Table of Contents Table of Contents by akgame

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									                                 of Contents
                        TableTable of Contents
                        Table
FINANCIAL PLANNING ISSUES ISSUES of Contents
       FINANCIAL PLANNING
  The Financial Planning Puzzle ______________________________________________________________________ 1
             The Financial Planning Puzzle _____________________________________________________________________
              PLANNING ISSUES
FINANCIALfor Financial Planning _____________________________________________________________________ 2
  The Need The Need for Financial Planning ____________________________________________________________________
  The Financial Planning Puzzle ______________________________________________________________________ 1
  Basic Steps in the Financial Planning Process __________________________________________________________ 4
             Basic Steps in the Financial Planning Process _________________________________________________________
  The Need for Financial Planning _____________________________________________________________________ 5
  Choose the Financial Planning Team _________________________________________________________________ 2
             Choose the Financial Planning Team ________________________________________________________________
             Annual Financial Planning Process __________________________________________________________ 7
  Basic Steps in the Review __________________________________________________________________________ 4
  Annual Review Checklist Checklist _________________________________________________________________________
  Choose the Financial Planning Team _________________________________________________________________ 5
             Life Events _____________________________________________________________________________ 8
  Life Events Checklist Checklist ____________________________________________________________________________
  Annual Funding Summary Summary ________________________________________________________________________
             College Funding _________________________________________________________________________ 7
  College Review Checklist __________________________________________________________________________ 9
             College Funding Child 1 _________________________________________________________________ 8
  Life Events Checklist _____________________________________________________________________________10
  College Funding Analysis - Analysis - Child 1 _________________________________________________________________
             College Funding _________________________________________________________________________ 9
                    Summary Child 1 - Child 1 _________________________________________________________________
  College Funding Timeline -Timeline _________________________________________________________________ 11
             College Funding Child 2 _________________________________________________________________ 12
                                     1
  College Funding Analysis - Analysis - Child 2 _________________________________________________________________10
             College Funding Child 2 - Child 2 _________________________________________________________________
                                      1
  College Funding Timeline -Timeline _________________________________________________________________ 13        11
             College Funding Child 3 _________________________________________________________________ 14
                                     2
  College Funding Analysis - Analysis - Child 3 _________________________________________________________________12
             College Funding Child 3 - Child 3 _________________________________________________________________
                                      2
  College Funding Timeline -Timeline _________________________________________________________________ 15        13
             College Funding Child 4 _________________________________________________________________ 16
                                     3
  College Funding Analysis - Analysis - Child 4 _________________________________________________________________14
             College Funding Child 4 - Child 4 _________________________________________________________________
                                      3
  College Funding Timeline -Timeline _________________________________________________________________ 17        15
             College Funding Child 5 _________________________________________________________________ 18
                                     4
  College Funding Analysis - Analysis - Child 5 _________________________________________________________________16
             College Funding Child 5 - Child 5 _________________________________________________________________
                                      4
  College Funding Timeline -Timeline _________________________________________________________________ 19        17
             College Funding Child Data and Assumptions _________________________________________________________
                    client Data and 5 _________________________________________________________________ 20
  College Funding Analysis - clientAssumptions _________________________________________________________ 18
  College Funding Timeline - College Education ________________________________________________________________
  The Benefits of A College AChild 5 _________________________________________________________________ 19
             The Benefits of Education ________________________________________________________________ 21
  College Funding for College _______________________________________________________________________________
              College _______________________________________________________________________________ 20
  Saving forSavingclient Data and Assumptions _________________________________________________________ 23
  The Benefits for College _________________________________________________________________________ 24
             Ways to Save for College ________________________________________________________________ 21
  Ways to Saveof ACollege Education _________________________________________________________________________
  Saving 529 Qualified Qualified Tuition Plans _________________________________________________________________
              College _______________________________________________________________________________ 23
  Section forSection 529 Tuition Plans _________________________________________________________________ 26
  Ways to Save for College _________________________________________________________________________ 24
             529 Higher Savings Plans ________________________________________________________________ 27
  529 Higher Education Education Savings Plans ________________________________________________________________
               Qualified Tuition Plans _________________________________________________________________ 26
  Section 529Higher Education Savings Plan Works ______________________________________________________ 31
  How a 529How a 529 Higher Education Savings Plan Works ______________________________________________________
      Higher Tuition Plan __________________________________________________________________________ 32
             529 Prepaid Tuition Plans ________________________________________________________________ 27
  529 PrepaidEducation Savings Plan __________________________________________________________________________
             How a 529 Prepaid Tuition Plan Works ______________________________________________________________
              Prepaid Tuition Plan Works ______________________________________________________________ 31
  How a 529 Higher Education Savings Plan Works ______________________________________________________ 35
  529 Prepaid Tuition Education Savings _______________________________________________________________ 36
  Coverdell Coverdell Plan __________________________________________________________________________ 32
             Education Savings Account Account _______________________________________________________________
  How a 529 Prepaid Tuition Plan Works ______________________________________________________________ 35
             How a ESA Works ______________________________________________________________________ 40
         Coverdell Coverdell ESA Works ______________________________________________________________________
             Savings Plans Compared _________________________________________________________________ 36
  Coverdell Education Savings Account _______________________________________________________________ 41
  Education Education Savings Plans Compared _________________________________________________________________
  How a forPaying for College ______________________________________________________________________ 43
              College Today _________________________________________________________________________ 40
  Paying Coverdell ESA Works Today _________________________________________________________________________
  Education Ways College __________________________________________________________________________ 41
             Savings Pay for College _________________________________________________________________ 48
  Ways to Pay for to Plans Compared __________________________________________________________________________
  Paying forChoosing a College ______________________________________________________________________________
  Choosing aCollege Today _________________________________________________________________________ 43
               College ______________________________________________________________________________ 49
  Ways to Pay for College Calendar _________________________________________________________________ 52
  College and Financial Aid__________________________________________________________________________ 48
             College and Financial Aid Calendar _________________________________________________________________
  Choosing Growth in ______________________________________________________________________________ 49
  Growth ina CollegeCosts __________________________________________________________________________ 53
              College College Costs __________________________________________________________________________
             Projected Costs Calendar _________________________________________________________________ 52
  College and Financial Aid of ______________________________________________________________________ 54
  Projected Costs of Education Education ______________________________________________________________________
  Growth in An of Social of Social Security Benefits _____________________________________________________________
              College Costs __________________________________________________________________________ 55
  An Overview OverviewSecurity Benefits _____________________________________________________________ 53
  Projected Costs Receives Social Security ______________________________________________________________ 57
             Who of Education Benefits? Benefits? ______________________________________________________________
  Who Receives Social Security ______________________________________________________________________ 54
SOCIAL SECURITY AND OTHER GOVERNMENT PROGRAMS
             Social Security and Medicare _____________________________________________________________ 55
  An Overview of Social Security BenefitsTaxes _________________________________________________________________
  Social Security and Medicare Taxes _________________________________________________________________ 58
  Who Receives Social Security Benefits? ______________________________________________________________ 57
  Taxation of Social Security Benefits _________________________________________________________________ 59
             Taxation of Social Security Benefits _________________________________________________________________
  Social Security of Social of Social Security Benefits ___________________________________________________________
             Taxable Medicare Taxes _________________________________________________________________ 60
  Taxable PortionandPortionSecurity Benefits ___________________________________________________________ 58
  Taxation of Social Social Security Benefits ___________________________________________________________ 61
             How Work Affects Social _________________________________________________________________ 59
  How Work AffectsSecurity Benefits Security Benefits ___________________________________________________________
  Taxable Portion of Social Security Benefits ___________________________________________________________ 63
  Social Security Retirement Benefits _________________________________________________________________ 60
             Social Security Retirement Benefits _________________________________________________________________
  How to Take Social Security Retirement Benefits Benefits _____________________________________________________
             When to Social Security Benefits ___________________________________________________________ 66
  WhenWork Affects Take Social Security Retirement _____________________________________________________ 61
                   Retirement ________________________________________________________________________ 68
  Social Security Break-EvenBenefits _________________________________________________________________ 63
             Social Security Break-Even ________________________________________________________________________
  When to Take Social of Early Retirement Benefits _____________________________________________________ 66
  The EffectTheEarly orSecurity or Delayed Retirement Security Retirement Benefits ____________________________ 69
              of Effect Delayed Retirement on Social on Social Security Retirement Benefits ____________________________
                   Break-Even ________________________________________________________________________ 68
             Social Security Benefits Benefits __________________________________________________________________
  Social Security Survivor's Survivor's__________________________________________________________________ 70
  The EffectSocial Security Benefits Benefits __________________________________________________________________
              of Early or Delayed Retirement on Social Security Retirement Benefits ____________________________ 74
  Social Security Disability Disability__________________________________________________________________ 69
  Medicare Parts Survivor's A,________________________________________________________________________ 78
                                 B and __________________________________________________________________ 70
  Social Security A, B PartsDBenefits D ________________________________________________________________________
             Medicare and
  Medicare Part Disability Benefits __________________________________________________________________ 74
  Social SecurityC - Medicare- AdvantageAdvantage ______________________________________________________________
             Medicare Part C Medicare ______________________________________________________________ 81
             Parts A, B Part D -________________________________________________________________________ 83
             Medicare and D Prescription Drug Coverage Works ___________________________________________________
  Medicare Part D - Prescription Drug Coverage Works ___________________________________________________ 78
  Medicare Part Prescription Drug Coverage Coverage Works _____________________________________________________
             How - Medicare Advantage ______________________________________________________________ 86
  How MedicareCMedicare Prescription Drug Works _____________________________________________________ 81
  Medicare Part D Prescription Drug Coverage Works ___________________________________________________ 83
  Medigap Policies- ________________________________________________________________________________ 87
             Medigap Policies ________________________________________________________________________________
  How Medicare Prescription Drug Coverage Works _____________________________________________________ 86
  Medigap Policies ________________________________________________________________________________ 87
   Medigap Policies Compared _______________________________________________________________________ 89

                                                         i
CASH FLOW AND DEBT
  Cash Management Tools __________________________________________________________________________ 91
  The Personal Budget _____________________________________________________________________________ 94
  Personal Cash Flow Statement _____________________________________________________________________ 97
  Sample Family Budget ___________________________________________________________________________ 98
  Cash Flow _____________________________________________________________________________________ 99
  Cash Flow Detail _______________________________________________________________________________ 100
  Medigap Policies Compared _______________________________________________________________________ 89


CASH FLOW AND DEBT
  Cash Management Tools __________________________________________________________________________ 91
  The Personal Budget _____________________________________________________________________________ 94
  Personal Cash Flow Statement _____________________________________________________________________ 97
  Sample Family Budget ___________________________________________________________________________ 98
  Cash Flow _____________________________________________________________________________________ 99
  Cash Flow Detail _______________________________________________________________________________ 100
  Net Worth ____________________________________________________________________________________ 101
  Personal Net Worth Statement ____________________________________________________________________ 102
  Lifetime Earnings ______________________________________________________________________________ 106
  Managing Your Debt ____________________________________________________________________________ 107
  Up to Your Neck in Debt? ________________________________________________________________________ 109
  Checking Your Credit Report _____________________________________________________________________ 111
  Credit Cards __________________________________________________________________________________ 113
  Buying a Home ________________________________________________________________________________ 116
  Types of Mortgages _____________________________________________________________________________ 120
  The Bi-Weekly Mortgage ________________________________________________________________________ 122
  Bi-Weekly Mortgage ____________________________________________________________________________ 123
  When to Refinance Your Home ___________________________________________________________________ 124
  Financing an Auto ______________________________________________________________________________ 126
  Loan Amortization Schedule ______________________________________________________________________ 129
  Rate of Interest for a Loan ________________________________________________________________________ 131
  Payments to Pay Off a Loan ______________________________________________________________________ 132

HEALTH, DISABILITY AND LONG-TERM CARE
  The Need for Health Insurance ____________________________________________________________________          133
  Health Insurance Issues __________________________________________________________________________          134
  How Employer Provided Health Insurance Works _____________________________________________________          135
  How Individual Health Insurance Works ____________________________________________________________          136
  Critical Illness Insurance _________________________________________________________________________        137
  Disability Income Analysis _______________________________________________________________________          138
  Disability Timeline - Client 1 _____________________________________________________________________        139
  Disability Timeline - Client 2 _____________________________________________________________________        140
  Client Data and Assumptions Summary _____________________________________________________________           141
  The Impact of Disability _________________________________________________________________________          145
  The Individual Need for Disability Insurance _________________________________________________________      146
  The Business Need for Disability Insurance __________________________________________________________       147
  Sources of Disability Insurance ____________________________________________________________________        148
  Individual Disability Income Insurance _____________________________________________________________        149
  How Individual Disability Income Insurance Works ___________________________________________________        151
  Group Disability Insurance _______________________________________________________________________          152
  How Employer-Provided Disability Insurance Works __________________________________________________         153
  When The Parent Becomes the Child - Providing Care for Older Individuals ________________________________   154
  Long-Term Care Analysis - Client 1 ________________________________________________________________         156
  Long-Term Care Timeline - Client 1 ________________________________________________________________         157
  Long-Term Care Analysis - Client 2 ________________________________________________________________         158
  Long-Term Care Timeline - Client 2 ________________________________________________________________         159
  Long-Term Care Client Data and Assumptions _______________________________________________________          160
  Long-Term Care Break-Even _____________________________________________________________________             161
  Long-Term Care _______________________________________________________________________________              162
  Choosing A Long-Term Care Policy ________________________________________________________________           164
  Long-Term Care Tax Issues ______________________________________________________________________            166
  How Individual LTC Insurance Works ______________________________________________________________           168
  How Employer-Provided LTC Insurance Works ______________________________________________________            169

ACCUMULATION AND INVESTMENTS
  The Perfect Investment __________________________________________________________________________           170
  Key Investment Questions ________________________________________________________________________           171
  Accumulation Goals ____________________________________________________________________________             172
  Cost of Procrastination __________________________________________________________________________          174
  Time and Growth of Money ______________________________________________________________________             175
  Future Value of a Single Sum _____________________________________________________________________          176
  Present Value of a Future Sum ____________________________________________________________________          177
  Deposits Needed to Accumulate a Future Sum ________________________________________________________         178
                                                         ii
  Rate of Return on a Single Sum ___________________________________________________________________          179
  Future Value of Periodic Deposits _________________________________________________________________         180
  Future Value of Single Sum and Periodic Deposits ____________________________________________________       181
  Accumulating One Million Dollars _________________________________________________________________          182
  The Accumulation Process _______________________________________________________________________            184
  Taxation While Accumulating the Nest Egg __________________________________________________________         185
  The Rule of 72 and the Rule of 115 ________________________________________________________________         186
  How Employer-Provided LTC Insurance Works ______________________________________________________ 169

ACCUMULATION AND INVESTMENTS
  The Perfect Investment __________________________________________________________________________        170
  Key Investment Questions ________________________________________________________________________        171
  Accumulation Goals ____________________________________________________________________________          172
  Cost of Procrastination __________________________________________________________________________       174
  Time and Growth of Money ______________________________________________________________________          175
  Future Value of a Single Sum _____________________________________________________________________       176
  Present Value of a Future Sum ____________________________________________________________________       177
  Deposits Needed to Accumulate a Future Sum ________________________________________________________      178
  Rate of Return on a Single Sum ___________________________________________________________________       179
  Future Value of Periodic Deposits _________________________________________________________________      180
  Future Value of Single Sum and Periodic Deposits ____________________________________________________    181
  Accumulating One Million Dollars _________________________________________________________________       182
  The Accumulation Process _______________________________________________________________________         184
  Taxation While Accumulating the Nest Egg __________________________________________________________      185
  The Rule of 72 and the Rule of 115 ________________________________________________________________      186
  Types of Investment Risk ________________________________________________________________________        187
  Asset Allocation _______________________________________________________________________________         190
  Current Allocation for Assets _____________________________________________________________________      192
  Recommended Allocation for Assets _______________________________________________________________        193
  Asset Allocation Comparison _____________________________________________________________________        194
  Weighted Average Rate of Return _________________________________________________________________        195
  Personal Finance Client Data and Assumptions _______________________________________________________     196
  Risk Questionnaire - Two Clients __________________________________________________________________      198
  Risk Analysis - Two Clients ______________________________________________________________________       201
  Risk Questionnaire - Single Client _________________________________________________________________     205
  Risk Analysis - Single Client _____________________________________________________________________      208
  Asset Allocation Client Data ______________________________________________________________________      212
  Inflation ______________________________________________________________________________________         213
  Effect of Inflation ______________________________________________________________________________       215
  Rate of Inflation _______________________________________________________________________________        216
  Consumer Price Index ___________________________________________________________________________         217
  Purchasing Power of One Dollar ___________________________________________________________________       218
  The Real Rate of Return _________________________________________________________________________        219
  Tax-Exempt vs. Taxable Income ___________________________________________________________________        222
  Pyramid of Investments __________________________________________________________________________        224
  Basic Investment Tools __________________________________________________________________________        225
  Stocks _______________________________________________________________________________________           229
  Stock Market Indexes and Averages ________________________________________________________________       231
  Growth vs. Value Investing: Which is Best? __________________________________________________________    233
  Bonds ________________________________________________________________________________________           234
  Corporate Bonds _______________________________________________________________________________          237
  U.S. Government Securities ______________________________________________________________________        239
  Treasury Inflation-Protected Securities ______________________________________________________________   243
  Municipal Bonds _______________________________________________________________________________          245
  Mutual Funds __________________________________________________________________________________          248
  Mutual Fund Share Classes - A, B, and C ____________________________________________________________     250
  Mutual Funds - Glossary of Terms _________________________________________________________________       252
  Index Funds ___________________________________________________________________________________          256
  Exchange-Traded Funds _________________________________________________________________________          257
  Exchange-Traded Funds vs. Index Mutual Funds ______________________________________________________      259
  How a Mutual Fund Works _______________________________________________________________________          260
  Mutual Fund Families ___________________________________________________________________________         261
  Dollar Cost Averaging ___________________________________________________________________________        263
  Limited Partnerships ____________________________________________________________________________        265
  Real Estate Investment Trusts _____________________________________________________________________      267
  Hedge Funds __________________________________________________________________________________           270
  Accumulation Funding Analysis 1 _________________________________________________________________        272
  Accumulation Funding Timeline 1 _________________________________________________________________        273
  Accumulation Funding Analysis 2 _________________________________________________________________        274
  Accumulation Funding Timeline 2 _________________________________________________________________        275
  Accumulation Funding Analysis 3 _________________________________________________________________        276
  Accumulation Funding Timeline 3 _________________________________________________________________        277
  Accumulation Funding Analysis 4 _________________________________________________________________        278
  Accumulation Funding Timeline 4 _________________________________________________________________        279
  Accumulation Funding Analysis 5 _________________________________________________________________        280
  Accumulation Funding Timeline 5 _________________________________________________________________        281
  Accumulation Funding Client Data and Assumptions __________________________________________________      282
                                                     iii
CURRENT INCOME TAX
  Income Taxes Generally _________________________________________________________________________         283
  Federal Income Tax Approximator _________________________________________________________________        284
  Federal Income Tax Tables - 2009 _________________________________________________________________       285
  Federal Income Tax Tables - 2008 _________________________________________________________________       287
  Income Taxes Payable ___________________________________________________________________________         288
  Hedge Funds __________________________________________________________________________________              270
  Accumulation Funding Analysis 1 _________________________________________________________________           272
  Accumulation Funding Timeline 1 _________________________________________________________________           273
  Accumulation Funding Analysis 2 _________________________________________________________________           274
  Accumulation Funding Timeline 2 _________________________________________________________________           275
  Accumulation Funding Analysis 3 _________________________________________________________________           276
  Accumulation Funding Timeline 3 _________________________________________________________________           277
  Accumulation Funding Analysis 4 _________________________________________________________________           278
  Accumulation Funding Timeline 4 _________________________________________________________________           279
  Accumulation Funding Analysis 5 _________________________________________________________________           280
  Accumulation Funding Timeline 5 _________________________________________________________________           281
  Accumulation Funding Client Data and Assumptions __________________________________________________         282

CURRENT INCOME TAX
  Income Taxes Generally _________________________________________________________________________            283
  Federal Income Tax Approximator _________________________________________________________________           284
  Federal Income Tax Tables - 2009 _________________________________________________________________          285
  Federal Income Tax Tables - 2008 _________________________________________________________________          287
  Income Taxes Payable ___________________________________________________________________________            288
  Income Tax Tables for Estates - Trusts - Corporations - 2009 ____________________________________________   289
  Sources of Government Revenues __________________________________________________________________           290
  Federal Government Expenditures _________________________________________________________________           291
  Personal Income Tax History _____________________________________________________________________           292
  Capital Gains and Losses ________________________________________________________________________           293
  Utilizing Passive Losses _________________________________________________________________________          297
  Personal Alternative Minimum Tax ________________________________________________________________           299
  Corporate Alternative Minimum Tax _______________________________________________________________           302
  Types of Trusts and Their Tax Treatment ____________________________________________________________        305
  Accumulation of Trust Income for Minors ___________________________________________________________         306
  Income Tax Basis ______________________________________________________________________________             307
  Taxation of Disability Insurance Premiums and Benefits ________________________________________________     308
  Deductibility of Interest __________________________________________________________________________        309
  Highlights of the Pension Protection Act of 2006 ______________________________________________________     311
  Highlights of Hurricane Tax Relief _________________________________________________________________        319
  Highlights of 2003 Tax Legislation _________________________________________________________________        322
  Tax Act of 2003 Phase-In Timeline ________________________________________________________________          324
  Highlights of 2001 Tax Legislation _________________________________________________________________        325
  Tax Act of 2001 Phase-In Timeline ________________________________________________________________          333

PROPERTY AND CASUALTY
  Personal Property and Casualty Insurance ___________________________________________________________        334
  Automobile Insurance ___________________________________________________________________________            337
  Homeowner's Insurance _________________________________________________________________________             339
  Renter's Insurance ______________________________________________________________________________           343
  Condominium Unit Owner's Insurance ______________________________________________________________           346
  Earthquake Insurance ___________________________________________________________________________            349
  Flood Insurance ________________________________________________________________________________            350
  Watercraft Insurance ____________________________________________________________________________           353
  Individual Liability Insurance _____________________________________________________________________        356

LIFE INSURANCE AND ANNUITIES
  Survivor Needs - Client 1 Dies ____________________________________________________________________         359
  Survivor 's Immediate Needs - Client 1 Dies _________________________________________________________       360
  Survivor Needs Timeline - Client 1 Dies ____________________________________________________________        361
  Survivor Analysis Detail - Client 1 Dies _____________________________________________________________      363
  Survivor Needs - Client 2 Dies ____________________________________________________________________         364
  Survivor's Immediate Needs - Client 2 Dies __________________________________________________________       365
  Survivor Needs Timeline - Client 2 Dies ____________________________________________________________        366
  Survivor Analysis Detail - Client 2 Dies _____________________________________________________________      368
  Client Data and Assumptions Summary _____________________________________________________________           369
  General Purposes of Life Insurance ________________________________________________________________         373
  Life Insurance: Glossary of Terms _________________________________________________________________         375
  Spouse Insurance _______________________________________________________________________________            379
  Considerations in the Purchase of Life Insurance ______________________________________________________     380
  First-to-Die Life Insurance Policies (Joint Life) _______________________________________________________   391
  Survivorship Life Insurance (Second-to-Die) _________________________________________________________       382
  Tax-Free Policy Exchanges (IRC Sec. 1035) _________________________________________________________         383
  Modified Endowment Contracts ___________________________________________________________________            385
  The Need for Responsible Planning ________________________________________________________________          386
  Capital Needs Analysis Worksheet _________________________________________________________________          387
  How Much Life Insurance? _______________________________________________________________________            388
                                                            iv
  Human Life Value ______________________________________________________________________________             393
  Types of Life Insurance Policies ___________________________________________________________________        394
  Term Life Insurance ____________________________________________________________________________            396
  Whole Life Insurance ___________________________________________________________________________            399
  Universal Life Insurance _________________________________________________________________________          403
  Variable Life Insurance __________________________________________________________________________          307
  Variable Universal Life Insurance __________________________________________________________________        411
  Immediate Annuities ____________________________________________________________________________            415
  Client Data and Assumptions Summary _____________________________________________________________           369
  General Purposes of Life Insurance ________________________________________________________________         373
  Life Insurance: Glossary of Terms _________________________________________________________________         375
  Spouse Insurance _______________________________________________________________________________            379
  Considerations in the Purchase of Life Insurance ______________________________________________________     380
  First-to-Die Life Insurance Policies (Joint Life) _______________________________________________________   391
  Survivorship Life Insurance (Second-to-Die) _________________________________________________________       382
  Tax-Free Policy Exchanges (IRC Sec. 1035) _________________________________________________________         383
  Modified Endowment Contracts ___________________________________________________________________            385
  The Need for Responsible Planning ________________________________________________________________          386
  Capital Needs Analysis Worksheet _________________________________________________________________          387
  How Much Life Insurance? _______________________________________________________________________            388
  Human Life Value ______________________________________________________________________________             393
  Types of Life Insurance Policies ___________________________________________________________________        394
  Term Life Insurance ____________________________________________________________________________            396
  Whole Life Insurance ___________________________________________________________________________            399
  Universal Life Insurance _________________________________________________________________________          403
  Variable Life Insurance __________________________________________________________________________          307
  Variable Universal Life Insurance __________________________________________________________________        411
  Immediate Annuities ____________________________________________________________________________            415
  Deferred Annuities _____________________________________________________________________________            416
  Variable Annuities ______________________________________________________________________________           421
  Equity-Indexed Annuities ________________________________________________________________________           425
  Combination Annuities __________________________________________________________________________            430
  Life Insurance Options for the Terminally Ill _________________________________________________________     431
  1980 Commissioners Standard Ordinary Mortality Table ________________________________________________       434
  Deaths per Thousand at Various Ages (1980 CSO) ____________________________________________________         435
  The Chance of Dying Before Age 65 (1980 CSO) _____________________________________________________          436
  2001 Commissioners' Standard Ordinary Mortality Table _______________________________________________       437
  Deaths per Thousand at Various Ages (2001 CSO) ____________________________________________________         438
  The Chance of Dying Before Age 65 (2001 CSO) _____________________________________________________          439
  1986 Life Expectancy Table ______________________________________________________________________           440
  Insurance Company Rating Systems ________________________________________________________________           441

EMPLOYEE BENEFITS
  Group Term Life Insurance _______________________________________________________________________           443
  Table I Rates for Group Term Insurance _____________________________________________________________        444
  Group Health Insurance __________________________________________________________________________           445
  Health Care Portability __________________________________________________________________________          446
  COBRA Coverage Continuation ___________________________________________________________________             448
  Cafeteria Plans - IRC Sec. 125 ____________________________________________________________________         450
  Flexible Spending Accounts ______________________________________________________________________           453
  Medical Reimbursement Plans ____________________________________________________________________            455
  Health Reimbursement Arrangements ______________________________________________________________            456
  How a Health Reimbursement Arrangement Works ____________________________________________________           458
  Health Savings Account _________________________________________________________________________            459
  How a Health Savings Account Works ______________________________________________________________           463
  Medical Savings Accounts _______________________________________________________________________            464

THE RETIREMENT PLANNING PROBLEM
  Retirement Analysis ____________________________________________________________________________            465
  Capital Available for Retirement ___________________________________________________________________        466
  Alternatives to Achieving Retirement Goals __________________________________________________________       467
  Achieving Retirement Goals ______________________________________________________________________           468
  Retirement Timeline ____________________________________________________________________________            469
  Retirement Analysis Detail _______________________________________________________________________          470
  Client Data and Assumptions Summary _____________________________________________________________           471
  The Need for Retirement Planning _________________________________________________________________          475
  Average Life Expectancy at Age 65 ________________________________________________________________          477
  Sources of Retirement Income ____________________________________________________________________           478
  When Will Your Nest Egg Run Out? _______________________________________________________________            480
  Evaluating Early Retirement Offers ________________________________________________________________         481
  Making the Most of Your Retirement Plan ___________________________________________________________         483
  Length of Time a Sum Will Last ___________________________________________________________________          484
  Present Value of Future Annuity Payments __________________________________________________________         485
  Net Present Value ______________________________________________________________________________            486
  Internal Rate of Return __________________________________________________________________________          487
  Annuities in Retirement Income Planning ____________________________________________________________        488
  Pension Income Alternative ______________________________________________________________________           490
  Reverse Mortgages _____________________________________________________________________________             492
  How a Reverse Mortgage Works __________________________________________________________________             496
                                                      v
INDIVIDUAL RETIREMENT ACCOUNTS
  IRAs Compared ________________________________________________________________________________              497
  Traditional IRAs _______________________________________________________________________________            501
  How a Traditional IRA Works ____________________________________________________________________            506
  Roth IRA Conversion ___________________________________________________________________________             507
  Roth IRAs ____________________________________________________________________________________              508
  Sources of Retirement Income ____________________________________________________________________          478
  When Will Your Nest Egg Run Out? _______________________________________________________________           480
  Evaluating Early Retirement Offers ________________________________________________________________        481
  Making the Most of Your Retirement Plan ___________________________________________________________        483
  Length of Time a Sum Will Last ___________________________________________________________________         484
  Present Value of Future Annuity Payments __________________________________________________________        485
  Net Present Value ______________________________________________________________________________           486
  Internal Rate of Return __________________________________________________________________________         487
  Annuities in Retirement Income Planning ____________________________________________________________       488
  Pension Income Alternative ______________________________________________________________________          490
  Reverse Mortgages _____________________________________________________________________________            492
  How a Reverse Mortgage Works __________________________________________________________________            496

INDIVIDUAL RETIREMENT ACCOUNTS
  IRAs Compared ________________________________________________________________________________             497
  Traditional IRAs _______________________________________________________________________________           501
  How a Traditional IRA Works ____________________________________________________________________           506
  Roth IRA Conversion ___________________________________________________________________________            507
  Roth IRAs ____________________________________________________________________________________             508
  How a Roth IRA Works _________________________________________________________________________             514
  Roth 401(k) and Roth 403(b) - Qualified Roth Contribution Program ______________________________________   515
  Deductible IRA Contributions for Traditional IRAs ____________________________________________________     518
  Tax-Deferred Growth in an IRA ___________________________________________________________________          521
  Does It Matter When You Contribute to an IRA? ______________________________________________________       524

EMPLOYER SPONSORED RETIREMENT PLANS
  Qualified Retirement Plans _______________________________________________________________________         526
  Life Insurance in Qualified Plans __________________________________________________________________       529
  Keogh Plans (H.R. 10) __________________________________________________________________________           532
  Traditional Profit Sharing Plan ____________________________________________________________________       534
  How a Traditional Profit Sharing Plan Works _________________________________________________________      538
  Traditional Money Purchase Plan __________________________________________________________________         539
  How a Traditional Money Purchase Plan Works ______________________________________________________         543
  Nontraditional Defined Contribution Plan ___________________________________________________________       544
  How a Nontraditional Defined Contribution Plan Works ________________________________________________      549
  Traditional Defined Benefit Plan ___________________________________________________________________       550
  How a Traditional Defined Benefit Plan Works _______________________________________________________       555
  Target Benefit Plan _____________________________________________________________________________          556
  Employee Stock Ownership Plan (ESOP) ____________________________________________________________          560
  Cash or Deferred - IRC Sec. 401(k) Plan ____________________________________________________________       566
  Safe Harbor 401(k) Plan _________________________________________________________________________          573
  How a 401(k) Cash or Deferred Plan Works __________________________________________________________        576
  Solo 401(k) ___________________________________________________________________________________            577
  How a Solo 401(k) Plan Works ____________________________________________________________________          579
  403(b) Salary Deferral Plan _______________________________________________________________________        580
  How a 403(b) Salary Deferral Plan Works ___________________________________________________________        584
  Stock Bonus Plan ______________________________________________________________________________            585
  Age-Weighted Profit Sharing Plan _________________________________________________________________         590
  Fully-Insured Defined Benefit Plan - IRC Sec. 412(e)(3) ________________________________________________   595
  Simplified Employee Pension (SEP) ________________________________________________________________         599
  How a SEP IRA Works __________________________________________________________________________             605
  SIMPLE Retirement Plan ________________________________________________________________________            606
  How a SIMPLE IRA Works ______________________________________________________________________              611
  Qualified Plans Compared ________________________________________________________________________          612
  Defined Contribution Plans Compared ______________________________________________________________         616
  Combinations of Retirement Plans _________________________________________________________________         619
  Top-Heavy Plans _______________________________________________________________________________            622
  Fiduciary Standards and Responsibilities ____________________________________________________________      624
  Prohibited Transactions Rules _____________________________________________________________________        626
  Qualified Plan Participant Loans ___________________________________________________________________       628
  Unrelated Business Taxable Income (UBTI) _________________________________________________________         629

DISTRIBUTIONS FROM IRAS AND QUALIFIED PLANS
  Retirement Plan Distributions Before Age 59½ (IRC Sec. 72(t)) __________________________________________   631
  Lump-Sum Distributions Before Age 59½ ___________________________________________________________          635
  IRA Rollover of Qualified Plan Values vs. Lump-Sum Tax Treatment _____________________________________     637
  IRA Rollover as a Qualified Plan Conduit ___________________________________________________________       638
  Mandatory Withholding for Plan Distributions ________________________________________________________      641
  Net Unrealized Appreciation ______________________________________________________________________         642
  Taxes on Qualified Plan Distributions at Death _______________________________________________________     645
  Required Minimum Distributions __________________________________________________________________          647
                                                           vi
  The Basics of Required Minimum Distributions _______________________________________________________       650
  Required Minimum Distributions During Life ________________________________________________________        651
  Required Minimum Distributions After Death - Spousal Beneficiary ______________________________________    653
  Required Minimum Distributions After Death - Non-Spouse Beneficiaries __________________________________   657
  Stretch IRA ___________________________________________________________________________________            661
  Stretch IRA (Spousal Beneficiary and Single Inherited IRA) _____________________________________________   664
  Stretch IRA (Spousal Beneficiary and Separate Inherited IRAs) __________________________________________   665
  Qualified Plan Participant Loans ___________________________________________________________________ 628
  Unrelated Business Taxable Income (UBTI) _________________________________________________________ 629

DISTRIBUTIONS FROM IRAS AND QUALIFIED PLANS
  Retirement Plan Distributions Before Age 59½ (IRC Sec. 72(t)) __________________________________________    631
  Lump-Sum Distributions Before Age 59½ ___________________________________________________________           635
  IRA Rollover of Qualified Plan Values vs. Lump-Sum Tax Treatment _____________________________________      637
  IRA Rollover as a Qualified Plan Conduit ___________________________________________________________        638
  Mandatory Withholding for Plan Distributions ________________________________________________________       641
  Net Unrealized Appreciation ______________________________________________________________________          642
  Taxes on Qualified Plan Distributions at Death _______________________________________________________      645
  Required Minimum Distributions __________________________________________________________________           647
  The Basics of Required Minimum Distributions _______________________________________________________        650
  Required Minimum Distributions During Life ________________________________________________________         651
  Required Minimum Distributions After Death - Spousal Beneficiary ______________________________________     653
  Required Minimum Distributions After Death - Non-Spouse Beneficiaries __________________________________    657
  Stretch IRA ___________________________________________________________________________________             661
  Stretch IRA (Spousal Beneficiary and Single Inherited IRA) _____________________________________________    664
  Stretch IRA (Spousal Beneficiary and Separate Inherited IRAs) __________________________________________    665
  Stretch IRA (Non-Spouse Beneficiaries and Separate Inherited IRAs) _____________________________________    666
  Uniform Lifetime Table _________________________________________________________________________            667
  Joint Life and Last Survivor Table _________________________________________________________________        668
  Single Life Table _______________________________________________________________________________           682
  RMD Amounts - A Moving Target _________________________________________________________________             683
  Annuity Table V _______________________________________________________________________________             687
  Annuity Table VI ______________________________________________________________________________             688

BUSINESS PLANNING GENERALLY
  Business Owner Planning Needs ___________________________________________________________________           694
  Retirement and the Business Professional ____________________________________________________________       695
  Basic Types of Business Organizations ______________________________________________________________        696
  Advantages and Disadvantages of Corporations _______________________________________________________        697
  S Corporations _________________________________________________________________________________            698
  Limited Liability Companies ______________________________________________________________________          700

BUSINESS USES OF LIFE INSURANCE
  Qualified Deferred Compensation Plan (IRC Sec. 457) _________________________________________________       701
  Nonqualified Deferred Compensation Plan ___________________________________________________________         703
  Rabbi Trust ___________________________________________________________________________________             704
  Secular Trust __________________________________________________________________________________            706
  Nonqualified Deferred Compensation (Avoiding Constructive Receipt) ____________________________________     708
  Split-Dollar Arrangement ________________________________________________________________________           715
  Federal Taxation of Split-Dollar Arrangements _______________________________________________________       715
  Split-Dollar Arrangement (Collateral Assignment) _____________________________________________________      719
  Split-Dollar Arrangement (Endorsement Method) _____________________________________________________         720
  Split-Dollar Arrangement Funding an Irrevocable Life Insurance Trust ____________________________________   721
  Split-Dollar Arrangement Funding a Cross-Purchase Agreement __________________________________________      723
  Reverse Split-Dollar Arrangement _________________________________________________________________          725
  Split-Dollar Arrangement - Deferred Compensation ___________________________________________________        726
  Private Split-Dollar Arrangement __________________________________________________________________         727
  Executive Carve-Out Plan ________________________________________________________________________           730
  Executive Bonus Plan ___________________________________________________________________________            731
  How an Executive Bonus Plan Works _______________________________________________________________           732
  Table 2001 ____________________________________________________________________________________             733
  P.S. 58 Table - Economic Benefit to Employee _______________________________________________________        734
  P.S. 58 Rates __________________________________________________________________________________            735
  U.S. 38 Rates __________________________________________________________________________________            736

BUSINESS CONTINUATION
  Meet the Business Planning Team _________________________________________________________________           737
  Importance of a Business Continuation Plan __________________________________________________________       738
  Commonly Asked Business Continuation Questions ___________________________________________________          739
  Buy-Sell Agreement ____________________________________________________________________________             745
  Buy-Sell Agreement - Partnership __________________________________________________________________         746
  Buy-Sell Agreement - Sole Ownership ______________________________________________________________          748
  Buy-Sell Agreement - Corporation _________________________________________________________________          750
  Types of Corporate Continuation Plans _____________________________________________________________         751
  Buy-Sell Agreement - Cross-Purchase vs. Corporate Stock Redemption ____________________________________     752
  Buy-Sell Agreement - S Corporation _______________________________________________________________          755
  Cross-Purchase Buy-Sell Agreement _______________________________________________________________           756
  Cross-Purchase Buy-Sell Agreement With Three Or More Owners ________________________________________        757
                                                         vii
  Stock Redemption Plan __________________________________________________________________________            758
  Wait-And-See Buy-Sell Agreement ________________________________________________________________            759
  Trusteed Corporate Buy-Sell Agreement ____________________________________________________________          760
  Making Buy-Sell Agreements Acceptable to the IRS ___________________________________________________        761
  Corporate Distributions to Redeem Stock ____________________________________________________________        762
  Corporate Stock Redemption (IRC Sec. 303) _________________________________________________________         764
  Family Attribution ______________________________________________________________________________           765
  Meet the Business Planning Team _________________________________________________________________ 737
  Importance of a Business Continuation Plan __________________________________________________________ 738
  Commonly Asked Business Continuation Questions ___________________________________________________ 739
  Buy-Sell Agreement ____________________________________________________________________________ 745
  Buy-Sell Agreement - Partnership __________________________________________________________________ 746
  Buy-Sell Agreement - Sole Ownership ______________________________________________________________ 748
  Buy-Sell Agreement - Corporation _________________________________________________________________ 750
  Types of Corporate Continuation Plans _____________________________________________________________ 751
  Buy-Sell Agreement - Cross-Purchase vs. Corporate Stock Redemption ____________________________________ 752
  Buy-Sell Agreement - S Corporation _______________________________________________________________ 755
  Cross-Purchase Buy-Sell Agreement _______________________________________________________________ 756
  Cross-Purchase Buy-Sell Agreement With Three Or More Owners ________________________________________ 757
  Stock Redemption Plan __________________________________________________________________________ 758
  Wait-And-See Buy-Sell Agreement ________________________________________________________________ 759
  Trusteed Corporate Buy-Sell Agreement ____________________________________________________________ 760
  Making Buy-Sell Agreements Acceptable to the IRS ___________________________________________________ 761
  Corporate Distributions to Redeem Stock ____________________________________________________________ 762
  Corporate Stock Redemption (IRC Sec. 303) _________________________________________________________ 764
  Family Attribution ______________________________________________________________________________ 765
  Methods of Funding a Buy-Sell Agreement __________________________________________________________ 767
  Who Should Own The Policy? ____________________________________________________________________ 768
  Taxes on Premiums Paid by a Corporation ___________________________________________________________ 769
  Transfers for Value _____________________________________________________________________________ 770
  The Cost of Borrowing When Interest Is Deductible ___________________________________________________ 772
  The Cost of Borrowing When Interest Is Not Deductible ________________________________________________ 774
  Reasons to Value a Business ______________________________________________________________________ 776
  Business Valuation Factors _______________________________________________________________________ 777
  Valuation Methods Explained _____________________________________________________________________ 780
  Advantages and Disadvantages of Valuation Methods __________________________________________________ 782
  Business Valuation - Revenue Ruling 59-60 __________________________________________________________ 784
  Discount and Capitalization Rates __________________________________________________________________ 785
  Business Valuation Per Share Using the Courtroom Method _____________________________________________ 787
  Time Delay in Closing Contested Estates ____________________________________________________________ 788
  Odds of Disability ______________________________________________________________________________ 789
  Disability of a Business Owner ____________________________________________________________________ 790
  Tax Basics for Disability Buyouts __________________________________________________________________ 793
  Business Overhead Expense ______________________________________________________________________ 794
  Disability Buy-Out Cross-Purchase Agreement _______________________________________________________ 795
  Disability Buy-Out Stock Redemption Plan __________________________________________________________ 796
  Key Employee Insurance _________________________________________________________________________ 797
  Methods of Valuing a Key Employee _______________________________________________________________ 798
  Financing the Replacement of a Key Employee _______________________________________________________ 799
  Key Employee Coverage Issues ___________________________________________________________________ 800
  Protecting Against the Loss of a Key Employee _______________________________________________________ 801
  Key Employee Disability Plans ____________________________________________________________________ 802
  Business Continuation Needs _____________________________________________________________________ 803
  Ways to Pay for Business Continuation _____________________________________________________________ 804
  Business Continuation Client Data and Assumptions ___________________________________________________ 805

THE ESTATE PLANNING PROBLEM
  The Need for Estate Planning _____________________________________________________________________         806
  Key Estate Planning Considerations ________________________________________________________________        807
  Estate Settlement Costs Funnel ____________________________________________________________________        810
  Estate Settlement Costs __________________________________________________________________________         811
  The High Cost of Dying When Estate Is Probated _____________________________________________________       812
  The High Cost of Dying When Estate Is Not Probated __________________________________________________      813
  Potential Savings By Avoiding Probate _____________________________________________________________        814
  The High Cost of Dying with a $5,000,000 Gross Estate ________________________________________________     815
  The Federal Estate Tax __________________________________________________________________________          816
  How The Federal Estate Tax Works ________________________________________________________________          817
  Federal Estate Tax Worksheet _____________________________________________________________________         818
  Federal Estate Tax Tables ________________________________________________________________________         819
  Federal Estate Tax Approximator __________________________________________________________________         820
  Valuation of Estate Assets ________________________________________________________________________        821
  Federal Credit for State Death Tax Paid _____________________________________________________________      823
  Planning Your Estate with Uncertain Tax Laws _______________________________________________________       825
  Death Taxes Under the Tax Act of 2001 for a $5,000,000 Estate __________________________________________   827
  Death Taxes Under the Tax Act of 2001 for a $10,000,000 Estate _________________________________________   828
  Federal Estate Taxes Under the Tax Act of 2001 ______________________________________________________      829
  Carry-Over Income Tax Basis after 2010 ____________________________________________________________        830
  Estates of Famous People ________________________________________________________________________          832
                                                         viii
  Estates of Four Famous People ____________________________________________________________________         833

BASIC ESTATE PLANNING
  Basic Steps in the Estate Planning Process ___________________________________________________________     834
  Meet the Estate Planning Team ____________________________________________________________________         835
  Choose the Estate Planning Team __________________________________________________________________         836
  How Often Should Legal Documents Be Reviewed? ___________________________________________________          838
   How The Federal Estate Tax Works ________________________________________________________________            817
   Federal Estate Tax Worksheet _____________________________________________________________________           818
   Federal Estate Tax Tables ________________________________________________________________________           819
   Federal Estate Tax Approximator __________________________________________________________________           820
   Valuation of Estate Assets ________________________________________________________________________          821
   Federal Credit for State Death Tax Paid _____________________________________________________________        823
   Planning Your Estate with Uncertain Tax Laws _______________________________________________________         825
   Death Taxes Under the Tax Act of 2001 for a $5,000,000 Estate __________________________________________     827
   Death Taxes Under the Tax Act of 2001 for a $10,000,000 Estate _________________________________________     828
   Federal Estate Taxes Under the Tax Act of 2001 ______________________________________________________        829
   Carry-Over Income Tax Basis after 2010 ____________________________________________________________          830
   Estates of Famous People ________________________________________________________________________            832
   Estates of Four Famous People ____________________________________________________________________           833

BASIC ESTATE PLANNING
  Basic Steps in the Estate Planning Process ___________________________________________________________        834
  Meet the Estate Planning Team ____________________________________________________________________            835
  Choose the Estate Planning Team __________________________________________________________________            836
  How Often Should Legal Documents Be Reviewed? ___________________________________________________             838
  Choosing an Attorney ___________________________________________________________________________              839
  Items to Discuss Before Meeting with an Attorney _____________________________________________________        841
  Advantages of a Will ____________________________________________________________________________             844
  Types of Wills and Trusts ________________________________________________________________________            846
  Various Estate Planning Arrangements ______________________________________________________________           848
  No Will? No Problem! (State Drawn Will in Common Law States) ________________________________________         849
  No Will? No Problem! (State Drawn Will in Community Property States) __________________________________       850
  Duties of an Executor ___________________________________________________________________________             851
  Steps in a Probate ______________________________________________________________________________             853
  Avoiding Probate _______________________________________________________________________________              854
  Transfer on Death ______________________________________________________________________________              856
  Holding Title __________________________________________________________________________________              857
  Joint Tenancy _________________________________________________________________________________               859
  Should One Hold Appreciated Assets in Community Property or Joint Tenancy? _____________________________      861
  Revocable Living Trust __________________________________________________________________________             862
  Funding Your Revocable Living Trust ______________________________________________________________            863
  Durable Power of Attorney _______________________________________________________________________             864
  Who Makes Medical Care Decisions when I Cannot? __________________________________________________            865
  Advance Health Care Directives ___________________________________________________________________            866
  Lifetime Gifts _________________________________________________________________________________              868
  The Federal Gift Tax ____________________________________________________________________________             870
  Annual Exclusion Gifts __________________________________________________________________________             871
  Effect of Annual Exclusion Gifting Program _________________________________________________________          872
  Federal Gift Taxes after 2009 (Assuming Congress Fails to Repeal FET) ___________________________________     873
  Tax-Free Gifts and Bequests (If Congress Fails to Repeal FET after 2010) __________________________________   874
  IRC Sec. 2503(c) Trust for Minors _________________________________________________________________           875
  How an IRC Sec. 2503(c) Trust Works ______________________________________________________________            876
  Uniform Gifts to Minors Act ______________________________________________________________________            877
  Uniform Transfers to Minors Act __________________________________________________________________            878
  How a Custodial Account Works __________________________________________________________________              880
  Special Needs Trust _____________________________________________________________________________             881
  How a Special Needs Trust Works _________________________________________________________________             882

LIFE INSURANCE AND ESTATE TAXATION
  Estate Summary - Simple Will - Married ____________________________________________________________           883
  Estate Summary - Simple Will - Individual __________________________________________________________          884
  Estate Analysis - Simple Will - Married _____________________________________________________________         885
  Estate Analysis - Simple Will - Partners _____________________________________________________________        887
  Estate Analysis - Simple Will - Individual ___________________________________________________________        889
  Estate Summary - Credit Shelter Trust - Married ______________________________________________________        890
  Estate Analysis - Credit Shelter Trust - Married _______________________________________________________      891
  Estate Summary - CST and ILIT - Married ___________________________________________________________           893
  Estate Analysis - CST and ILIT - Married ___________________________________________________________          894
  Estate Summary - ILIT - Partners __________________________________________________________________           896
  Estate Analysis - ILIT - Partners ___________________________________________________________________         897
  Estate Summary - ILIT - Individual ________________________________________________________________           899
  Estate Analysis - ILIT - Individual _________________________________________________________________         900
  Estate Options - Married _________________________________________________________________________            901
  Estate Options - Individual _______________________________________________________________________           903
  Estate Analysis Client Data and Assumptions ________________________________________________________          904
  How Are Death Taxes Paid? ______________________________________________________________________              906
  Taxation of Life Insurance Proceeds ________________________________________________________________          907
                                                            ix
  Irrevocable Life Insurance Trust for a Single Person ___________________________________________________      908
  Irrevocable Life Insurance Trust for a Married Couple __________________________________________________      911
  Credit Shelter and Irrevocable Insurance Trusts _______________________________________________________       913
  Paying Estate Costs with Estate-Tax-Free Dollars _____________________________________________________        914
  Using Life Insurance to Pay Estate Costs ____________________________________________________________         915
  Effect of Life Insurance Transfers on Federal Estate Taxes ______________________________________________     916
  Gifts of Life Insurance Policies ____________________________________________________________________         917
  Estate Analysis - Credit Shelter Trust - Married _______________________________________________________     891
  Estate Summary - CST and ILIT - Married ___________________________________________________________          893
  Estate Analysis - CST and ILIT - Married ___________________________________________________________         894
  Estate Summary - ILIT - Partners __________________________________________________________________          896
  Estate Analysis - ILIT - Partners ___________________________________________________________________        897
  Estate Summary - ILIT - Individual ________________________________________________________________          899
  Estate Analysis - ILIT - Individual _________________________________________________________________        900
  Estate Options - Married _________________________________________________________________________           901
  Estate Options - Individual _______________________________________________________________________          903
  Estate Analysis Client Data and Assumptions ________________________________________________________         904
  How Are Death Taxes Paid? ______________________________________________________________________             906
  Taxation of Life Insurance Proceeds ________________________________________________________________         907
  Irrevocable Life Insurance Trust for a Single Person ___________________________________________________     908
  Irrevocable Life Insurance Trust for a Married Couple __________________________________________________     911
  Credit Shelter and Irrevocable Insurance Trusts _______________________________________________________      913
  Paying Estate Costs with Estate-Tax-Free Dollars _____________________________________________________       914
  Using Life Insurance to Pay Estate Costs ____________________________________________________________        915
  Effect of Life Insurance Transfers on Federal Estate Taxes ______________________________________________    916
  Gifts of Life Insurance Policies ____________________________________________________________________        917
  Adult Children's Insurance Trust ___________________________________________________________________         918

ADVANCED ESTATE PLANNING
  Death Tax Reduction ____________________________________________________________________________             920
  The Marital Deduction __________________________________________________________________________             921
  Credit Shelter Trust _____________________________________________________________________________           922
  Credit Shelter and QTIP Trusts ____________________________________________________________________          924
  Lifetime QTIP Trust ____________________________________________________________________________             926
  Credit Shelter Trust vs. Simple Will ________________________________________________________________        928
  Life Insurance and the Applicable Credit Amount _____________________________________________________        929
  Exhausting the Applicable Credit Amount Today ______________________________________________________         930
  Qualified Family-Owned Business Interest ___________________________________________________________         931
  Qualifying for the QFOBI Deduction _______________________________________________________________           935
  Special Use Valuation (IRC Sec. 2032A) ____________________________________________________________          936
  Deferring Payment of Federal Estate Taxes (IRC Sec. 6161 and IRC Sec. 6166) _____________________________    938
  Powers of Appointment __________________________________________________________________________             941
  Disclaimers ___________________________________________________________________________________              943
  Generation-Skipping Transfer Tax _________________________________________________________________           945
  Income in Respect of a Decedent __________________________________________________________________           947
  Potential Combined Tax Disaster with a Child as the Beneficiary _________________________________________    950
  Potential Combined Tax Disaster with a Grandchild as the Beneficiary _____________________________________   951
  Effects of Skipping a Generation __________________________________________________________________          952
  Generation-Skipping Transfers and the QTIP Trust ____________________________________________________        953
  Transfers to Noncitizen Spouses ___________________________________________________________________          956

ESTATE FREEZING TECHNIQUES
  Estate Freezing Generally ________________________________________________________________________           959
  Family General Partnership _______________________________________________________________________           960
  Family Limited Partnership _______________________________________________________________________           961
  Installment Sale ________________________________________________________________________________            964
  Private Annuity ________________________________________________________________________________             966
  Corporate Recapitalization _______________________________________________________________________           967
  Joint Purchase of Assets _________________________________________________________________________           968
  Grantor-Retained Interest Trust (GRIT) _____________________________________________________________         969
  Grantor-Retained Annuity Trust (GRAT) ____________________________________________________________           972
  Grantor-Retained Unitrust (GRUT) ________________________________________________________________            974
  Personal Residence GRIT ________________________________________________________________________             977

CHARITABLE ALTERNATIVES
  Considering a Charitable Gift _____________________________________________________________________ 979
  Charitable Giving Techniques _____________________________________________________________________ 980
  Asset Replacement Trust _________________________________________________________________________ 982
  Charitable Income Tax Deduction __________________________________________________________________ 983
  Charitable Gifts and Estate Taxation ________________________________________________________________ 985
  Qualified Conservation Easement __________________________________________________________________ 986
  Unrelated Business Taxable Income ________________________________________________________________ 989
  Charitable Remainder Annuity Trust (CRAT) ________________________________________________________ 991
  Wealth Replacement Trust (CRAT) ________________________________________________________________ 995
  Charitable Remainder Unitrust (CRUT) _____________________________________________________________ 996
  Wealth Replacement Trust (CRUT) _______________________________________________________________ 1000
  Charitable Remainder Trust Data and Assumptions ___________________________________________________ 1001
  Charitable Remainder Trust Numerical Tests ________________________________________________________ 1002
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  Charitable Gift Annuity (CGA) ___________________________________________________________________ 1003
  Taxation of a Charitable Gift Annuity ______________________________________________________________ 1005
  Pooled Income Fund (PIF) ______________________________________________________________________ 1006
  Charitable Lead Annuity Trust (CLAT) ____________________________________________________________ 1008
  Charitable Lead Unitrust (CLUT) _________________________________________________________________ 1011
  Supplementing Retirement Income With a Charitable Remainder Unitrust _________________________________ 1014
  Life Insurance Charitable Plan ___________________________________________________________________ 1016
  Private Foundations ____________________________________________________________________________ 1017
  Charitable Giving Techniques _____________________________________________________________________ 980
  Asset Replacement Trust _________________________________________________________________________ 982
  Charitable Income Tax Deduction __________________________________________________________________ 983
  Charitable Gifts and Estate Taxation ________________________________________________________________ 985
  Qualified Conservation Easement __________________________________________________________________ 986
  Unrelated Business Taxable Income ________________________________________________________________ 989
  Charitable Remainder Annuity Trust (CRAT) ________________________________________________________ 991
  Wealth Replacement Trust (CRAT) ________________________________________________________________ 995
  Charitable Remainder Unitrust (CRUT) _____________________________________________________________ 996
  Wealth Replacement Trust (CRUT) _______________________________________________________________ 1000
  Charitable Remainder Trust Data and Assumptions ___________________________________________________ 1001
  Charitable Remainder Trust Numerical Tests ________________________________________________________ 1002
  Charitable Gift Annuity (CGA) ___________________________________________________________________ 1003
  Taxation of a Charitable Gift Annuity ______________________________________________________________ 1005
  Pooled Income Fund (PIF) ______________________________________________________________________ 1006
  Charitable Lead Annuity Trust (CLAT) ____________________________________________________________ 1008
  Charitable Lead Unitrust (CLUT) _________________________________________________________________ 1011
  Supplementing Retirement Income With a Charitable Remainder Unitrust _________________________________ 1014
  Life Insurance Charitable Plan ___________________________________________________________________ 1016
  Private Foundations ____________________________________________________________________________ 1017
  Supporting Organizations _______________________________________________________________________ 1020

PLANNER SUPPORT REPORTS
  Agenda for Discussion _________________________________________________________________________ 1023
  Planner Input Sheet ____________________________________________________________________________ 1024
  Receipt for Documents _________________________________________________________________________ 1025
  Planning Task List _____________________________________________________________________________ 1026
  Action Items _________________________________________________________________________________ 1028
  Goals _______________________________________________________________________________________ 1029
  Client Referral ________________________________________________________________________________ 1030
  Categorical Report List (Back Room Technician) ____________________________________________________ 1031
  Summary of Legal Citations _____________________________________________________________________ 1046
  College Funding Analysis data ___________________________________________________________________ 1047
  Survivor Needs Analysis Data ___________________________________________________________________ 1048
  Retirement Needs Analysis Data __________________________________________________________________ 1049
  Disability Income Analysis Data __________________________________________________________________ 1051
  Long-Term Care Analysis Data ___________________________________________________________________ 1054
  Business Continuation Analysis Data ______________________________________________________________ 1055
  Estate Analysis Data ___________________________________________________________________________ 1056
  Asset Allocation Data __________________________________________________________________________ 1059
  Accumulation Funding Analysis Data ______________________________________________________________ 1061
  Personal Finance Data _________________________________________________________________________ 1062
  Charitable Remainder Trust Data _________________________________________________________________ 1065




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