Positioning Life Insurance as an Asset Protection Vehicle

Transcription

1 Positioning Life Insurance as an Asset Protection Vehicle CIFP 6 th Annual Conference 2008 James W. Kraft, CA, MTax, CFP, CLU, TEP Marketing VP, Independent Advisors

2 Any written materials that you receive in connection with this presentation should not be redistributed. We have provided client-friendly material about many of our products and concepts on our advisor website at This presentation is for educational purposes only. It should not be construed as legal, tax or accounting advice. This presentation doesn't bind Manulife to provide, or to continue to provide, any of the concepts or products described in the presentation. It also doesn't limit Manulife's ability to change any of the procedures that may be described in the presentation. If this presentation contains competitive information, we've made every effort to ensure its accuracy as of the date of the original oral presentation. We can't, however, guarantee the accuracy and, if you have any questions regarding this information, you should contact the competitor directly.

3 Asset Protection Google search 3,310,000 hits 114,000 Canadian hits

4 Asset Protection From Wikipedia, the free encyclopedia Asset protection (sometimes also referred to as debtor-creditor law) refers to a set of legal techniques and a body of statutory and common law dealing with protecting assets of individuals and business entities from civil money judgments.

5 Asset Protection my definition Ensuring that the client s assets will effectively accomplish his/her goals taking into account common risks that he/she face.

6 Asset Protection A matter of control When you don t take control, someone else will. You are currently in plan A, why not look at plan B

7 Asset Protection Why? 1) protect self 2) protect spouse 3) protect children 4) respect for wealth

8 Asset Protection Risk management techniques are: 1) Avoidance 2) Modification 3) Retention 4) Insurance 5) Sharing/Transferring

9 Estate Liquidity Sequence of Returns Critical Illness Your Creditors Long Term Care Client Changing Assumptions etc. Estate Disputes Health Care Children s Creditors

10 Assets Assets Assets Assets Products Structures Asset s Assets Assets

11 Asset Protection Structures Change ownership to spouse Use of holding companies Change ownership to a trust Offshore strategies

12 Asset Protection - Structures Client Spouse $ Partnership

13 Asset Protection - Structures Client Spouse Trust $

14 Asset Protection - Structures A S B T H H O

15 Asset Protection

16 Asset Protection - Structures Dentist Spouse Practice

17 Asset Protection - Structures Spouse Client Trust $

18 Asset Protection Products RPP, IPP, RRSP Segregated Funds Annuities Insurance Policies

19 Asset Protection Investment Returns sequence of returns drop in overall rate Longevity Risk

20 Sequence of Returns 25% 20% 15% Annual Return (Loss) 10% 5% 0% -5% -10% -15% Early Returns -20%

21 Sequence of Returns 25% 20% 15% Annual Return (Loss) 10% 5% 0% -5% -10% -15% Early Returns Early Losses -20%

22 350,000 Sequence of Returns 300, ,000 Early Returns Early Losses 200, , ,000 50,

23 Sequence of Returns Products Segregated Funds

24 Asset Protection Planning

25 Asset Protection Planning insurance LTC Life CI

26 Asset Protection - Insurance LTC long term care cash in the event of need avoid using own cash LTC

27 Long Term Care 700, , , , , , ,000 0 Self Insure Your Long Term Care Using Insurance to Protect the Risk

28 Asset Protection - Insurance CI critical illness cash in the event of need avoid using own cash CI

29 Critical Illness 700, , , , , , ,000 0 Self Insure Your Critical Illness Using Insurance to Protect the Risk

30 Critical Illness 700, , , , , , ,000 0 Self Insure Your Critical Illness Using Insurance to Protect the Risk

31 Asset Protection - Insurance Life cash in the estate avoid using own cash replace cash Life lost in changing circumstances

32 Asset Protection - Insurance Cash in Estate 1) use cash 2) borrow 3) insure Life

33 Estate Liquidity Alternatives 300, , ,000 Cash Loan Insurance 150, ,000 50,000 0 Cost PV@3%

34 Asset Protection Current Situation Asset Protection Strategies

35 800, , , , , ,000 Change in Assumptions 200, ,000 0 Initial Assumption Stays Constant Reduction in Assumption

36 1,400,000 1,200,000 Change in Assumptions 1,000, , , , ,000 0 Initial Assumption Stays Constant Reduction in Assumption but Insurance in Place

37 Asset Protection Wrap Up Portfolio Diversification Product Diversification Strategy Diversification

38 Positioning Life Insurance as an Asset Protection Vehicle CIFP 6 th Annual Conference 2008 James W. Kraft, CA, MTax, CFP, CLU, TEP Marketing VP, Independent Advisors