Your Legacy. An Estate-Planning Guide

Transcription

1 Your Legacy An Estate-Planning Guide INVESTMENT AND INSURANCE PRODUCTS: NOT FDIC INSURED NOT A BANK DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NO BANK GUARANTEE MAY LOSE VALUE

2 To some people, estate planning means hiring an attorney, writing a will, drawing up trusts and finding ways to minimize estate taxes. But that probably shouldn t be your initial starting point. So where should you begin? Just as you might have financial and career goals, you also need goals for your estate. This is your chance to create a legacy and influence how you are remembered. 2

3 An Estate-Planning Guide Before calling a qualified estate attorney, consider some key questions. The answers could help you meet your estate-planning goals. If you could hand out all of your assets to your heirs before you died, who would receive what and how would you explain your choices? Would you divide your wealth equally or would some heirs get more than others? Would some family members receive their inheritance right away, while others might receive it over time, because you re concerned they couldn t handle the money responsibly? How can you ensure a comfortable lifestyle for a surviving spouse and still provide for other heirs? If you have been married more than once, how will you provide for the children and stepchildren from your various marriages? Do any family members have special needs? Do you want to help any particular charities or friends? Who should make financial and health care decisions on your behalf, should you become incapacitated, and what guidance would you like to provide them? After your death, who should control your estate s assets until final distributions are made? What can you do now to make things easier for your family and other heirs? YOUR LEGACY An Estate-Planning Guide 3

4 Your Estate-Planning Journey You might have already begun answering these questions, perhaps without knowing it. Estate planning is a journey that can start early in life often before we re even aware of it. NAMING BENEFICIARIES > PROVIDING FOR CHILDREN > REVISING A PLAN OVER TIME > LEAVING A LEGACY When we open our first Individual Retirement Account or sign up for the company s 401(k) plan, we might name beneficiaries. When we buy our home, we might decide to title the property so it would pass directly to our spouse or partner, assuming we die first. These can turn out to be crucial estate-planning decisions, because our home and our retirement accounts are often our most valuable assets. All of us, of course, should have a will, but many folks procrastinate. Maybe our good intentions finally turn to action when we settle down with a partner, get married or have kids. We want to make sure our family is taken care of and we need a guardian for any children. 4

5 Later, as we grow older, move to another state, get divorced or accumulate significant wealth, perhaps we realize we need to revise our will. At that point, the attorney might suggest other estate-planning steps. These might include setting up a variety of trusts, starting a regular gifting program to family members, revising the beneficiary designations on our retirement accounts and rethinking our life insurance. The attorney might also prod us to start considering those difficult end-of-life decisions, and our choices get reflected in a durable power of attorney, a health care power of attorney and a living will. At that juncture, perhaps we finally decide to write a letter of last instructions and have that frank conversation with our family, where we spell out our wishes, talk about how we have divided our estate and tell our loved ones where to find important documents. Because many of us piece together our estate plan over our lifetime, it s easy to overlook crucial issues and it s important every few years to review the steps we have taken. Does your estate plan need updating? Below, you will read about some of the key considerations you should think about. But we also encourage you to talk to your Citi Personal Wealth Management Financial Advisor about your estate plan and any concerns you may have. YOUR LEGACY An Estate-Planning Guide 5

6 > ESTATE TAXES Thanks to the tax law passed by Congress in December 2010, some of the uncertainty surrounding estate planning has been removed, at least temporarily. After a one-year hiatus, the federal-estate tax returns in The tax law establishes an estate-tax exemption of $5 million per person ($10 million for married couples) and a maximum tax rate on estates of 35%. These new rules, however, are good for just 2011 and That means Congress will have to revisit the issue soon and you may want to revisit your estate plan, working with your estate-planning attorney to make sure your will and trust documents continue to make sense even as the tax law changes. The new tax law also presents a choice for executors of those who died in You could apply the 2011 law, with its $5 million exemption and 35% top tax rate. Alternatively, you could use the tax law that was in place in 2010, when there was no federal-estate tax but also a limit on the step-up in cost basis. Because of this limit, heirs could be subject to federal capital-gains taxes. Would the 2010 or the 2011 law leave you with a smaller tax bill? You ll want to discuss the issue with your attorney and possibly an accountant. 6

7 Writing Wills Who inherits your assets depends on a host of legal arrangements, including the beneficiaries named on your retirement accounts, your life insurance and any trusts you ve set up, and also how your home and your taxable accounts are titled. Still, the will that your lawyer draws up will likely be a cornerstone of your estate plan. Who Gets What As you think about who should inherit your assets, your first instinct may be to leave all or most of your assets to your spouse or partner, with some money going directly to your children. Indeed, without much thought, you may have already arranged things this way. For instance, if your and your spouse s home, bank accounts and investments are all held jointly with right of survivorship, all of these assets will go to him or her if you die first. Because many of your assets may already be titled so they go directly to your spouse, you might take a slightly different tack with your will. While your spouse or partner should likely be your will s main beneficiary, this is also a great time to consider other people and organizations that might benefit from your generosity. For example, maybe you want to include any other relatives aunts, uncles, nieces, nephews in your estate planning. How about close friends, especially if they helped care for you or your spouse in your later years? Do you want to leave them money, an item of sentimental importance or something more valuable, like a piece of YOUR LEGACY An Estate-Planning Guide 7

8 jewelry? You may want to have a conversation the first of several in this process to find out if any family members or close friends have special needs or wishes you should consider. Of course, there are thousands of charities, as well as many colleges, foundations and nonprofit organizations, that would be delighted to be remembered by you. You can leave them a cash donation in your will or, alternatively, you might put money in a trust that can benefit the organization now or after your death, or possibly both. Matters of Control This is also a good time to think about who might control your assets in the future. If you re married, you may want your spouse to inherit all of your assets. But what if he or she doesn t have the experience or know-how to manage the family s finances? Who could step in to help? You will want to think carefully about who should be your estate s executor and whether you also need to make arrangements to help your spouse over the longer term. Beyond that, if your children or grandchildren are minors, do you think they will be able to handle large amounts of money when they turn 18 or 21? If not, do you want them to receive their inheritance over several years? The steps you take to answer these and other questions can help ensure that your estate will be distributed and used as you intended. 8

9 Where There s a Will Now that you ve made some of these decisions, it is time to get your will written. Every adult should have a will. If you die intestate, meaning you don t have a will, the state not your family decides how your money and other property will be distributed. Probate courts try to be fair and take any special needs into account, but they still have to follow state law, which means your friends, relatives who are not part of your immediate family and your favorite charities probably won t get anything. For a fee of at least a few percentage points of your estate, the court may appoint an administrator to supervise distribution of your assets. If you don t have any living relatives, all of your money could go into the state s coffers. A will specifies who gets what and names guardians for any minor children. If your will directs that certain trusts should be created, it may also name the trustees, which could be a person or a firm. Your will governs those assets that pass through the probate courts. These courts oversee the settling of your estate, which means making sure your will is valid, that your debts are paid and that your final wishes are carried out. But many assets don t go through probate. So, if you and your spouse own your home jointly with right of survivorship, it will pass directly to him or her when you die. In the same way, your 401(k) and IRA will go to beneficiaries named on those accounts, and your life insurance proceeds will usually pass to the beneficiaries named on the policy. YOUR LEGACY An Estate-Planning Guide 9

10 Revising Your Will Just because you had the foresight to write a will, sign it and have it notarized doesn t mean you never have to think about it again. You should consider revising or rewriting your will whenever big changes occur in your life: Marriage. You and your spouse should get new, individual wills after you marry. In most states, your spouse is entitled to a percentage of your property when you die, unless there is a written agreement to the contrary. The rules are different in community property states. If you live in one of those states, that should be taken into consideration as well. Also, each of you may have particular items or bequests you want to make. These should be mentioned in your wills. Living with a partner. If you don t have a will or take other steps, your partner won t inherit anything. Therefore, you and your partner should each have wills specifying how your assets should be distributed. Some states have special provisions for registered domestic partners or partners in a civil union. Children. The will you created when you got married or registered as domestic partners should have provided for any future children. Still, when the baby arrives, you need to name a personal guardian to raise your child in case neither of you is around. As your children grow older and become adults, one or more of them may have particular needs that should be addressed in a revised will. Divorce. Unless you want your ex-spouse to inherit part of your estate, or remain as a beneficiary of your life insurance and retirement plans, you should draw up a new will and change your beneficiary designations after your divorce. On the other hand, if your ex-spouse is continuing to care for your children, your new will should probably take that into account. 10

11 Stepchildren. If you remarry, find yourself caring for stepchildren and want them to inherit part of your property, you will need to adjust your will. Moving to another state. Since state inheritance laws can vary widely, you should ask about revising your will when you move. If you move to or from a community property state, you ll find that the laws of ownership relating to spouses in those states differ from most other states. Increased wealth. Depending on how much your wealth has grown, this happy circumstance may make estate taxes a greater issue. While wealthier Americans got a break from the estate tax in 2010, it returned in 2011, so your will and estate plan should reflect this. Small businesses. If you start, buy or become a partner in a small business, you may need to change your will and estate plan. For example, you might take steps to smooth the transfer of ownership to family members or other owners, minimize taxes or possibly create a buy-sell agreement that sets a price for the business and your share of it. You might also want to make sure there is adequate life insurance to buy out a deceased partner s share. You change your mind. If you decide to leave more or less of your estate to someone, be sure to create a new will. Some of these changes can be made with amendments, or codicils, which revoke or add provisions to your will. But since codicils can be confusing or create conflicts, it s probably best to write a new will. Once you have your new will, be sure to destroy all copies of the old one and tell your family about the change. YOUR LEGACY An Estate-Planning Guide 11

12 > EXECUTORS In your will, you will likely want to appoint an executor, or personal representative, to dispose of your property. Almost anyone as long as he or she is an adult can be an executor. It could be a spouse, neighbor, friend, attorney or accountant. Many banks and trust companies also serve as executors. The executor s job is to collect your assets, pay your debts and distribute the remainder to your heirs. The executor may also be asked to help make funeral arrangements, locate the will, obtain several copies of the death certificate and discuss immediate financial needs with family members. Other tasks can include collecting final payments from pensions, profit-sharing plans, Social Security and veterans benefits, and having those payments stopped, if necessary. Later, the executor will file final federal and state tax returns. Make sure that whomever you name as executor knows about it and agrees to take on the job. That person must be named in your will. 12

13 Titling Property It s clearly important to have a will that specifies who gets what. But as you no doubt have gathered, your will may not determine what happens to many and maybe most of your assets. That brings us to the crucial concept of titling and how it affects your estate plan. Joint Tenancy with Right of Survivorship. One of the easiest ways to bypass the probate courts and transfer assets quickly is to have joint tenancy with right of survivorship. Then, when one of the owners, or tenants, of the assets dies, the surviving owner often the spouse inherits the entire property. For married couples, this is a common form of ownership. Tenancy by the Entirety. A similar form of ownership is tenancy by the entirety. This is a form of ownership that can only be created by married persons. Both spouses hold title to the whole property with the right of survivorship. When one spouse dies, the surviving spouse takes title to the property. When the second spouse dies, the property is distributed to the heirs according to the terms of the will. Tenants in Common. Jointly owned assets may also be held as tenants in common. With this form of ownership, each owner (there can be more than two) holds a share of the property, which may or may not be equal. When one owner dies, his or her share passes immediately to that person s heirs, according to the laws in each state. Bank accounts, securities accounts and certificates of deposit can be set up as joint accounts, which may provide liquidity after your death. For example, you could open a joint checking account, with right of YOUR LEGACY An Estate-Planning Guide 13

14 survivorship, with one of your adult children. After your death, the adult child would be able to use the account to pay outstanding bills. Before opening one of these accounts, make sure you trust the person who will be taking it over and discuss your decision with other family members. Whoever does this job should provide a periodic accounting to other heirs. You can also name a specific beneficiary for some assets, so they pass directly to that person upon your death. This frequently happens with life insurance and retirement accounts. Similarly, you can do this with money in taxable accounts, using a special titling known as transfer on death or payable on death. In addition, you can ensure money flows through to your chosen beneficiaries by putting the money in a trust. > INHERITED IRAS An Individual Retirement Account is an important vehicle for retirement planning. But it can be an equally valuable part of your legacy, as long as everyone plays by the often-complex rules for inherited IRAs. For a surviving spouse, it s pretty simple: Taxes on the IRA can be deferred to a later date by transferring the account to his or her name. If the spouse has not reached age 70½, the money can stay in the spouse s account until he or she must take required minimum distributions. If the spouse needs to, penalty-free distributions can start at age 59½. Nonspouse beneficiaries, such as children and grandchildren, don t have this option. They have to start taking distributions by December 31 of the year after inheriting. But they can choose to receive the money very slowly, using a distribution schedule based on their life expectancy. 14 continued

15 This is known as the stretch IRA and it can extend the period of potential tax-deferred growth, possibly over several generations. A grandchild, for example, could inherit an IRA, take very small distributions and, if he or she doesn t need the money, leave it to his or her heirs, who could do the same, and so on. For an inherited Roth IRA, this strategy can be even more appealing because you re extending the period of potential tax-free growth. Some specific rules have to be followed to make this work. While you can take money out of your own IRA and put it back into another one within 60 days, that doesn t work with an inherited IRA. In this case, the money has to be moved from one custodian to another in a trustee-to-trustee transfer. Also, unless you inherited from a spouse, you have to retitle the IRA and indicate that it is inherited. For example, the title might say: John Doe, deceased, inherited IRA for the benefit of Mary Doe, beneficiary. More likely, your spouse will be the primary beneficiary, followed by a succession of one or more contingent beneficiaries. Be sure to tell all your beneficiaries that you have named them, as well as the rules and regulations for inherited IRAs, because they will have to meet strict deadlines in order to take distributions over their life expectancy. Otherwise, they may have to take the money in a lump sum, which would mean a bigger tax bite and less potential growth. While you can also name one or more beneficiaries for a Roth IRA, the rules are a little different. Unlike the traditional IRA, there are no required distributions for the original owner of a Roth IRA and, because earnings in a Roth IRA are not subject to income taxes, much of the tax burden on your heirs is eliminated. But nonspouse heirs do have to take regular distributions. Still, as with the traditional IRA, your heirs can stretch the distributions over many years. YOUR LEGACY An Estate-Planning Guide 15

16 Creating Trusts A trust may seem like something that only the rich need, but used properly, it might be the best way to ensure that your wishes are carried out. Think of it as a blueprint for how you want the assets in your estate to be managed, as well as how and by whom you want the distribution of those assets to be controlled. A trust can also reduce the bite from estate taxes and help your heirs avoid probate. In some states, going through probate court can take considerable time and can mean considerable legal and other costs. Also, for the rich and famous, probate can mean unwanted publicity. Living Trusts Perhaps the simplest trust is a revocable living trust. It is considered revocable because, as long as you are alive, you control the assets and you can modify or revoke the trust at any time. Most folks choose to be their own trustee, although you can name another individual or an institution to serve in this capacity, which may be required if you become incapacitated. Assets placed in a living trust are still potentially subject to estate taxes. But they avoid legal review by the probate court and, instead, go directly to the named beneficiaries. Keep in mind that you don t avoid probate simply by creating a trust. Instead, assets must be transferred into the trust before you die. This is called funding the trust. Any assets you want in the trust should 16

17 be transferred as soon as the trust is created. You can add more to the trust later. This can be an especially smart move if you own a second home in a different state. By placing your second home in a living trust, you may avoid having your estate go through probate in two states. Even if you have a living trust, you still need a will to cover any assets outside the trust at the time of your death. Life Insurance Trusts While a living trust is revocable, you may also want to create an irrevocable trust, one that cannot be revoked or altered by the creator. These trusts are commonly used to remove the value of property from a person s estate. One example: If you have an insurance policy on your life when you die, the proceeds usually aren t subject to income taxes. The payout, however, could be hit with federal-estate taxes if you are listed as the policy s owner. To avoid this problem, you might arrange for the policy to be owned by an irrevocable living trust. If you transfer an existing policy into an irrevocable life insurance trust, the assets will be considered part of your estate if you die within three years of the transfer. Bypass Trusts If your spouse is a U.S. citizen, you can bequeath an unlimited sum to him or her, with no federal-estate taxes owed. This is known as the marital deduction. YOUR LEGACY An Estate-Planning Guide 17

18 If you have substantial assets, however, leaving everything to your spouse may be a mistake, because there could be an unnecessarily large estate-tax bill when your spouse dies. The reason: By leaving everything to your spouse, you might fail to take advantage of your federal-estatetax exemption. This is the amount you can bequeath to your other heirs without paying federal-estate taxes. The federal exemption will be $5 million in 2011 and Even if you fail to make use of your exemption, the loss can be partly undone, because your surviving spouse can make use of your unused exemption when he or she dies. Problem is, even if your spouse does so, any growth of the assets will occur within your surviving spouse s estate potentially creating a large estate-tax bill when he or she dies. You also lose control over who ultimately inherits the assets involved. What to do? You could arrange for $5 million to flow into a bypass trust upon your death, thus making use of your federal-estate-tax exemption. This trust is also known as a B or family trust. This money might be earmarked for your children, but with your spouse still able to draw income from the assets and possibly able to spend part of the principal each year. Assuming the federal-estate-tax exemption stays at $5 million, another $5 million would pass free of federal-estate taxes when your spouse dies, for a total of $10 million. While bypass trusts are especially popular with married couples, they can also be used by unmarried couples. Keep in mind that some states have decoupled their laws from the federal system. So, if you re considering a bypass trust, it may have to be adjusted, depending on where you live. 18

19 QTIP Trusts Like a bypass trust, a Qualified Terminable Interest Property (QTIP) trust can provide income to your surviving spouse, but it can also let you name the final beneficiaries of the money. A QTIP trust is often used in conjunction with a bypass trust, with the QTIP trust being the A in an A/B Trust. While the bypass trust makes use of the federal-estate-tax exemption, the QTIP trust takes advantage of the unlimited marital deduction. That means that any federal-estate taxes owed on the money in the QTIP trust can be deferred until after the second spouse dies. True, you could also defer estate taxes by simply leaving money outright to your spouse. That would also take advantage of the unlimited marital deduction. But with the QTIP, you can specify the trust s ultimate beneficiaries. This can be important if, say, you are remarried and you want to make sure money eventually passes to the children from your previous marriage. Testamentary Trusts A testamentary trust is created in your will and becomes effective upon your death. Bypass trusts are a common type of testamentary trust. But testamentary trusts aren t necessarily focused on cutting taxes. Instead, they may be primarily designed to ensure that your wishes are carried out. Suppose you have young children. If your kids are under, say, age 25 at the time of your death, your will might specify that their inheritance should flow into a trust, with the money paid out slowly over time, rather than as a lump sum. YOUR LEGACY An Estate-Planning Guide 19

20 While trusts are often viewed as a vehicle for cutting estate taxes, they can sometimes end up triggering hefty income-tax bills. If a trust retains income rather than disbursing it, a special tax schedule may apply. In 2010, the top 35% federal income-tax rate would kick in once a trust retained taxable income in excess of $11,200. Spendthrift Trusts Are you concerned that some of your adult heirs may not be mature enough to handle the money wisely, because of their lifestyle, an addiction or heavy debt? A spendthrift trust can specify how much these heirs can receive each year. The trust can also leave it to the trustee to decide if and when the heirs receive any money. Or, it can instruct the trustee to release the remainder of the money once these beneficiaries have shown sufficient financial responsibility. The spendthrift trust also offers protection against creditors if an heir has, say, gone deep into debt. Even if the trust states that the heir will be the ultimate beneficiary of the assets, as long as those assets are part of the trust, they cannot be seized by creditors. Special-Needs Trusts Families with children or grandchildren with mental or physical disabilities can set up a special-needs trust, sometimes called a supplemental-needs trust. This trust can hold an unlimited amount of assets for that person assets that aren t counted when it comes to qualifying for governmental benefits such as Social Security, Medicaid, vocational rehabilitation, subsidized housing or other benefits based 20

21 upon need. The trust provides for supplemental and extra care over and above what the government provides. Like the spendthrift trust, money in a special-needs trust is not vulnerable to creditors. Keep in mind that a special-needs trust is irrevocable, although a carefully drafted trust document can include provisions for dissolution or termination of the trust under certain circumstances. Charitable Trusts Many colleges, universities, churches, arts organizations and other charities will be happy to help you set up a charitable trust. A common version is the charitable remainder trust, where you leave property or money to a charity but continue to receive income from it while you are living. You, as the grantor, avoid capital gains tax on the donated assets. Also, the assets involved are removed from your estate, which can mean lower estate taxes for your heirs. The contribution is irrevocable, but you may have some control over how the assets are invested. > GIFT-TAX EXCLUSION One of the easiest ways to reduce the value of your estate and potential estate taxes is to give away some of your wealth, assuming you can afford to do so. Thanks to the gift-tax exclusion, you can give as much as $13,000 a year ($26,000 for married couples) to as many individuals as you like each year, without worrying about the gift tax. Meanwhile, the person receiving the gift does not have to report it as income, as long as it is a true gift and not any kind of payment. Just make sure you won t need the money in the future: The gift is irrevocable. YOUR LEGACY An Estate-Planning Guide 21

22 > SECOND-TO-DIE INSURANCE If you and your spouse are worried about paying estate taxes or you want to make sure there s some money left for your heirs, consider second-to-die life insurance, also known as survivorship life. These policies don t pay out until the second of two people die. For instance, suppose you die and leave a sizable sum to your spouse. Thanks to the unlimited marital deduction, there shouldn t be any estate taxes owed. But when your spouse dies and leaves everything to the kids, the estate-tax bill could be substantial. Your heirs could pay that tax bill with the proceeds from your second-to-die policy. 22

23 Other Documents Powers of Attorney We all hope we can manage our financial affairs and make our own medical decisions for as long as we live. Unfortunately, that may not be the case. This is why many people have a durable power of attorney. This document gives a trusted person a good friend, family member or an attorney the power to manage your financial affairs, even if you become incompetent or incapacitated. Because the person holding this power has complete control over your assets, it must be someone you trust completely. Some people will designate a second person, or a firm, to take over in case the first person dies or is unable to do the job. You may also want an advance health care directive, also known as a living will. This document lets you state what type of medical treatment you want, or don t want, if you are too injured or ill to direct your care. Another key document is the durable power of attorney for health care. Like the durable power of attorney that deals with financial matters, this one gives one or more trusted people the authority to make health care decisions for you in case you can t make them yourself. This is the person, sometimes called the health care proxy, who can make sure instructions in your living will are followed. Be sure to talk to your doctor and the person you have named as your health care proxy, so there s no doubt about your wishes. The requirements and limitations for living wills, as well as for durable powers of attorney, vary by state. That means you ll need an attorney who is familiar with your state s laws to help prepare these documents. YOUR LEGACY An Estate-Planning Guide 23

24 Letter of Last Instructions Even if you have prepared all the documents in this guide a will, trusts, living will, health care proxy and durable power of attorney you have at least one more task: Write a letter of last instructions. This is not a will, though it can be mentioned in the will, and doesn t carry the same legal authority. Rather, it s a detailed instruction of everything your survivors need to know to handle your personal finances, either if you become incapacitated or die. Make sure several people have a copy, including children, adult grandchildren, close friends, your attorney and your accountant, if you have one. This letter should tell people where certain documents are kept, some of which may be in a safe-deposit box, a filing cabinet or a desk drawer. If you have a safe-deposit box, make sure that someone else has a key to that box and has signed the signature card at the bank. The letter of last instructions should also give the location of personal effects, especially the ones you want someone to have, such as heirlooms, old letters, family jewelry or a piece of furniture that you want kept in the family. The letter should include names, addresses, phone numbers and perhaps addresses of people you want notified of your death. It should also have the name of a funeral home, the location of your Social Security card and records, military service records, insurance policies, tax returns, and names and addresses of your Financial Advisor, attorney, insurance agent and accountant. In addition, the letter might spell out special instructions, such as whether you prefer burial or cremation, and reasons for some provisions of your will, such as why you disinherited someone. 24

25 The Conversation A letter of last instructions can be helpful, but a conversation with family members can be even more important. As mentioned earlier, if you have this conversation before you begin to write your will, you may learn that someone in your family has a financial need you didn t know about. That need could be specifically addressed in the will or provided for in a trust. If you are married, you should, of course, discuss your estate-planning goals with your spouse. Once your will and any trusts have been drawn up, try to have another conversation with your family, so they can hear directly from you why certain decisions were made. This conversation may go a long way toward avoiding future conflict. You can also tell everyone where to find your letter of last instructions, will, trust documents and other important papers. For additional information on estate planning, contact your Citi Personal Wealth Management Financial Advisor. YOUR LEGACY An Estate-Planning Guide 25

26 NOTES

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28 IMPORTANT DISCLOSURES: The information provided here is for informational purposes only. It is not an offer to buy or sell any of the securities, insurance products, investments, or other products named. Citigroup Inc. and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the taxpayer s particular circumstances from an independent tax advisor. A change to your current policy may incur charges, fees and costs. A new policy will require a medical exam. Since life insurance is medially underwritten you should not cancel your current policy until your new policy is in force. Your actual premiums may vary from any initial quotation you receive. A change to your current policy may incur charges, fees and costs. A new policy will require a medical exam. Surrender charges may be imposed and the period of time for which the surrender charges apply may increase with a new policy. You should consult with your own tax advisors regarding your potential tax liability on surrenders. Past performance is not a guarantee of future results. There is no guarantee that these strategies will succeed. The strategies do not necessarily represent the experience of other clients, nor do they indicate future performance. Investment results may vary. Individual clients should review with their Financial Advisors the terms and conditions and risks involved with specific products or services Citigroup Inc. Citi Personal Wealth Management is a business of Citigroup Inc., which offers investment products through Citigroup Global Markets Inc. ( CGMI ), member SIPC. Insurance products offered through Citigroup Life Agency LLC ( CLA ). In California, CLA does business as Citigroup Life Insurance Agency, LLC (license number 0G56746). Citibank, N.A., CGMI and CLA are affiliated companies under the common control of Citigroup Inc. Citi and Citi with Arc Design are registered service marks of Citigroup Inc. or its affiliates, and are used and registered throughout the world BC210 2/11