Transcript Manulife USI template

Wealth Transfer Planning
Sales Ideas
Creating a legacy for
generations to come
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Insurance Company and are used by it and its affiliates
including Manulife Financial Corporation.
 2004. The Manufacturers Life Insurance Company of
New York . All rights reserved. MNY0405043367.
Expires 04/2005
The Manufacturers Life Insurance Company of New York
100 Summit Lake Drive, Valhalla, New York, 10595
www.manulifenewyork.com
9 trillion dollars will
transfer to the next
generation over the next
20-30 years.
www.aarp.org
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Did You Know…
1/3 of affluent households over the age
of 50 do not have a plan in place
31% of households with $3 million or
more do not have an estate plan
www.limra.com, Financial Plans – Real and Imagined Held by the Affluent, 2002.
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Estate Tax Rollback
After President Bush
passed the tax bill
– 9% of people said they
would change their plan
– 47% would review it
– 44% would leave it alone
www.limra.com, Financial Plans – Real and Imagined –
held by the Affluent (2002)
Change
Review
Do nothing
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Estate Plans
serve purposes
BEYOND avoiding
Taxes
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Wealth Transfer
Planning Sales
Ideas
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Annuity Max
Do you have clients
who have a deferred
annuity that they do not
need for retirement?
Did you know that if
they leave it in their
estate it will be eroded
by estate and income
taxes?
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Ben Newell
Age 70, non-smoker preferred
Estate of $10 million
Deferred annuity valued at $1 million
3 kids and 4 grandkids
Does not need his annuity for income
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Ben’s Goals
Create a legacy for his children
Maintain a cash reserve
Decrease income and estate taxes
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Solution
Annuity Max
Gift distributions from the annuity to an
irrevocable life insurance trust (ILIT)1
Trustee will purchase a Manulife New York
UL-LC2 policy in the trust
1 Trusts
should be drafted by an attorney familiar with such matters in order to take into account income and estate tax
laws (including the generation-skipping tax). Failure to do so could result in adverse tax treatment of trust proceeds.
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Manulife New York’s Universal life products are issued by The Manufacturers Life Insurance Company of New York.
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The Numbers
Ben is going to take annual distributions of
$61,954 from the annuity
He will gift $60,000 as annual exclusions to the
trust. The rest he will save.
The trustee will purchase a Manulife New York
UL-LC policy with an initial death benefit of
$2,044,532
The data shown is taken from an illustration and is not intended to project actual performance. Current interest rates
and/or dividend rates and values (unless indicated otherwise) are not guaranteed.
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Keep Annuity vs. Withdraw and
Purchase Life Insurance
Estate Taxes
Income Taxes
Net to Heirs
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Keep Annuity vs. Withdraw and
Purchase Life Insurance
No Planning
With Planning
Estate Tax
$1,200,581
$345,1556
Income Tax
$285,735
$7,407
Net To Heirs
$696,558
$2,331,154
Difference of:
$1,634,596
This is a hypothetical illustration and is not intended to project actual performance. Current interest rates and/or dividend rates
and values (unless indicated otherwise) are not guaranteed.
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Summary
Ben was able to create a legacy for his
family
He was able to maintain a cash reserve
He decreased his taxable estate
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Smart Trust
Are your clients
concerned about giving
up access to policy cash
values and trust assets?
A Smart Trust is the
trust for them.
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Charles and Molly Appleton
Charles and Molly are both 55, non-smoker
preferred
3 children
$5 million estate
Want to maximize the amount passed to children,
but are reluctant to lock up funds.
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Solution
Create a Smart Trust and fund it with Manulife
New York Survivorship UL
A Smart Trust is an ILIT which has one of the
spouses as a beneficiary
Manulife New York’s Survivorship Universal life products are issued by The Manufacturers Life Insurance Company of
New York.
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The Numbers
Charles and Molly will make annual exclusion gifts
of $100,000 a year to the trust
The trust will purchase a Manulife New York
Survivorship UL policy with a guaranteed* level
death benefit of $12,858,399
*These guaranteed product features are dependent upon the claims-paying ability of The Manufacturers
Life Insurance Company of New York.
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Current v. Proposed in Year 34*
Current
Proposed
Taxable Estate
$24,990,458
$19,631,240
Estate Tax
$13,398,952
$10,465,132
Credit Shelter Trust
$1,215,506
$1,215,506
$0
$7,701,172
$12,807,012
$18,082,786
ILIT
Net to Heirs
Difference of:
$5,275,774
* Life Expectancy
The data shown is taken from an illustration and is not intended to project actual performance. Current interest rates and/or
dividend rates and values (unless indicated otherwise) are not guaranteed.
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Current v Smart Trust
20,000,000
15,000,000
10,000,000
Current
Smart Trust
5,000,000
0
Current
Smart
Trust
The data shown is taken from an illustration and is not intended to project actual performance. Current interest rates and/or
dividend rates and values (unless indicated otherwise) are not guaranteed.
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Summary
Smart Trust allows:
– One spouse has access to the policy cash value
while the insureds are alive
– Increase in the amount passed to heirs
– Reduction in the size of the taxable estate
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Municipal Bond
Maximization
Did you know a muni bond
may be subject to taxes at
death?
Do you have a client who
does not need municipal
bonds for income purposes?
Are your clients concerned
about outliving their money?
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Matt and Shelby Pons
Matt and Shelby are both age 67 non-smoker
preferred
Estate of $10 million
One child and three grandchildren
Have a $2 million muni bond they do not need for
income purposes
Want an emergency cash reserve
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Solution
Muni Bond Maximization
Annuitize the muni bonds, gift part of the proceeds
to a Smart Trust, and keep the rest as income
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The Numbers
Matt and Shelby will convert their municipal
bond to a Single Premium Immediate Annuity
(SPIA)*
Annual Income of $145,831 (after tax)
They will gift $100,000 to the trust and keep the
remainder as disposable income ($45,831)
The trustee will purchase a Manulife New York
Survivorship UL with an initial death benefit of
$7,367,188
*A SPIA may have more risk associates with it than a muni bond. Please consult with an advisor for a detailed
discussion on the risk and the cost of this conversion. Please Note: Manulife New York does not issue SPIAs.
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Here is what it looks like
Muni Bond
$2 million
Joint and Survivor SPIA
$145, 831
Smart Trust
$7,403,334
Disposable
Income
$45,831
The data shown is taken from an illustration and is not intended to
project actual performance. Current interest rates and/or dividend
rates and values (unless indicated otherwise) are not guaranteed.
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Summary
Matt and Shelby were able to:
– Maintain an emergency cash reserve
– Provide a legacy for their daughter and her children
– Keep their disposable income
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Remember There is MORE to
estate planning than
tax avoidance –
Help your clients put
together a wealth
transfer plan today!
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For More Information on
Wealth Transfer Planning
Sales Ideas, please call
your local Manulife New
York Representative, or
the Advanced Markets
Group at (800) 743-5542,
option 5
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No legal, tax or accounting advice can be given by Manulife Financial, its agents, employees or registered
representatives. Prospective purchasers should consult with their professional tax/legal advisor for details.
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