Wealth Transfer Planning Sales Ideas

1. Wealth Transfer Planning Sales Ideas Creating a legacy for generations to come Manulife and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.  2004. The Manufacturers Life Insurance Company of New York . All rights reserved. MNY0405043367. Expires 04/2005 The Manufacturers Life Insurance Company of New York 100 Summit Lake Drive, Valhalla, New York, 10595 www.manulifenewyork.com

2. $9,000,000,000,000 9 trillion dollars will transfer to the next generation over the next 20-30 years. www.aarp.org 2

3. Did You Know… • 1/3 of affluent households over the age of 50 do not have a plan in place • 31% of households with $3 million or more do not have an estate plan www.limra.com, Financial Plans – Real and Imagined Held by the Affluent, 2002.

4. Estate Tax Rollback • After President Bush passed the tax bill • 9% of people said they would change their plan • 47% would review it • 44% would leave it alone www.limra.com, Financial Plans – Real and Imagined – held by the Affluent (2002)

6. Estate Plans serve purposes BEYOND avoiding Taxes 6

7. 3 Wealth Transfer Planning Sales Ideas 7

8. Annuity Max Do you have clients who have a deferred annuity that they do not need for retirement? Did you know that if they leave it in their estate it will be eroded by estate and income taxes? 8

9. Ben Newell • Age 70, non-smoker preferred • Estate of $10 million • Deferred annuity valued at $1 million • 3 kids and 4 grandkids • Does not need his annuity for income

10. Ben’s Goals • Create a legacy for his children • Maintain a cash reserve • Decrease income and estate taxes

11. Solution • Annuity Max • Gift distributions from the annuity to an irrevocable life insurance trust (ILIT)1 • Trustee will purchase a Manulife New York UL-LC2 policy in the trust 1 Trusts should be drafted by an attorney familiar with such matters in order to take into account income and estate tax laws (including the generation-skipping tax). Failure to do so could result in adverse tax treatment of trust proceeds. 2 Manulife New York’s Universal life products are issued by The Manufacturers Life Insurance Company of New York.

12. The Numbers • Ben is going to take annual distributions of $61,954 from the annuity • He will gift $60,000 as annual exclusions to the trust. The rest he will save. • The trustee will purchase a Manulife New York UL-LC policy with an initial death benefit of $2,044,532 The data shown is taken from an illustration and is not intended to project actual performance. Current interest rates and/or dividend rates and values (unless indicated otherwise) are not guaranteed.

13. Estate Taxes Income Taxes Net to Heirs Keep Annuity vs. Withdraw and Purchase Life Insurance

14. Keep Annuity vs. Withdraw and Purchase Life Insurance This is a hypothetical illustration and is not intended to project actual performance. Current interest rates and/or dividend rates and values (unless indicated otherwise) are not guaranteed.

15. Summary • Ben was able to create a legacy for his family • He was able to maintain a cash reserve • He decreased his taxable estate

16. Smart Trust Are your clients concerned about giving up access to policy cash values and trust assets? A Smart Trust is the trust for them. 16

17. Charles and Molly Appleton • Charles and Molly are both 55, non-smoker preferred • 3 children • $5 million estate • Want to maximize the amount passed to children, but are reluctant to lock up funds.

18. Solution • Create a Smart Trust and fund it with Manulife New York Survivorship UL • A Smart Trust is an ILIT which has one of the spouses as a beneficiary Manulife New York’s Survivorship Universal life products are issued by The Manufacturers Life Insurance Company of New York.

19. The Numbers • Charles and Molly will make annual exclusion gifts of $100,000 a year to the trust • The trust will purchase a Manulife New York Survivorship UL policy with a guaranteed* level death benefit of $12,858,399 *These guaranteed product features are dependent upon the claims-paying ability of The Manufacturers Life Insurance Company of New York.

20. * Life Expectancy The data shown is taken from an illustration and is not intended to project actual performance. Current interest rates and/or dividend rates and values (unless indicated otherwise) are not guaranteed. Current v. Proposed in Year 34*

21. Current v Smart Trust The data shown is taken from an illustration and is not intended to project actual performance. Current interest rates and/or dividend rates and values (unless indicated otherwise) are not guaranteed.

22. Summary • Smart Trust allows: • One spouse has access to the policy cash value while the insureds are alive • Increase in the amount passed to heirs • Reduction in the size of the taxable estate

23. Municipal Bond Maximization Did you know a muni bond may be subject to taxes at death? Do you have a client who does not need municipal bonds for income purposes? Are your clients concerned about outliving their money? 23

24. Matt and Shelby Pons • Matt and Shelby are both age 67 non-smoker preferred • Estate of $10 million • One child and three grandchildren • Have a $2 million muni bond they do not need for income purposes • Want an emergency cash reserve

25. Solution • Muni Bond Maximization • Annuitize the muni bonds, gift part of the proceeds to a Smart Trust, and keep the rest as income

26. The Numbers • Matt and Shelby will convert their municipal bond to a Single Premium Immediate Annuity (SPIA)* • Annual Income of $145,831 (after tax) • They will gift $100,000 to the trust and keep the remainder as disposable income ($45,831) • The trustee will purchase a Manulife New York Survivorship UL with an initial death benefit of $7,367,188 *A SPIA may have more risk associates with it than a muni bond. Please consult with an advisor for a detailed discussion on the risk and the cost of this conversion. Please Note: Manulife New York does not issue SPIAs.

27. Here is what it looks like Muni Bond $2 million Joint and Survivor SPIA $145, 831 Smart Trust $7,403,334 Disposable Income $45,831 The data shown is taken from an illustration and is not intended to project actual performance. Current interest rates and/or dividend rates and values (unless indicated otherwise) are not guaranteed.

28. Summary • Matt and Shelby were able to: • Maintain an emergency cash reserve • Provide a legacy for their daughter and her children • Keep their disposable income

29. Remember -There is MORE to estate planning than tax avoidance – Help your clients put together a wealth transfer plan today! 29

30. For More Information on Wealth Transfer Planning Sales Ideas, please call your local Manulife New York Representative, or the Advanced Markets Group at (800) 743-5542, option 5 30

31. No legal, tax or accounting advice can be given by Manulife Financial, its agents, employees or registered representatives. Prospective purchasers should consult with their professional tax/legal advisor for details. 31