contact to determine if an alliance is possible and practical.

Worksheet Advisor Type Name Address Phone Number 1.

2.

3.

4.

5.

6.

7.

8.

Workbook W-65

Name ____________________________________________________ Date ______________

Sales Planning Project 4 Assembling Your Estate Planning Team

Report Form

1. Describe your expectations of the relationship you want to have with the members of the team. What can you do for them? What do you expect from them?

What I Can Do for Them What I Expect Them to Do for Me

2. Create a list of questions to ask based on your expectations. Record them below. For

example:

• What are your areas of expertise? • How long have you worked in these areas of expertise? How many cases have you

worked on that deal with (fill in the type of cases you will encounter)? • Do you have professional liability (errors-and-omissions) insurance? • Who is your target market? Who is your ideal client? • Outline your process for working with clients.


Record your questions here:

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

3. Summarize your interview with an advisor from your list of potential members of your estate

planning team.

1) What was the advisor’s specialty? 2) How long has he or she been practicing? 3) What background and credentials does he or she have?

4) Describe your first impression of the advisor. Consider the advisor’s physical appearance,

attitude, and demeanor as well as his or her office. Was he or she professional? Why or why not? ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

5) In what ways do you feel you would be an asset to this particular advisor?

________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

6) What do you feel the advisor would add to your team?

________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

7) How did you feel about the process of qualifying team members?

________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

Workbook W-67

Breakout—Class 5 5-1. What do you look for when you analyze a case?

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

5-2. Do you or have you used seminar marketing as a way of prospecting and marketing

yourself?

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________ 5-3. Federal Estate and Gift Tax Forms

The federal estate and gift tax forms contain a wealth of information and can add credibility to your presentation and an appreciation of your competence in the eyes of your prospect. These forms can be obtained from an IRS office or can be downloaded from the IRS website at www.irs.gov. Review them for the class discussion.

• Form 706-United States Estate Tax Return and Instructions • Form 709-United States Gift Tax Return and Instructions


Discussion Questions 1. a. How do you think a prospect would respond to Form 706 and Form 709? b. How do you think a prospect would respond to the instructions for these forms?

2. How would you feel about filling out these forms?

3. How much do you think an attorney or accountant would charge to complete these forms? 4. How long would it take to read all these forms? 5. a. Describe how you could use Form 706 to educate an estate planning prospect about estate

taxes, deductions, and credits. b. What would you say to the prospect? (role-play) 6. a. Describe how you could use Form 709 to educate an estate planning prospect about gift

taxes, exclusions, and credits. b. What would you say to the prospect? (role-play) 7. Review Schedule D-Insurance on the Decedent’s Life, and Form 712-Life Insurance

Statement—forms that are required to be completed if there was insurance on the decedent’s life. These forms discuss many of the topics covered in this course.

What life insurance topics do you see on these forms?

Workbook W-69

Name ____________________________________________________ Date ______________


Instructions: Study the reading assignment from Class 5, then circle the correct answer for each of the following questions. Each question is worth 10 points (100 points total). 5-1. Which of the following is correct regarding the state death tax deduction?

(A) It is an allowable adjustment to the gross estate. (B) It is disallowed if the marital deduction is used. (C) It is a credit against the estate tax due. (D) It is a deduction against the adjusted gross estate.

5-2. For estate tax purposes, how is jointly held property treated at the death of the first spouse?

(A) The entire value of the property is included in the estate of the first to die. (B) Nothing regarding the jointly held property is included in the estate of the first spouse

to die. (C) Half of the property’s fair market value is included in the estate of the first spouse to

die. (D) Half of the decedent’s cost basis in the property is included in the estate of the first

spouse to die. 5-3. The federal estate tax is a tax on

(A) an individual’s right to gift property to others in his or her will (B) an individual’s right to transfer property at death (C) the income derived from receiving an inheritance (D) only a decedent’s probate property

5-4. Which of the following is a deduction from a decedent’s gross estate in determining the

adjusted gross estate?

(A) foreign death taxes (B) state death taxes (C) debts and claims against the estate (D) the marital deduction


5-5. Which of the following statements concerning the federal estate tax charitable deduction is correct?

(A) In order to be allowed as a charitable deduction for the estate, the bequest must first

be includible in the donor’s gross estate. (B) The amount of the estate tax charitable deduction is limited to a percentage of the

adjusted gross estate. (C) A donor can get a charitable deduction or an income tax deduction for a charitable

gift, but not both. (D) The amount of the deduction will be increased by the amount of any estate taxes paid

from the charitable bequest. 5-6. Which of the following statements regarding the estate tax calculation is (are) correct? I. Income that the decedent was entitled to receive but had not yet received at the date

of death is includible in his or her gross estate as income in respect of a decedent. II. For years 2005–2009, the State Death Tax Credit will be replaced with a deduction

for state death taxes.


5-7. Which of the following statements regarding the generation-skipping transfer tax (GSTT) is

(are) correct?

I. Every taxpayer is permitted to transfer up to $1 million free of the GSTT either during lifetime or at death.

II. The objective of the GSTT is to obtain at least one transfer tax per generation.


5-8. All of the following statements about estate inclusion are correct EXCEPT:

(A) The federal estate tax is a tax on the right to transfer property at death and is imposed on the estate itself.

(B) Property located outside the United States but owned by U. S. citizens is exempt from federal estate taxation.

(C) All property owned by the decedent at death is included in the decedent’s gross estate.

(D) Gifts of life insurance policies made within 3 years of death are includible in the gross estate.

Workbook W-71

5-9. All of the following statements regarding the applicable credit amount are correct EXCEPT:

(A) It may be applied at the taxpayer’s option against gift taxes during life. (B) It must be applied against any gift taxes due during life. (C) It is scheduled to be phased out in 2010 as a result of EGTRRA 2001. (D) It may be applied to offset federal estate taxes after someone’s death.

5-10. For property to qualify for the marital deduction, all of the following requirements must be met EXCEPT:

(A) The spouse must be a U.S. citizen. (B) The property must be included in the estate. (C) The estate of the decedent spouse must pay estate tax on the marital deduction

property. (D) The property must transfer directly to the spouse.

Workbook W-73

Action Project 2 The Initial Interview: Starting the Process


Purpose The objective of this project is for you to implement or refine your initial interview to mirror the recommended actions of step three of the selling/planning process. Assignment In your initial interview with a client, implement the actions recommended in step three of the selling/planning process. In general, you will discuss estate planning and why it is needed, introduce yourself and your company, and discuss the nature of the relationship you would like to establish with the client. The prospects can be people you know or those from your prospecting list.

Successful interviews are the result of careful planning. They don’t happen by chance. They begin well before you meet your prospects face to face. In fact, much of what happens during the interview depends on how you prepare for it.

In part your success depends on making a strong professional impression. That impression can be enhanced by the materials you present. If you have business cards, brochures, fact finders, prospectuses, and literature about your company in your briefcase, you may feel you are always prepared. But a folder prepared specifically for estate planning will make a stronger, more professional presentation. Procedure 1. Set up an appointment with a client on the basis that you want to discuss estate planning

with him or her. It can be an appointment scheduled in Action Project 1. Otherwise, select a prospect from people you know or from the prospect inventory you created in Sales Planning Project 2.

2. Think about the actions described in the meeting-the-client step of the selling/planning process and create an outline for the initial interview. Below is a summary of the steps to be covered in the initial interview.

• Establish rapport. • Discuss the need for estate planning. • Clarify the overall estate planning process and what is involved in the process. • Explain the services you provide and the time and cost involved to the client. • Present briefly your credentials and qualifications to assist the prospect through this

process. • Explain the client’s and advisor’s responsibilities. This includes any client documents

the advisor needs for proper case analysis. • Discuss the expectations and desired outcomes of both parties. • Explain the method and sources of advisor compensation for the services provided. • Discuss and prioritize the client’s goals, needs, and concerns.


• Mutually define the areas of concern that you and your client will address using the estate planning process. Obtain the client’s permission to continue the process with a fact-finding session.

• Set an appointment for a fact-finding interview.

3. Conduct an initial interview and complete the report form.

Workbook W-75

Name ____________________________________________________ Date ______________

Action Project 2 The Initial Interview: Starting the Process

Report Form

The Initial Interview Outline what your initial interview will look like. Briefly, but specifically, describe what you will do to accomplish each step. Indicate the language you will use. For example, list a few questions you can ask to establish rapport. You can use the blank space below or attach a copy of a document you created using a computer word processor. (This is the recommended approach, since it will enable you to make changes easily and also reformat the document to create an agenda to give your clients.)


Summary Questions Describe how the client responded to the initial meeting. What seemed to appeal to the client? What seemed to distract the client? Did you set a fact-finding appointment? Was the client a qualified prospect? What goals, needs, or concerns did the client express? What changes would you make to your initial presentation? What did you learn from making this type of presentation?

Workbook W-77

Sales Planning Project 5 Estate Planning Case Studies:



Purpose This assignment will give you practice in analyzing and evaluating factual information in order to make estate planning recommendations for a client. It will give you experience in formulating nonfinancial and financial solutions that will address a client’s estate planning goals. In this assignment you will analyze the facts of five cases and develop recommendations that are consistent with each client’s goals.

Assignment Read and analyze the five case scenarios. Develop recommendations that you would present to the client(s) to consider implementing now and in the future.

Procedure 1. Review the facts of the case studies. Consider the client’s current situation and personal and

financial goals using the information provided. Identify additional information that may be needed to make the appropriate recommendations.

2. Use the attached report form to focus on the areas of estate planning that will be the most helpful in each case. Analyze the gathered information, and assemble a list of actions you would recommend to the client.

3. Develop recommendations in the area of estate planning that you believe best address their goals and needs.

4. Complete the attached form and turn it in at the beginning of Class 8. Come to class prepared to discuss your recommendations and your rationale for them.


ESTATE CASE STUDIES Review the following case studies and complete your recommendations. Be prepared to discuss these cases in class.

Case Study 1—John P. Quigley (Widower) John P. Quigley is a retired widower aged 70 with two married daughters who each have two young children. John has currently accumulated an estate worth $5,000,000 and has a comfortable retirement income. a) Calculate the federal estate tax if John dies in 2006, 2007, 2008, 2009, or 2010.

Gross estate $5,000,000 Marital deduction $ Taxable estate $ Tentative tax $ Applicable credit amount $ Federal estate tax $

b) What planning recommendations would you suggest to John?

Case Study 2—Roger and Barbara Jones (Married Couple) Roger and Barbara Jones have been happily married for many years. Their three children are grown. Roger has accumulated an estate worth $2,000,000. Barbara has assets valued at $750,000. Roger and Barbara executed an “I love you” will 20 years ago leaving all property outright to the surviving spouse. Over the years they lost contact with the executor, and furthermore, they no longer support the charities named in both their wills. They are very active in their local church. They have come to you for advice on the recommendation of one of your current clients. a) Calculate the federal estate tax assuming Roger predeceases Barbara, and dies in 2006.

Roger: “I leave all to Barbara….” Gross estate $2,000,000 Marital deduction $ Taxable estate $ Tentative tax $ Applicable credit amount $ Federal estate tax $

Workbook W-79

Barbara: “I have survived Roger and leave all to my children….” Assume Barbara dies in 2007.

Gross estate $750,000 Marital property inherited from Roger +_______ Total gross estate $ Marital deduction $ Taxable estate $ Tentative tax $ Applicable credit amount $ Federal estate tax $

b) What recommendations would you propose in planning Roger’s and Barbara’s estates?

Case Study 3—Victoria Regent (Widow) Victoria Regent is a widow in her early 60s. After conducting a fact-finding interview, you learn that her estate is worth $3,000,000. You have informed Mrs. Regent that the approximate estate tax for her estate in 2007 would be $225,000 [$555,800 + $450,000 (45%/$2 million) + $1,005,800 – applicable credit of $780,800 = $225,000] and settlement costs would amount to approximately $120,000. This disturbed Mrs. Regent, but she remains reluctant to make substantial gifts of property. The client has indicated a willingness to make a series of smaller gifts to her three children. What planning opportunities can you suggest to help her reduce her estate and replace asset values lost to these estate settlement costs? Write down your thoughts. a) How can Mrs. Regent reduce the value of her estate? b) What planning opportunities can you suggest to replace asset values lost to these estate

settlement costs?

Case Study 4—Samuel Richards (Second Marriage) Samuel Richards is a middle-aged executive. Sam’s first wife, Bertha, died 10 years ago. They have four children. Five years ago, Sam married Mabel Merriweather. Over his lifetime, Sam has been able to accumulate substantial sums of money including a recent inheritance from his father. Sam’s estate amounts to $5,000,000. This includes $1,000,000 of life insurance on his own life. Sam never revised his will following Bertha’s death. After observing the cost of settling his father’s estate, Sam decided it was time to undertake estate planning. He would like to take care of both Mabel and his children. Mabel has relatively little property of her own. Sam is concerned, however, about the possibility of Mabel’s remarriage should he predecease her. What ideas would you suggest to accomplish Sam’s goals and lower the estate tax bill?


Case Study 5—Marvin Walker (Widower) Marvin Walker is a widower in his mid-70s. His two sons are the beneficiaries of his estate. Both sons are accomplished artists, and neither has business experience. Marvin’s assets include a substantial stock portfolio and rental property in three states. Marvin lives, votes, and registers his car in a fourth state.

A friend’s recent death caused Marvin to seek your advice. In his opinion, too many procedures were performed; not enough attention was given to his friend’s personal comfort or wishes during his final illness. Marvin is also concerned about his children’s ability to manage his property should he become disabled. On the other hand, he is skeptical of leaving all decisions to professional advisors. What planning opportunities would you suggest that might accomplish Marvin’s objectives regarding both his care and his property?

Workbook W-81

Name ____________________________________________________ Date ______________

Sales Planning Project 5 Estate Planning Case Studies:


Report Form

Summary of Recommendations Case 1—John Quigley/Recommendations a) Calculate the federal estate tax if John dies in 2006, 2007, 2008, 2009, or 2010. 2006 Gross estate Marital deduction Taxable estate Tentative tax Applicable credit amount Federal estate tax 2007 Gross estate Marital deduction Taxable estate Tentative tax Applicable credit amount Federal estate tax 2008 Gross estate Marital deduction Taxable estate Tentative tax Applicable credit amount Federal estate tax 2009 Gross estate Marital deduction Taxable estate Tentative tax Applicable credit amount Federal estate tax


2010 Gross estate Marital deduction Taxable estate Tentative tax Applicable credit amount Federal estate tax b) Recommendations Case 2—Roger and Barbara Jones/Recommendations

a) Roger: “I leave all to Barbara….” Assume Roger dies in 2006.

Gross estate Marital deduction Taxable estate $ 0 Tentative tax $ 0 Applicable credit amount $ 0 Federal estate tax $ 0

Barbara: “I have survived Roger and leave all to my children….” Assume Barbara dies in 2007.

Gross estate $ Marital property $ Total $ Marital deduction $ Taxable estate $ Tentative tax $ Applicable credit amount $ Federal estate tax $ b) Recommendations

Workbook W-83

Case 3—Victoria Regent/Recommendations a) How can Mrs. Regent reduce the value of her estate? b) Recommendations and planning opportunities Case 4—Samuel Richards/Recommendations Case 5—Marvin Walker/Recommendations

Workbook W-85

Breakout—Class 6 6-1. How do you prepare to present your recommendations?

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________ 6-2. How do you introduce your recommendations to the prospect? What do you say?

____________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________ 6-3. What documentation do you include in your presentation meeting?

___________________________________________________________________

___________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________


6-4. Do you present plan alternatives? If so, how many and how? If not, why?

____________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________ 6-5. Case Analysis Scenario—Mr. Jones

Mr. Jones, aged 45, is a successful business executive. Ten years ago he divorced after 8 years of marriage. He has two children with whom he has remained in close contact. He is now about to remarry and would like your input as to how he should revise his will. What other areas of concern might you wish to discuss with him since he is open to and respects your ideas?

__________ _______________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

Workbook W-87

Name ____________________________________________________ Date ______________


Instructions: Study the reading assignment from Class 6, then circle the correct answer for each of the following questions. Each question is worth 10 points (100 points total). 6-1. The purpose of the credit shelter or bypass trust is to

(A qualify assets for the marital deduction (B) maximize the value of the applicable credit amount (C) defer estate taxes to the death of the surviving spouse (D) overqualify the estate of the first spouse to die

6-2. A credit shelter or bypass trust does which of the following?

(A) It gifts money to a spouse so that those assets qualify for the marital deduction. (B) It places life insurance in a trust so that the owner avoids incidents of ownership. (C) It defers estate taxes to the death of the surviving spouse. (D) Assets are exposed to estate tax, but the tax obligation is covered by the applicable

credit amount, and thus no taxes are due on those assets. 6-3. Which of the following provides the holder with the ability to transfer property to anyone

he or she chooses?

(A) general power of appointment (B) general power of attorney (C) durable power of attorney (D) marital trust

6-4. A technique to stop its future growth by removing appreciating assets from an estate and

shifting future growth to successors is known as

(A) creating an estate freeze (B) creating tax-exempt wealth (C) discounting the estate obligation (D) creating future interest gift


6-5. Which of the following statements best describes underqualification of the marital deduction?

(A) Less property has passed tax free than should have to the surviving spouse in a

qualifying manner. (B) There is underutilization of the estate owner’s applicable credit amount. (C) More property than necessary to reduce the estate owner’s federal estate tax to zero

goes to the surviving spouse via the martial deduction. (D) At the surviving spouse’s death, more property than necessary is exposed to tax.

6-6. A legal document that addresses a person’s desires for medical treatment if he or she is

unable to provide instructions is called a

(A) durable power of attorney (B) living will (C) health care power of attorney (D) health care proxy

6-7. Which of the following statements regarding estate tax planning with AB trust

arrangements is (are) correct? I. There will be no estate tax due on the marital trust (A trust) portion at the first

death. II. The B trust provides management for assets taxable at the first spouse’s death and

valued at approximately the applicable exclusion amount.


6-8. Which of the following statements regarding the estate plan presentation is (are) correct? I. Identify and evaluate alternative recommendations. II. Compare the current and recommended plans.


Workbook W-89

6-9. All of the following statements regarding advance medical directives (living will and health care proxy) are correct EXCEPT:

(A) A living will does not guarantee that wishes regarding health care will be followed. (B) A health care proxy is a legal document in which the individual designates who will

make medical decisions on his or her benefit. (C) A health care proxy is not effective if the principal is unable to make health care

decisions. (D) Health care directives vary widely by state law.

6-10. All of the following statements regarding a durable power of attorney are correct EXCEPT:

(A) Without one, the family of an incapacitated person must petition the court to be made that person’s guardian.

(B) It becomes inoperative if the principal is incapacitated. (C) It can be designed for use in making medical care decisions. (D) It can complement a revocable trust.

Workbook W-91

Action Project 3 Fact Finding: “What’s Important to You?”


Purpose The objective of this Action Project is for you to gain first-hand experience in conducting the fact-finding process with a client using an estate planning approach.

Assignment Set up an interview with a client with whom you conducted an initial interview. The interview could also be done with current clients you know.

If you have not met with the client before, conduct a brief initial interview and then proceed directly to the fact finder. In your approach, you can tell the client that you are taking this course and would like to talk about your services. You can also indicate how you can help him or her set priorities and meet their estate planning goals and needs. Mention also that you would like to collect information about the client in order to analyze his or her situation, and draft recommendations based on this information.

Procedure 1. Begin your meeting by establishing an agenda and setting proper expectations. 2. Indicate to the client that you will be asking many questions about his or her personal life

and financial situation. This point should have been discussed in the initial interview before this meeting.

3. Be sure the client understands the importance of accurate and complete information gathering for you to analyze his or her situation and develop meaningful and correct recommendations that will achieve his or her financial goals and satisfy financial needs.

4. Explain the need for an adequate amount of time. Tell the client in advance that you plan to spend about 30 minutes on this activity. The amount of time needed will vary from client to client, depending on the complexity of the situation, the client’s degree of interest in the process, his or her personal style, and the nature of his or her needs and goals.

5. Decide which fact finder you will use and review it prior to the meeting. Get agreement to the ground rules above and begin filling out the fact finder. Attached to this assignment is Section 17 of the Fact Finder included in Class 4, which you can also use.

Approach When you call the client, you could say something like this:

“(Client), in order for me to help you, I would like to spend about a half-hour with you to ask

some questions about your current financial situation and your financial objectives. Does this sound reasonable to you?”

Offer the client a choice of times to meet by saying, “Is daytime or evening more convenient for

you?”


You might say something like this: “Client, have you considered how much it costs to settle an estate? Even if no federal estate

taxes are due, final expense, probate costs, and state death taxes often create an immediate need for cash. I’d like to share with you some strategies for paying these costs while leaving your property to your heirs. How does that sound to you?”

“I’d like to suggest we set aside 30 minutes of your time so that I can show you the work I do, and collect information from you that will enable me to make recommendations to you to prepare your estate properly.”

Your client may ask, “What strategies?” To answer this question say something like: “The answer to your question depends on your goals and objectives. I’d like to set aside 30

minutes of your time to ask you some questions and to talk with you about any estate planning you have done. If you haven’t done any, that’s OK too. We can talk about how you plan to pay estate settlement costs and pass your property on to your heirs. “Is next Wednesday evening at _________ convenient or would ___________ be better?”

Conduct a brief initial interview in which you introduce yourself and your services, if you

have not already done so. Proceed with a more detailed fact-finding interview so that you can gather enough information to make recommendations in a future meeting with the client.

Workbook W-93

Section 17 Estate and Gift Planning

Do you have a last will and testament? Yes Date of will: No Does your spouse have a last will and testament? Yes Date of will: No Do you and/or your spouse have a living will? Client: Yes No Spouse: Yes No Do you and/or your spouse have a power of attorney for health care? Client: Yes No Spouse: Yes No If yes, who is named as the power of attorney for: Client? ____________________________ Spouse? __________________________________

Do you have a basic estate plan? Yes No Ignoring taxes, describe briefly how you want your estate distributed in the following instances: Client dies first: Spouse dies first: Both die in a common disaster:

Are any specific provisions, preferences, bequests, or allowances to be made in your estate distribution plan? Client: Yes No If yes, explain: Spouse: Yes No If yes, explain:

Do you anticipate that both principal and income will be used to provide financial support to your survivors from your respective estate assets?

Client: both principal and income income only Spouse: both principal and income income only

Who has been named as executor in your will? In your spouse’s will? Name: Name: Address: Address: Phone: Phone:

Have guardians been named for your children? Yes No If yes, who? Name: Address: Phone:

Have you or your spouse created grantor, insurance, or testamentary trusts? You? Spouse? If so, complete the items below.

Grantor Type of Trust Trustee Beneficiary Value Client Spouse

Have you or your spouse ever made a gift under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act? Client: Yes No Spouse: Yes No If yes, in which state? Who is the custodian? Who are the donees?

Are you or any members of your immediate family beneficiaries of a trust? Yes No If yes, who? Amount expected:

Do you or your spouse expect to receive gifts/inheritances? Yes No If yes, who? How much? From whom? When?

Do you want to give any of your assets to your heirs during your lifetime for tax reduction or other purposes? Client: Yes No Spouse: Yes No If yes, please complete the items below.

Giver Recipient Gift Description Value When Client Spouse

Do you and/or your spouse intend to include bequests to charity in your will? Yes No If yes, explain.

Workbook W-95

Name ____________________________________________________ Date ______________

Action Project 3 Fact Finding: “What’s Important to You?”

(Report Form)

Briefly describe your interview and your experience below. Include in your report the initials of the person you interviewed and whether or not he or she was qualified. Comment on whether you feel you collected enough information to offer recommendations. Explain how you felt in doing the fact finder. Ask the client directly about his or her reaction to the fact-finding process.

Interview Summary Client Initials _______ 1. Describe generally the client and the interview.

2. Was the person a qualified client? Comment.

3. Did you collect enough information to make recommendations? Comment.


4. How comfortable were you in filling out this fact finder? Describe your experience.

5. What was the client’s reaction to the fact-finding process?

Workbook W-97

Breakout—Class 7

7-1. Where is the fine line between motivating a client to take action and applying sales pressure

(answering objections and closing techniques)?

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________ 7-2. What do you do to close a sale? Is “closing” the right concept or term to use in financial

planning?

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__________________________________________________________________________ 7-3. How much of what you do involves selling?

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__________________________________________________________________________ 7-4. How do you develop referrals from clients and centers of influence?

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Workbook W-99

Name ____________________________________________________ Date ______________


Instructions: Study the reading assignment from Class 7, then circle the correct answer for each of the following questions. Each question is worth 10 points (100 points total). 7-1. The provision used to qualify a life insurance premium paid to a trust as a present interest

gift is called a

(A) marital deduction (B) Crummy powers (C) Section 6166 extension (D) Section 303 redemption

7-2. In a per stirpes distribution, policy proceeds are paid to

(A) the decedent’s estate (B) each surviving named beneficiary equally (C) a trust for the benefit of the named beneficiaries (D) each named beneficiary, if living, and to the children of deceased beneficiaries

7-3. IRC Section 6166 permits

(A) a tax-free total redemption of closely held stock (B) 35 percent of the estate taxes due to be deferred (C) a partial redemption of stock by a corporation to pay certain estate expenses (D) the estate tax attributed to a business or farm to be deferred and paid in installments

7-4. The inclusion of an effective QTIP provision into the terms of an irrevocable life insurance

trust will assure which of the following?

(A) gifts to the trust to qualify as present interests (B) availability of the marital deduction (C) protection that creditors cannot attach the property (D) qualifies surviving resident-alien spouse for marital exclusions


7-5. The amount a worker will receive under Social Security if he or she retires at full retirement age or becomes disabled is called

(A) supplemental security income (B) qualified terminable interest property (C) primary insurance amount (D) monthly benefit amount

7-6. Which of the following statements (is) are correct regarding a QTIP trust? I. It can be used to preserve the estate tax marital deduction. II. It can be used to remove the trust assets from a surviving spouse’s estate.


7-7. An irrevocable life insurance trust owns the life insurance policy on an estate owner. Which

of the following situations will cause the proceeds from that policy to be included in his or her estate?

I. The trust has direct or indirect responsibility to pay the insured’s estate expenses. II. The insured possessed incidents of ownership in a policy on his or her life

transferred to the trust life within 3 years of death.


7-8. All of the following are life insurance policy settlement options EXCEPT

(A) left with the insurance company to earn interest (B) paid in installments for a fixed period of time (C) reduced paid-up insurance (D) paid in installments guaranteed for the beneficiary’s life

Workbook W-101

7-9. All of the following statements concerning the attractiveness of life insurance for the purposes of charitable giving are correct EXCEPT:

(A) The face amount of the life insurance policy paid to the charitable organization will

not be subject to federal income taxation or probate costs. (B) The transfer of a life insurance policy to a qualifying charitable organization will give

the donor significant tax benefits, such as the current available income tax deduction. (C) A person can make a substantial contribution to a qualifying charitable organization

without a substantial out-of-pocket cost during life. (D) The premium payments will generally be lower if a charitable organization is

involved in the transaction.

7-10. Reasons life insurance proceeds should not be payable to an insured’s estate include all of the following EXCEPT:

(A) Life insurance premiums lose their income tax deductibility if paid to the insured’s

estate. (B) Life insurance proceeds in many states become subject to state death taxes if they are

payable to the insured’s estate. (C) Insurance payable to a decedent’s estate subjects the proceeds to costs of probate

administration. (D) Insurance payable to a decedent’s estate subjects the proceeds to the claims of

creditors.

Workbook W-103

Breakout—Class 8 8-1. What relationships have you developed with other professionals for advancing your

business, and how did these relationships get started?

__________________________________________________________________________

__________________________________________________________________________

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__________________________________________________________________________ 8-2. What are key ingredients for developing your client base?

__________________________________________________________________________

__________________________________________________________________________

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__________________________________________________________________________ 8-3. What role does service play in developing your financial services practice? Give specific

examples.

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

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8-4. Have you ever found yourself in a difficult situation from an ethical standpoint? If so, explain.

__________________________________________________________________________

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8-5. Ethics Case Study—Mike Rollins Mike Rollins has been a successful financial advisor for 5 years, specializing in the personal insurance needs of baby boomers living in his suburban community. Mike recently conducted a periodic review with one of his neighbors, Richard Carey.

Richard is a 45-year-old widowed parent raising two preteen children. He recently received an inheritance from his parents. Richard indicated in the meeting his interest in long-term care insurance (LTCI). This interest stemmed from the fact that both his parents had been confined to a nursing home before their deaths. Prior to their meeting, Richard had read a short article about proposed changes and possible further reduction or elimination of the federal estate tax system. He was especially interested in the notion that the estate tax exemption amount for 2006 and 2007 was $2,000,000, increasing to $3,500,000 in 2009 and then full elimination in 2010. He felt that the $1,000,000 exemption in 2011 should eliminate any concerns he might have regarding estate planning.

Mike conducted a fact-finding session that uncovered an estate of $700,000 and the fact that Richard had no will. A substantial portion of Richard’s assets was traced to the inheritance and consisted primarily of a condo in a prime location and a stock portfolio. Once it was determined that he had less than $1,000,000 of assets, Richard lost interest in discussing estate planning issues.

Richard, however, quickly switched the topic to the depressing nature of nursing homes and his desire to avoid the situation his parents found themselves in during the last period of their lives. Rather than risk losing a potential LTCI sale—and Richard’s losing interest in estate planning—Mike decided to drop further discussions of estate planning and shifted the topic to long-term care. Richard was delighted to learn that LTCI provides home health care benefits. After some discussion Richard signed the application for LTCI that night.

Richard closed the meeting by walking Mike to the front door. As Richard thanked Mike for his work he said, “I guess you’re finding a lot of clients in my shoes. It’s wonderful that the new law will free up $1 million or more from the feds. It looks like the law came just in time to bail out us boomers from the estate tax problem.”

The remark stuck in Mike’s mind for over a week. He wondered if and how he should respond. He felt he hadn’t done his job. He sensed that Richard needed to take estate planning seriously for the sake of his children. He had a sense that other forms of planning were needed including investment planning, insurance planning, and retirement planning. But he wasn’t sure about how to proceed.

Workbook W-105

What are your thoughts on the following issues? Be prepared to discuss this case in class.

1. Does Richard need to attend to any estate planning issues? Is so, what and why? 2. Richard’s life expectancy is over 30 years. What bearing does this have on his need to

address estate planning and his remarks regarding estate taxation? 3. What would you recommend that Mike do? How would you proceed?

Workbook W-107

Name ____________________________________________________ Date ______________


Instructions: Study the reading assignment from Class 8, then circle the correct answer for each of the following questions. Each question is worth 10 points (100 points total). 8-1. Which of the following can be used to transfer assets to a surviving resident-alien spouse

while preserving the marital deduction for such transfer?

(A) qualified terminable interest property (B) qualified domestic trust (C) incentive trust (D) supplemental security income trust

8-2. Which of the following statements best defines compliance?

(A) an unselfish regard for the welfare of others (B) adherence to the laws and regulations including company rules (C) behavior that reflects the principles of right and wrong accepted by your profession (D) specialized knowledge not generally understood by the public

8-3. Which of the following is correct where one unmarried partner owns the home and wants to

put his or her partner’s name on the title?

(A) The donor is subject to gift taxes if the transfer is worth more than $12,000. (B) The recipient is subject to gift taxes if the transfer is worth more than $12,000. (C) The donor would not be able to use his or her applicable credit amount on a taxable

transfer. (D) The recipient is subject to gift taxes if the transfer is worth more than $100,000.

8-4. Which of the following statements regarding Social Security benefits is (are) correct? I. The disabled child of a parent covered by Social Security will qualify for benefits

when the covered parent retires or dies if the disability started before age 22 and meets the Social Security definition of disability.

II. Social Security disability benefit payments make an individual eligible for Medicare benefits.



8-5. Which of the following statements regarding the legal capacity of minors is (are) correct? I. Generally insurance companies will not accept a minor as either owner or beneficiary

of a life insurance policy. II. Minors do not have the legal capacity to execute the contractual provisions of the

policy.


8-6. Which of the following statements are correct regarding planning implications for two

unrelated adults who are living together but are not married? I. A surviving spouse automatically inherits all or a portion of the estate. Cohabitants

typically do not have this protection. II. The rights and benefits of marriage at the federal and state levels are generally

unavailable to nontraditional couples.


8-7. Which of the following statements regarding the taxation of resident aliens is (are) correct? I. The property of nonresident aliens located in the United States is subject to both

federal estate and gift taxation. II. The unlimited marital deduction is available only if the surviving spouse is a U.S.

citizen.


8-8. All of the following statements regarding the kiddie tax are correct EXCEPT:

(A) Shifting wealth and income from higher-tax-bracket parents to lower-tax-bracket children can save substantially on the family’s income taxes.

(B) The kiddie tax applies to children under 18. (C) If the child is 18 or older, all taxes are taxed at the child’s rate. (D) The kiddie tax eliminates all income taxes at the parents’ rate on the child’s income.

Workbook W-109

8-9. Regarding joint tenancy as a solution for holding property by unmarried persons, all of the following are true EXCEPT:

(A) One of the unmarried parties could sever a joint tenancy. (B) Either partner may make withdrawals or obtain the property, such as joint bank

accounts, irrespective of his or her percentage of contribution to the account. (C) The creation of a joint tenancy may cause gift tax liability. (D) The share of the unmarried partner’s property will be included in the other partner’s

estate.

8-10. All of the following statements regarding UGMA/UTMA are correct EXCEPT:

(A) The minor must spend the money according to the wishes of the grantor or custodian. (B) The minor has the right to receive the property when he or she reaches the age of

majority applicable in his or her state. (C) The income from the gift will be taxed to the minor. (D) The trust property is considered property of the minor and will count against college

financial aid eligibility.

Workbook W-111

Name ____________________________________________________ Date ______________


Reflection is an important part of the learning process that is often overlooked. Take a minute to think about what you have learned and write the most valuable concept, sales idea, or marketing strategy, and so forth that you learned in class. Class 1:

___________________________________________________________________________

___________________________________________________________________________ Class 2:

___________________________________________________________________________

___________________________________________________________________________ Class 3:

___________________________________________________________________________

___________________________________________________________________________ Class 4:

___________________________________________________________________________

___________________________________________________________________________ Class 5:

___________________________________________________________________________

___________________________________________________________________________ Class 6:

___________________________________________________________________________

___________________________________________________________________________ Class 7:

___________________________________________________________________________

___________________________________________________________________________ Class 8: __________________________________________________________________________________

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Documents

Center for Financial Advisor Education FA 271 Workbook · Center for Financial Advisor Education FA 271 ... the Graduate Financial Planning Track (another CFP ... enable you to understand