A Kaleidoscope of IdeasFrom the 2005 Arizona

Institute A tradition since 1946

Estate PlanningRetrospective Relevancy Prospective Problems &

Solutions by Lynne F. Stubbins, Esq., CLU, ChFC

• Significant Case where the taxpayer won wasthe Kimball case in the 5th circuit which is a positive development for FLP’s

• Tax Brackets get compressed beginning in 2006. “Like a Flat Tax”

• Repeal of Step-Up in Basis Rule post 2010• Gifts limited during lifetime to 1,000,000

Estate PlanningRetrospective, Relevancy Prospective Problems &

Solutions by Lynne F. Stubbins, Esq., CLU, ChFC

cont. • Projected loss of Federal Revenue over next 20

years will be 982 billion• Current Argument for Repeal of Transfer tax• Current Legislative Arguments for Transfer tax• State Revenue concerns driving Decoupling• Drafting concerns as State’s exemption will be

different from Federal• How long before the US Government raises the

Capital gains tax rate on property transferred at death?

Charitable Planning TransfersBy: Jerry McCoy, JD

• A Public Charity that makes grants-donor advised funds (I.E. Fidelity has one)

• The Transfer tax may be going away but the gift tax and annual exclusion will still be with us

• The unsuccessful CRT and how to get out early

Pensions: Some Cool Planning Ideas in Qualified & Non-Qualified retirement

plansBy: Robert W. Ridley, Esq.

• 412 I and the current Abuses• Haircuts are out in Deferred Compensation

plans. (Thank You Enron)• Major changes in distribution rules• The D.O.L. and the IRS are different when it

comes to enforcement• D.O.L. and the wind down of a plan when you

have orphans• The D.O.L. has certain rules on a search method-

you must comply

The New World of Executive CompensationBy: Stuart M. Lewis JD

• Lower overall Audit rate • Going after the Fortune 1000• Attacking grandfathered Split Dollar

plans “It’s coming”

• Establishing Value for a Life Insurance Contract (PERC)

• COLI Legislation coming in the next Congress

The New World of Executive CompensationCont.

• FA 123 ( R ) Effective 7/15/05 Fair Value mandatory

• Expensing of Options• 409-A overview-major penalties for

non-compliance• Additional guidance coming out of

notice 2005-1 by 7/05, Stuart thinks by year end

• Do a plan now or Wait?

How to Benchmark your PracticeBy: Mark C. Tibergien

• More advisors over $1,000,000• Productivity gains are rising• Salaries and rents are rising• Income increases are modest• Lost efficiency for Solos• What advisors wish they could change• Practice Evolution is coming• 33% of time on administration and 39% on

prospecting• Characteristics of the Best Practices• There is a physical limit to how many relationships

you can manage successfully• Business Consulting@ mossadams.com

Moving Long Term Care to a Mainstream Planning ProductBy: Debra C. Newman, CLU, ChFC, LTCP

• Why LTC planning is Critical to Retirement & Estate Planning

• People don’t die-life expectancy (Stroke-Heart Attack-Cancer) in the “good old days”

• By 2035 there will be 57 million Americans Age 70 or more

• Living a Long Life is near certainty so planning for it is a necessity

• Family Care-25% of US households contain a Family caregiver

Moving Long Term Care to a Mainstream Planning Product By: Debra C. Newman, CLU, ChFC, LTCP (cont.)

• Nursing Home in 20 Years will cost $160,000

• Home Health Aide in 20 years will cost $172,000

• There are so many provisions that have been built into LTC no wonder companies didn’t know how to price it with accuracy

• If you miss on lapse assumption or return on your reserves it can cause a 24% increase in premium needed

Moving Long Term Care to a Mainstream Planning Product By: Debra C. Newman, CLU, ChFC, LTCP (cont.)

• The result on incorrect Assumptions have led to increased pricing and less carriers

• Consider a 10 pay life to lock in the premium

• The tax component is positive in marketing this product

• Benefits to employers and particularly C-Corps

Moving Long Term Care to a Mainstream Planning Product By: Debra C. Newman, CLU, ChFC, LTCP (cont.)

• Doctor group of Anesthesiologists which is structured as a C-Corp. $7,000 is the approximate annual premium per doctor (It’s a 10 pay) and there are 71 doctors

• A 5 year care event and it’s impact on the Estate values and when you calculate opportunity cost it’s substantial

Selling Fiduciary Products & ServicesBy: Marianne K. Smythe, JD

• Selling advice for a fee without a product bias• Selling advice and product is naturally at odds• The Laws governing an investment advisor is a

paper clip while the law affecting a Broker’s conduct is in the volumes

• The SEC has added a Fiduciary label to the advisor (you cannot have a conflict of interest).

• The law of advice and sales have finally been joined in the last 2 years.

• Disclosure of any conflicts must be given to your clients

Conclusion

• The Arizona Institute is the Society’s Top drawer event bringing together some of the best producers and minds in the business.

PRESENTED BY:

Michael A. Wood, CLU, ChFC