Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing
For: Arthur Baxter & Allison Baxter
Presented By: Daniel P. Wachs CFP,ChFC,CLU 1431 Opus Place Suite 630 Downers Grove, IL 60515 Phone: 630-445-1399 Email: dwachs@perpetualwm.com
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Testing Financial Tolerance for Premium Financing
Preface The accompanying report contains an analysis of your current financial plan compared to the addition of a life insurance policy funded by premium financing. The material examines the following two situations: Strategy 1 reflects your current financial plan. Strategy 2 illustrates the results of acquiring a life insurance policy owned by a trust formed on behalf of your family that is funded using premium financing secured from an independent lender. The accompanying report is presented in three parts, as follows: 1. Comparison of the results from each Strategy; 2. Details of Strategy 1; 3. Details of Strategy 2. Although all the material should be reviewed, you may find the most valuable information is in the Comparison section. The most important individual reports are the Cash Flow Analysis, Hypothetical Net Worth Illustration, and Wealth Transfer Summary. The balance of the material provides backup for the overall analysis. The material presented should provide a sound basis for evaluating your current situation as well as the effect that this planning strategy has on preservation of your family's wealth.
Date: 05/18/2017
Page 1 of 9
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Comparison of Alternatives
$180,000,000
Net Worth (After Providing Spendable Cash Flow)
$135,000,000 $126,330,371 $90,000,000 $83,934,684
Strategy 1
$45,000,000 Strategy 2
$0 50/45
60/55
70/65 80/75 Ages (Client/Spouse)
90/85
100/95
$30,000,000
Cumulative Spendable Cash Flow Provided by Ages 99/94
$22,500,000
$24,184,834 Strategy 1
$24,184,834 Strategy 2
Current Plan
Add Trust-Owned Premium Financing
$15,000,000
$7,500,000
$0
Date: 05/18/2017
Page 2 of 9
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Comparison of Alternatives
$240,000,000
Family Net Worth* (After Providing Spendable Cash Flow)
$180,000,000 $172,571,120 $126,330,371
$120,000,000 Strategy 2 $60,000,000 Strategy 1
$0 50/45
60/55
70/65 80/75 Ages (Client/Spouse)
90/85
100/95
$30,000,000
Cumulative Spendable Cash Flow Provided by Ages 99/94
$22,500,000
$24,184,834 Strategy 1
$24,184,834 Strategy 2
Current Plan
Add Trust-Owned Premium Financing
$15,000,000
$7,500,000
$0
*Family Net Worth includes assets outside the estate.
Date: 05/18/2017
Page 3 of 9
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Comparison of Alternatives
$40,000,000
Transfer Taxes
$30,000,000
$32,728,832
$20,000,000 $16,442,558 Strategy 2
$10,000,000
Strategy 1
$0 50/45
60/55
70/65 80/75 Ages (Client/Spouse)
90/85
100/95
$30,000,000
Cumulative Spendable Cash Flow Provided by Ages 99/94
$22,500,000
$24,184,834 Strategy 1
$24,184,834 Strategy 2
Current Plan
Add Trust-Owned Premium Financing
$15,000,000
$7,500,000
$0
Date: 05/18/2017
Page 4 of 9
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Comparison of Alternatives
$200,000,000
Wealth to Heirs
$150,000,000 $156,128,562
$100,000,000 $93,601,539 Strategy 2 $50,000,000 Strategy 1
$0 50/45
60/55
70/65 80/75 Ages (Client/Spouse)
90/85
100/95
$30,000,000
Cumulative Spendable Cash Flow Provided by Ages 99/94
$22,500,000
$24,184,834 Strategy 1
$24,184,834 Strategy 2
Current Plan
Add Trust-Owned Premium Financing
$15,000,000
$7,500,000
$0
Date: 05/18/2017
Page 5 of 9
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Comparison of Alternatives at Ages 99/94
Strategy 1
Strategy 2
Current Plan Total Wealth Distributed: $126,330,371
Add Trust-Owned Premium Financing Total Wealth Distributed: $172,571,120 Transfer Taxes $16,442,558
Transfer Taxes $32,728,832
Heirs $93,601,539 Heirs $156,128,562
Date: 05/18/2017
Page 6 of 9
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Summary Analysis of Alternatives Cumulative Spendable Cash Flow Provided by Ages 99/94
Strategy 1 Current Plan
$24,184,834
Strategy 2 Add Trust-Owned Premium Financing
$24,184,834
$0
$7,000
$14,000 (Thousands of dollars)
$21,000
Values at Ages 99/94 (After Providing Spendable Cash Flow) $220,000,000
$172.6M $165,000,000
$156.1M $126.3M
$110,000,000 $93.60M
$55,000,000 $32.73M $16.44M $0
Strategy 1 Current Plan
Strategy 2 Add Trust-Owned Premium Financing
Cumulative Spendable Cash Flow Family Net Worth* Transfer Taxes Wealth to Heirs
*Family Net Worth includes assets outside the estate.
Date: 05/18/2017
Page 7 of 9
$28,000
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Comparison of Alternatives
Spendable Cash Flow Strategy 1
Current Plan
Family Net Worth*
Strategy 2 Add Trust-Owned Premium Financing
Strategy 1
Strategy 1
Current Plan
Strategy 2 Add Trust-Owned Premium Financing
Current Plan
Strategy 2 Add Trust-Owned Premium Financing
Year
M/F Ages
1 2 3 4 5 6 7 8 9 10
50/45 51/46 52/47 53/48 54/49 55/50 56/51 57/52 58/53 59/54
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
12,261,375 13,009,733 13,831,460 14,721,532 15,679,422 16,707,031 17,807,631 18,985,359 20,244,946 21,591,604
12,014,935 12,534,044 13,142,121 13,834,602 14,611,438 15,475,227 16,431,020 17,517,080 18,679,131 19,922,522
11,332,013 12,374,985 13,155,675 14,002,058 14,913,434 15,891,522 16,939,399 18,060,996 19,260,823 18,006,314
37,008,372 36,937,565 36,592,687 36,263,778 35,945,711 35,634,617 35,328,048 36,064,918 36,848,506 36,127,617
11 12 13 14 15 16 17 18 19 20
60/55 61/56 62/57 63/58 64/59 65/60 66/61 67/62 68/63 69/64
0 0 0 0 0 400,000 412,000 424,360 437,091 450,204
0 0 0 0 0 400,000 412,000 424,360 437,091 450,204
23,030,972 24,569,110 26,212,498 27,968,053 29,462,164 30,626,092 31,841,993 33,113,402 34,443,526 35,835,482
21,471,908 23,131,850 24,908,898 26,810,314 28,464,461 29,723,080 31,046,596 32,439,897 33,908,136 35,456,771
18,997,293 20,052,906 21,176,872 22,365,159 23,401,410 24,244,175 25,114,530 26,022,363 26,969,351 27,957,102
36,735,761 37,382,182 38,068,255 38,786,951 39,319,954 39,628,442 39,935,778 40,250,117 40,571,370 40,899,324
21 22 23 24 25 26 27 28 29 30
70/65 71/66 72/67 73/68 74/69 75/70 76/71 77/72 78/73 79/74
463,710 477,621 491,950 506,708 521,909 537,567 553,694 570,304 587,413 605,036
463,710 477,621 491,950 506,708 521,909 537,567 553,694 570,304 587,413 605,036
37,262,315 38,751,462 40,305,635 41,927,642 43,620,414 45,446,117 47,354,096 49,348,497 51,432,423 53,610,621
37,061,201 38,753,512 40,541,964 42,436,196 44,447,837 46,654,887 49,016,629 51,553,629 54,256,127 57,122,099
29,014,863 30,110,822 31,254,820 32,456,777 33,702,711 35,038,208 36,433,188 37,898,155 39,419,633 41,008,480
41,261,325 41,623,567 41,993,786 42,379,689 42,764,958 43,195,541 43,636,283 45,419,195 47,936,745 50,615,152
31 32 33 34 35 36 37 38 39 40
80/75 81/76 82/77 83/78 84/79 85/80 86/81 87/82 88/83 89/84
623,187 641,883 661,139 680,973 701,402 722,444 744,118 766,441 789,435 813,118
623,187 641,883 661,139 680,973 701,402 722,444 744,118 766,441 789,435 813,118
55,887,378 58,267,212 60,754,869 63,355,337 66,073,867 68,917,444 71,892,156 75,004,448 78,261,152 81,669,505
60,161,420 63,382,199 66,794,513 70,408,657 74,234,429 78,281,282 82,561,201 87,083,221 91,855,058 96,883,742
42,675,624 44,408,154 46,225,326 48,122,563 50,103,473 52,180,029 54,348,257 56,612,399 58,984,934 61,462,580
53,472,446 56,500,802 59,726,471 63,151,928 66,787,134 70,648,390 74,739,691 79,069,894 83,654,410 88,491,874
14,583,707
14,583,707
*After providing cash flow. Family Net Worth includes assets outside the estate.
Date: 05/18/2017
Wealth to Heirs
Page 8 of 9
Comparison of Plans Current Plan vs. Add Trust-Owned Premium Financing Presented By: Daniel Wachs
For: Arthur Baxter & Allison Baxter
Comparison of Alternatives
Spendable Cash Flow Strategy 1
Strategy 2 Add Trust-Owned Premium Financing
Year
M/F Ages
Current Plan
41 42 43 44 45 46 47 48 49 50
90/85 91/86 92/87 93/88 94/89 95/90 96/91 97/92 98/93 99/94
837,511 862,637 888,516 915,171 942,626 970,905 1,000,032 1,030,033 1,060,934 1,092,762
837,511 862,637 888,516 915,171 942,626 970,905 1,000,032 1,030,033 1,060,934 1,092,762
24,184,834
24,184,834
Family Net Worth* Strategy 1
Strategy 1
Current Plan
Strategy 2 Add Trust-Owned Premium Financing
Current Plan
Strategy 2 Add Trust-Owned Premium Financing
85,239,485 88,979,591 92,898,893 97,007,057 101,317,498 105,841,502 110,591,109 115,579,162 120,819,364 126,330,371
102,176,033 107,831,647 113,903,572 120,459,530 127,587,789 135,389,465 143,743,836 152,693,588 162,284,862 172,571,120
64,058,595 66,770,261 69,611,164 72,579,201 75,696,983 78,947,116 82,360,589 85,936,789 89,675,523 93,601,539
93,594,542 98,350,989 103,429,850 108,879,002 114,785,613 121,208,469 129,041,318 137,444,083 146,452,144 156,128,562
*After providing cash flow. Family Net Worth includes assets outside the estate.
Date: 05/18/2017
Wealth to Heirs
Page 9 of 9