How to Make Your Estate Plan EPIC
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relevant federal tax laws. It is not intended for, nor can it be used
by any taxpayer for the purpose of avoiding federal tax penalties.
This information is provided to support the promotion or
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Taxpayers should seek the advice of their own tax and legal
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specific circumstances.
What is EPIC estate planning?
Your Life. Your Legacy. Your EPIC.
Your estate planning concerns
How much
should I give
to my kids?
Can I protect
them?
Is my estate
plan up-todate?
Do I have
enough life
insurance?
How much
should I give to
my community?
What about
taxes?
Traditional estate planning
• Traditional estate planning
– Discussions centered on:
• What is the status of estate taxes?
• What is the newest estate planning strategies?
• Is estate planning just planning after your death?
– These discussions are important but they may miss the
central objective
• How to help maximize your estate
• During life and at death
Estate planning decisions
Faced with the repression of the “OR”
Do I live less today, in order to give more tomorrow?
OR
Do I live more today, and simply give less tomorrow?
What is EPIC estate planning?
• One definition of epic is:
Ep·ic adjective \ˈe-pik\ “extending beyond the usual or
ordinary”
• EPIC estate planning
– Process of helping make your estate plan extend beyond
traditional estate planning
Source: www.merriam-webster.com/dictionary/epic
EPIC estate planning decisions
EPIC embraces the brilliance of the AND
I want to maximize how i live today
and
I want to maximize what I give tomorrow
What is EPIC estate planning?
• Stands for Estate Planning Individually Centered
– Planning centers around you
• Maximizing the EPIC Circles
• Minimizing the four estate planning threats
– An EPIC approach for EPIC Team:
• You
• Your advisor/agent/CPA/tax professional
• Your estate planning attorney
The EPIC Circles
Your Life. Your Legacy. Your EPIC.
It begins with…
Next, comes…
Your Descendants
Children
Children with
Special Needs
“… person should
leave his kids enough
to do anything but not
enough to do nothing.”
Warren Buffet
Other
beneficiaries
Grandchildren
It ends with…
Government
Federal
State
Local
Community
Foundations
EPIC circle
However, not all families are the same…
•
•
•
•
Single parents
Blended families
Non-citizen spouses
Partners (unmarried couples)
Four Estate Planning Threats
Your Life. Your Legacy. Your EPIC.
Taxes
Taxes
Old paradigm – get it out
• Large gap between federal transfer and income tax rates
• In 2001:
– Unified credit was $675,000 and top tax rate was 55%
– Long term capital gains was 20%
Gap is 35%
Source: Internal Revenue Service
Estate Tax
55%
Capital Gains
Tax 20%
New paradigm – tax basis opportunities
• Smaller gap between federal transfer and income tax rates
• In 2014:
– Basic exclusion is $5.34 M and top tax rate was 40%
– Long term capital gains was 20% + 3.8% Health Care Surtax
Gap is 16.2%
Source: Internal Revenue Service
Estate Tax
40%
Capital Gains
Tax 23.8%
Creditors
Taxes
Creditors
Protections
Three areas of protections
1.Client
– Retirement income, long term care costs, asset protection
2.Spouse or Partner
– Income replacement, remarriage, retirement income, asset
protection
3.Descendants
– Asset protection, divorce, spending, special needs, blended
families
Spending
Taxes
Spending
Creditors
Three buckets of assets
Capital
assets
Retirement
income
assets
Legacy
assets
Capital asset taxation
Timing
Tax consequences
Purchase
After tax
Income generated
Ordinary income
Sale
Capital gains
• Long term
• Short term
Disposition at death
Fair market value at date of death
• Can get a step-up or step-down in
basis
Retirement income assets
Timing
Tax consequences
Contribution
Qualified - before tax
Non-qualified - after tax
Growth
Tax-deferred
Distributions
Ordinary income
• Qualified – all ordinary income
• Non-qualified – exclusion ratio
Disposition at death
No step-up
Legacy assets
Timing
Tax consequences
Purchase
After tax
Growth
Tax-deferred
Distributions
Tax-preferred
Dispositions at death
Automatic step-up in basis
EPIC retirement spending
• Use retirement income assets
• Efficient use of capital assets
• Efficient use of legacy assets
EPIC estate planning
• Use retirement income assets as an income
source for the surviving spouse
• Maximize capital assets at death with estate
inclusion to receive step-up in basis
• Use legacy assets for income tax-free death
benefit
Death
Taxes
Spending
Creditors
Death
Why is life insurance important?
• Periodic small gift transfers of premium can provide larger
death benefits
• Income tax-free financial support for clients’ families upon
their death
• Cash value – valuable tool if client needs to withdraw a
portion for any reason
• Additional agreements may enhance the life insurance
policy
Agreements may be subject to additional costs and restrictions. Policy loans and withdrawals may
create an adverse tax result in the event of a lapse or policy surrender, and will reduce both the
cash value and death benefit.
EPIC
Taxes
Spending
Creditors
Death
Definition of an EPIC estate plan
• I want to maximize how live today
– By tax-efficient spending
• In order to maximize what I give tomorrow
– By protecting my family if an unexpected event happens
– By passing my estate in the most tax-efficient manner
possible
– By protecting my legacy for my descendants
– By turning tax dollars into charitable dollars
Other side of EPIC Estate Planning
• Another definition of an epic
Ep·ic noun\ˈe-pik\ “a narrative poem in elevated language
celebrating the adventures and achievements of a legendary
or traditional hero.”
• The other side of EPIC estate planning is:
– Estate planning is more than passing material wealth
– It’s your values, hopes, and dreams
– It’s the memories you create
Source: www.merriam-webster.com/dictionary/epic
Next Step
• Please take our EPIC fact finder
• Take some time to reflect and answer the questions
• Set up an initial meeting with your advisor(s) to start the
EPIC process
Make it EPIC!
Any questions?
Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.
Life insurance products contain fees, such as mortality and expense charges, and may contain
restrictions, such as surrender periods. One can lose money in this product.
Guarantees are based on the claims-paying ability of the issuing insurance company.
Securian Financial Group, Inc.
www.securian.com
400 Robert Street North, St. Paul, MN 55101-2098
1-800-820-4205
Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance
Company, a New York authorized insurer. Both companies are headquartered in Saint Paul, MN. Product availability and features may vary by state. Each insurer
is solely responsible for the financial obligations under the policies or contracts it issues. 400 Robert Street North, St. Paul, MN 55101-2098 • 1-800-820-4205
2014 Securian Financial Group, Inc. All rights reserved.
A04764-0914 DOFU 12-2014