Presented by Freedom Broker Services, LLC Executive Benefits: Recognizing Opportunities Knowing My Client Entrepreneur Small Business Owner CEO/Corporate Executive Attorney, CPA, Engineer Doctor or Medical Specialist Real Estate or Mortgage Banker Ask Your Client What is important to you about your money? Who is important to you? Who really matters? What is the make-up of your clients wealth/assets? 25% Know My Client CEOs Planning Opportunities & Vulnerabilities Executives Employment Agreement Review and analysis Is there a deferred compensation agreement or profit sharing component or ESOP? Is the plan funded? Is there a Survivor Benefit? What about company solvency? Employee Benefits Booklet Is Life Insurance offered and what is the multiplier? Are they aware they report Table I cost on their W-2, for every premium dollar paid over the Section 79 rules or $50,000 of group term life? Is Long Term Disability addressed? What is the formula (60% to $10,000 cap) is a Disability Income Restoration Plan offered? Is a 401k offered and what is the employer match (percentage?) Is it self-completing in the event of disability? CEOs Planning Opportunities & Vulnerabilities Employee Benefits Booklet Life Insurance can provide a safety net for the survivors of underperforming investments and sudden death in a down market. Life Insurance provides a stable retirement, college funding and debt relief. CEOs Planning Opportunities & Vulnerabilities What is the buy-out at retirement? Many law firms offer Capital Accounts to buy out retiring attorneys. This amount can be a big number after years of legal fees and an established client book but is it funded? Golden handcuffs or Golden Parachute? CEOs Planning Opportunities & Vulnerabilities Succession Planning: Do they have a Buy-Sell Agreement? When was the last time it was updated? Is it funded (Life, DI)? Business Owner, Planning Opportunities & Pitfalls A Moving Target What is the value of the business when was the last time they had a formal Business Valuation completed? Do they understand the benefits and tax advantages of a Cross-Purchase Agreement vs. other methods? Step-up in basis? How much would the business be worth to a competitor? Business Valuation Business Owner, Planning Opportunities & Pitfalls Keyperson- Is there a potential buyer internally or someone that the business cant live without? Has the firm indemnified itself to protect against their sudden death or disability. The value of the firm can plummet within months. Business Continuity- Does a son or daughter want to come into the business and continue the legacy? Business Owner, Planning Opportunities & Pitfalls Business Valuation Methods Who is important to your client? What assets do they want to preserve for the next generation? What is their liquidity quotient? How are they going to pay for Long Term Care and Catastrophic Medical Treatment that can devastate their legacy? Trans-Generational Planning & Legacy Opportunities What about State Estate Taxes and Inheritance Taxes? The liquidity of heirs becomes crucial Farms and closely-held businesses are not highly liquid The State of Maryland has a 10% State Inheritance Tax You may reach the $10,600,000 Federal Joint Exemption but still owe $1,600,000 in Maryland Inheritance Taxes Where will the money come from? Trans-Generational Planning & Legacy Opportunities One daughter is a partner in the business and the three sons are an attorney, a doctor and a teacher who are not actively involved in the business 80% of the family wealth is in the business 80% business value 10% personal assets 10% cash Life Insurance can balance the scales and no one becomes disenfranchised Estate Equalization Trans-Generational Planning & Legacy Opportunities Who do they have a passion for helping? Charitable Giving Options: College Alumni Association Disabled Veterans Groups Childrens Hospital How important is a family legacy? Know your client Trans-Generational Planning & Legacy Opportunities Why Affluent Investors Need Long Term Care Too Estate planning benefits, i.e. the ability to transfer funds out of estate instead of needing to use funds for care costs? Self-funding: A strategy that is doomed for failure Rainy Day Fund Transfer the risk to the insurance company- what are the benefits? Why Affluent Investors Need Long Term Care Too Long Term Care Insurance Matrix Purchasing Insurance vs. Alternative Investment The blue cells indicate a field where YOU input the data The white cells indicate a field that is calculated for you The red cells are the output fields Age55 Long Term Care Insurance Details Daily benefit amount$270 Benefit Period (years)3 Pool of benefits$295,650 Inflation protection option5% Simple Number of years policy in force before claim20 Future annual pool of benefits$192, Claim time (years)3 Future value of insurance claim$576, Alternative Investment Future value$576, Tax bracket20% Tax Equivalent future value$691, Investment rate of return5% Number of years to invest20 How much would I have to invest each year to attain my Tax Equivalent future value? $20,922.46 770 Accounts- what are they and how are they used? BOLI and COLI- effective benefit tools for banks and corporations SERPs, Split Dollar, Section 79 Plans, Executive Bonus, Non-qualified Deferred Compensation Plans- who wins, the executive or the corp? DI Restoration, Pension Completion, Corporate Paid LTC, Restricted Bonus Section 162 Plans Executive Benefits: Whats Hot and Whats Not Thank you! Contact our Team: Kevin Conley, CLU, CASL, LUTCF Ryan Buck, CLTC