Private Private Financing - - PowerPoint PPT Presentation

▶
private private financing
SMART_READER_LITE
LIVE PREVIEW

Private Private Financing - - PowerPoint PPT Presentation

May 22, 2023 490 likes •761 views

Private Private Financing

slide-1
SLIDE 1

Private

  • ! "#$%%&'()*
  • ()* +''' (*%#,-,
  • ./0'1"'")2'

% $&

Private Financing

slide-2
SLIDE 2

Disclosures

1'') 3')'//4/3.'''53

  • ''3''3''

5'1/''''! 5'/6)7/ '''5'') ''5'5 ''8')2''249.#,2:#9 '85'''' 1'3 '/' /5/ ' /5/5)) ./0'()2'

$ $&

/5/5)) 35/:'))/ '5 ''5 9;'4/'

slide-3
SLIDE 3

Objectives:

< "'4/'/ < 13 < =5' < ">'

./0'()2'

? $&

< ">' < /

slide-4
SLIDE 4

Self-financing: Using The Family Bank

< '/@5A1 < 1

B 5')' B 5 ''

< 1''.':.:

./0'()2'

C $&

< 1''.':.:

/'

<

B '/ B

< 13/

slide-5
SLIDE 5

Long Term AFR Rates (June 1998 – June 2008)

./0'()2'

, $&

The values on the above chart are derived from monthly Internal Revenue Service Revenue Rulings. *April 2008 mid-term AFR is 2.87% and May 2008 mid-term AFR is 2.74%. The AFR for an obligation is the applicable federal rate in effect under Code Section 1274(d) for the day on which the obligation is issued, as published in the Internal Revenue Bulletin. For LIBOR, see www.bankrate.com.

slide-6
SLIDE 6

Typical Scenarios

< */D'4 E%#'''

B './5'

< /> < F3')/

< 0' D'(9/5''

./0'()2'

& $&

< 0' D'(9/5'' < 0' D')'5///

slide-7
SLIDE 7
  • Mr. & Mrs. Jackson

Client Profile

< "" < !/&, (4 < (E%# ### ###'

3

./0'()2'

G $&

< 1'F3' < F35''4 < )''/ /3

slide-8
SLIDE 8

Lump Sum Loan with Ann. Excl. Gifts

< ")''51 < ")'''1E& GG? $&G

  • < )''/'>4

.: $##HB ?$#I

./0'()2'

H $&

.: $##HB ?$#I

slide-9
SLIDE 9

Private Loan to the Trust

  • !"#$

%&' ($)* &&8&& % & GG? $&G $%& GC, & --# #%$ &G8&G $ & --# #%$ $$? &H# G $%? &-$ &H8&H ? G $%? &-$ $?# H?H G CCC ,?% &-8&- C G CCC ,?% $?H $$, G &H$ G,,

./0'()2'

  • $&

G#8G# , G &H$ G,, $C, HCH G -$H &#C G%8G% & G -$H &#C $,? G%, H %H$ ?%- G$8G$ G H %H$ ?%- $&% H?C H CCC %,? G?8G? H H CCC %,? $G# $%? H G%C ?&& GC8GC

  • H G%C ?&&

$GH H&# H --? $$& G,8G, %# H --? $$& H --? $$& #

1)'''' 75'

slide-10
SLIDE 10

Lump Sum Loan with Ann. Excl. Gifts Without Life Insurance

< 11)''')

'GI

< ")''31

/

< *- 1)'''

./0'()2'

%# $&

< *- 1)'''

'

< 1)''5/

slide-11
SLIDE 11

Trust Activity Without Insurance

/ *

  • :

'F3' 9 1!' F0*JGI 1 ( &&8&& % G$ ### G ?$C C?& ??C C$C &G8&G $ G$ ### G -%C %H& G## C-C &H8&H ? G$ ### H ,C, $%- % %## &H- &-8&- C G$ ###

  • $$# C$C

% ,?G &G# G#8G# , G$ ###

  • -C$ H-C

$ #%C $-% G%8G% & G$ ### %# G%, -?G $ ,?? &%H G$8G$ G G$ ### %% ,C? #-$ ? #-H -C# ./0'()2'

%% $&

G$8G$ G G$ ### %% ,C? #-$ ? #-H -C# G?8G? H G$ ### %$ C$H %C- ? G%? GH? GC8GC

  • G$ ###

%? ?G, %,- C ?H% -?C +,+

  • +-

.-+-+ .-+-+ H#8H# %, G$ ### G %$G %-% G %$G %-% H,8H, $# G$ ### %# C?- $-$ %# C?- $-$

  • #

$, ?& ### %C H&? %&, %C H&? %&,

  • ,

?# ?& ### $% #&G HG& $% #&G HG& %## ?, ?& ### $- GG# ?#C $- GG# ?#C 1)'''' 75' GI'/') /5'5

slide-12
SLIDE 12

Here’s What It Looks Like – Without Life Insurance

  • MR. AND MRS.

JACKSON ILIT Three annual exclusions $6,773,267 lump sum loan. 9-year loan term. Interest capitalized at mid-term AFR (June 2008 – 3.20%) Principal and interest repaid at end of loan term Taxes

./0'()2'

%$ $&

IRS HEIRS at end of loan term $8,993,226. Balance of Trust Assets Net of Loan Estate Assets

slide-13
SLIDE 13

Lump Sum Loan with Ann. Excl. Gifts With Life Insurance

< 11)''''4/

555''-4 )%##I:2::02-*

< 11)''E?C% H--

  • ./0'()2'

%? $&

< *- 1)'''

'

< 11)''5''4/'

;/

Guaranteed product features are dependent upon minimum premium requirements and the claims-paying ability of the issuer.

slide-14
SLIDE 14

Trust Activity With Insurance

  • !"#$
  • /0)

)1

  • 2$)$

3 1)

  • /%+'
  • 1

&&8&& % & GG? $&G G$ ### ?C% H-- %# ?C% H-- & -,H &#C %# ?%# C-% &G8&G $ & -,H &#C G$ ### ?C% H-- %# &H? G-- G %,& -%C %# &$G #$# &H8&H ? G %,& -%C G$ ### ?C% H-- %% #$, &-H G ?&- %#& %# -,# $G? &-8&- C G ?&- %#& G$ ### ?C% H-- %% ?&G ,-G G ,-& %,% %% $H# --$ G#8G# , G ,-& %,% G$ ### ?C% H-- %% G#- C-& G H?- #H- %% &%- -H$ ./0'()2'

%C $&

G%8G% & G H?- #H- G$ ### ?C% H-- %$ #,% ?-& H #-- #?? %% -&H %%# G$8G$ G H #-- #?? G$ ### ?C% H-- %$ ?-? $-, H ?GG %G? %$ ?$& ?%, G?8G? H H ?GG %G? G$ ### ?C% H-- %$ G?, %-C H &GC GH? %$ &-, &%% GC8GC

  • H &GC GH?

G$ ### ?C% H-- %? #GG #-C H --? $$& %? #GG #-C +,+

  • +-
  • ++-.
  • ++-.

H#8H# %, CC? #?G G$ ### # %# ### ### ,,% #-# %# ,,% #-# H,8H, $# % #&C C%- G$ ### # %# ### ### % $%, -&H %% $%, -&H

  • #

$, % G&C -%? ?& ### # %# ### ### % -$& -GG %% -$& -GG

  • ,

?# $ &-& -#% ?& ### # %# ### ### $ -$C $#C %$ -$C $#C %## ?, C ##C #&% ?& ### # %# ### ### C ?$$ H&, %C ?$$ H&,

GI'/')/5 '5 1''''(''5'/1)4 /'7/'''5'

slide-15
SLIDE 15

Here’s What It Looks Like with Life Insurance

  • MR. AND MRS.

JACKSON ILIT Three annual exclusions $6,773,267 lump sum loan. 9-year loan term. Interest capitalized at mid-term AFR (June 2008 – 3.20%) Principal and interest repaid at end of loan term Taxes

./0'()2'

%, $&

IRS HEIRS JOHN HANCOCK at end of loan term $8,993,226. $341,899 9-pay Premium Balance of Trust Assets Net of Loan Estate Assets $10,000,000 Policy

slide-16
SLIDE 16

Trust Net Assets (Net of Loan)

20 25 30 35

Millions ./0'()2'

%& $&

5 10 15 66/66 69/69 72/72 75/75 78/78 81/81 84/84 87 90 93 96 99 No Insurance With Insurance

/

5/HG

1''''(''5'/1 )4/'7/'' '5'

slide-17
SLIDE 17

Sinking Fund w/ Ann. Excl. Gifts

< ")''51 < ")'''1E$ ?C# ###)

55

< )''/'>'/4

.:$##H4 CC&I

./0'()2'

%G $&

.:$##H4 CC&I

slide-18
SLIDE 18

Private Loan to the Trust

  • .&.'

($)* % &&8&& $ ?C# ### %#C ?&C $ CCC ?&C $ &G8&G %#- #%- $ ,,? ?H? ? &H8&H %%? HH% $ &&G $&? C &-8&- %%H -&# $ GH& $$? , G#8G# %$C $&& $ -%# CH- & G%8G% %$- H#H ? #C# $-G

./0'()2'

%H $&

G G$8G$ %?, ,-G ? %G, H-C H G?8G? %C% &C, ? ?%G ,?-

  • GC8GC

%CG -&$ ? C&, ,#% %# G,8G, %,C ,&% ? &$# #&? %, H#8H# %-$ $C? C ,#$ &$- $# H,8H, $?- %%$ , &## ?&C $,

  • #

$-G C#G & -&, G$& ?#

  • ,

?&- -%C H &&? -&% ?, %## C&# #-- %# GG& $$C

1)'''' 75'

slide-19
SLIDE 19

Trust Activity Without Insurance

  • /0)

)1

  • /%+'
  • 1

% &&8&& G$ ### $ ,H# HC# %?& CG& $ &G8&G G$ ### $ H?H ,?- $H, %,& ? &H8&H G$ ### ? %%C $GG CCG #%C C &-8&- G$ ### ? C#- ?%& &$? #-? , G#8G# G$ ### ? G$, ##H H%C ,%- & G%8G% G$ ### C #&$ G-- % #$$ ,#$

./0'()2'

%- $&

& G%8G% G$ ### C #&$ G-- % #$$ ,#$ G G$8G$ G$ ### C C$C $?C % $CH ?C# H G?8G? G$ ### C H%# -G% % C-? C?$

  • GC8GC

G$ ### , $$C GG- % G,- $GH %# G,8G, G$ ### , &&G ,,? $ #CG C-# %, H#8H# G$ ### H ?-$ #GC ? HH- CC, $# H,8H, G$ ### %$ $%? ?,C & &%$ --# $,

  • #

?& ### %G ?,% ?H# %# ?H, &,C ?#

  • ,

?& ### $C ,,G G$& %, H-? G&, ?, %## ?& ### ?C &&, ### $? HHH GG&

1)'''' 75' GI'/')/5 '5

slide-20
SLIDE 20

Sinking Fund w/ Ann. Excl. Gifts

Without Insurance

< 11)''')

'GI

< ")''31

/

< 55K 1)''

./0'()2'

$# $&

< 55K 1)''

'

< 11)''''

'

slide-21
SLIDE 21

Here’s What It Looks Like – Without Insurance

  • MR. AND MRS.

JACKSON ILIT Three annual exclusions $2,340,000 lump sum loan. Interest capitalized at long-term AFR (June 2008 - 4.46%). Principal and interest repaid at survivor’s death. Taxes

./0'()2'

$% $&

IRS HEIRS at survivor’s death. Balance of Trust Assets Net of Loan Estate Assets

slide-22
SLIDE 22

Sinking Fund w/ Ann. Excl. Gifts With Insurance

< 11)''''4/

555''''4 )C#I:2:

< 11)'''

E%GG ?H?

./0'()2'

$$ $&

< 55K 1)''

'

< 11)''E%# ### ###'

  • The enhanced Return of Premium Rider (ROP) allows clients to select the percentage of the return of premiums desired.

The rider will increase the death benefit each year by that percentage of the premium loan selected so that in any given year, the lender will get back from the death benefit what it paid to date in premiums, keeping a larger portion of the balance of the original death benefit intact for the family.

slide-23
SLIDE 23

Trust Activity With Insurance

  • /0)

)1

  • 2$)$
  • /%+'

3 1)

  • 1

% &&8&& G$ ### %GG ?H? $ ?-% #C# %# #G# -,? %# #%G &$- $ &G8&G G$ ### %GG ?H? $ CC, &,? %# %C% -#& %# #?C %GG ? &H8&H G$ ### %GG ?H? $ ,#C #-# %# $%$ H,- %# #C- &H, C &-8&- G$ ### %GG ?H? $ ,&& &%& %# $H? H%? %# #&C $#, , G#8G# G$ ### %GG ?H? $ &?? ,$# %# ?,C G&& %# #GG G-& & G%8G% G$ ### %GG ?H? $ G#, %#& %# C$, G%- %# #-# ,$H

./0'()2'

$? $&

& G%8G% G$ ### %GG ?H? $ G#, %#& %# C$, G%- %# #-# ,$H G G$8G$ G$ ### %GG ?H? $ GH% G#C %# C-& &G$ %# %#$ CH$ H G?8G? G$ ### %GG ?H? $ H&? &&C %# ,&G &$, %# %%? G,#

  • GC8GC

G$ ### %GG ?H? $ -,% ?&# %# &?H ,GH %# %$C C?H %# G,8G, G$ ### %GG ?H? ? #C, %-& %# G#- ,?$ %# %?C &&, %, H#8H# G$ ### %GG ?H? ? &$$ ,-? %% #&C $-G %# %HC $&% $# H,8H, G$ ### %GG ?H? C C?$ C$? %% C%- #&? %# $,% %$$ $,

  • #

?& ### %GG ?H? , ?C& G?? %% GG? H$- %# %,C H?, ?#

  • ,

?& ### %GG ?H? & &$- #-- %$ %$H ,-, %# #-? G?$ ?, %## ?& ### %GG ?H? H C$G &HC %$ CH? ?&# %# %?C H$%

GI'/')/5' 5 1''''(''5'/1)4/ '7/'''5'

slide-24
SLIDE 24

Here’s What It Looks Like – With Insurance

  • MR. AND MRS.

JACKSON ILIT Three annual exclusions $2,340,000 lump sum loan. Interest capitalized at long-term AFR (June 2008 - 4.46%). Principal and interest repaid at survivor’s death. Taxes

./0'()2'

$C $&

IRS HEIRS JOHN HANCOCK at survivor’s death. $177,383 Full-pay Premium Balance of Trust Assets Net of Loan Estate Assets $10,000,000 Policy

slide-25
SLIDE 25

Trust Net Assets (Net of Loan)

15 20 25 30

Millions ./0'()2'

$, $&

5 10 15 66/66 70/70 74/74 78/78 82/82 86 90 94 98 No Insurance With Insurance

/

5/-#

1''''(''5'/1 )4/'7/' ''5'

slide-26
SLIDE 26

Thank Thank-

  • you for attending!

you for attending!

./0'()2'

$& $&

For more information, please contact John Hancock Advanced Markets at (888) 266-7498, option 3