Basic Wealthy and Wise® Analysis

The illustrations and graphics for this Case Study were done using Wealthy and Wise (previously named "InsGift"), which has been enhanced to reflect the estate tax changes enacted in June 2001.

This evaluation involves John and Mary Reynolds, a 65 year old retiring business owner and a 60 year old retired business consultant, respectively. The couple has one child, Julie. John and Mary's attorney wants them to take advantage of their year 2001 $20,000 annual gift tax exemption for gifts to Julie. "I understand this makes tax sense," says John, "but it also has to make financial sense for us - long term." Mary adds, "We want to make sure that we can't run out of money ourselves. I don't ever want to ask for any of it back." They want to analyze their retirement cash flow needs combined with a study of their potential estate tax liabilities - including a review of the effect of $20,000 in annual gifts to Julie (via a trust). The attorney also wants them to evaluate a trust-owned survivor life insurance policy funded by gifts to the trust.

The Wealthy and Wise Reports you are about to review are a short demonstration of the capacity of the system to analyze and compare. The Reynolds's Status Quo situation is compared with two plans involving insurance - one with the amount of insurance their annual gift tax exclusion will purchase, and one with enough insurance to fund the couple's entire estate tax liability, using part of their lifetime gift tax exemption for the additional funding.

This demonstration is based on the more comprehensive analysis in our Basic Wealthy and Wise Sample Workbook, which includes two additional very important steps:

1. A "what-if" scenario using the money planned for the insurance to grow an investment fund in the trust instead; and

2. A test of whether it is better in the client's case to withdraw Pension assets as quickly as possible (because of the horrendous taxation such assets suffer upon death), or to withdraw them only as required by the Minimum Distribution Rules. (More often than not, the conventional wisdom of using the Pension money first proves faulty.)

A manual showing the full recommended analysis is available from your InsMark Account Executive, whom you can reach toll-free at 1-888-InsMark (467-6275).

Click here for the Reports.

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