2 5 simple gifting strategies 1.give comfort 2.give security 3.give knowledge 4.give opportunity...
TRANSCRIPT
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5 Simple Gifting Strategies
1. Give comfort
2. Give security
3. Give knowledge
4. Give opportunity
5. Give back
This presentation should not be considered tax or legal advice. Please consult your personal tax or legal advisor for information about your individual situation.
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#1 Give Comfort
Answer the “what ifs” while you are able
In times of crisis, the unknown can hurt you
Preparation is key:
1. Be prepared for emergencies
– Personal
– Financial
2. Create a will
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#1 Give Comfort
Be prepared for emergencies
Personal emergencies Who to contact and where to find them Spouse, children, pets Medical information and allergies Do it NOW and keep it handy
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#1 Give Comfort
Be prepared for emergenciesFinancial emergencies How do you get money? Where are all the assets to be found? Who can help?
Financial professional Attorney CPA Insurance agent
Account numbers and financial information
Everything on one handy checklist
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Download these forms today at www.jhfunds.com
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#2 Give Security
What would make you — and your family — feel secure? Today
If something happened to you
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#2 Give Security
Know where you stand today
What does your family spend today?
What assets are available?
Where are the gaps?
Any outstanding needs?
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Simple assets and liabilities forms are available at www.jhfunds.com or ask your financial professional
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#2 Give Security
Provide for your family down the road
Why buy life insurance? To provide income for life
Retire a mortgage
Pay all debts
Plan for future large cash needs,like college
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#2 Give Security
Example:
Clients Paul and Betty Roberts
Ages 45 and 42
Children 3
Ages 13, 9, 5
Paul’s income $150,000 ($110,000 after taxes)
Betty’s income $0 as homemaker
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Hypothetical example only
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Lump sum assets Dollars Interest rate* Annual income
#2 Give Security 2
Pension $_______ x 4% = __________
401(k)/Rtmt-plan $_______ x 4% = __________
IRAs $_______ x 4% = __________
Life insurance $_______ x 4% = __________
Subtotal __________
Monthly income source Monthly Social Security $_______ x 12 = __________
Rental income $_______ x 12 = __________
Other________ $_______ x 12 = __________
Subtotal __________Total yearly __________income availableto your family
*An influential study by William Bengen in the 1994 Journal of Financial Planning found that 4% withdrawals annually never exhausted a portfolio during a 30-year period. For hypothetical use only, and not illustrative of any particular portfolio.
100,000 4,000
200,000 8,000
80,000 3,200
200,000 8,00023,000
1,000 12,000
N/A 0
35,00012,000
Go to www.socialsecurity.gov to estimate your social security payment or surviorship benefits
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0
20,000
40,000
60,000
80,000
100,000
120,000
Yearly income available from assets
Yearly income family has been living on
#2 Give Security 2
35K
$110,000
need$75,000
Income shortfall
To replacethe $75,000income shortfall,$1.9 million inlife insuranceis needed.
1.9
X 4%
million
$75,000
*These examples are for illustrative purposes only and do not represent any particular investment
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Pass on your own knowledge What have you learned over time? What is the one thing you would want your grandchildren
to do? Not do? What was the best investment you ever made?• Worst financial decision?
What was the investment youshould have made but didn’t?
What are the goals you spenttoo much time on?
#3 Give Knowledge 3
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How can you help children orgrandchildren gain financial wisdom?
What can the next generation do to succeed? 10 lessons for life
ranging from: Pay Yourself First to Start Early to Use Debt Sensibly.
#3 Give Knowledge 3
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Many people are concerned that the next generation will have financial struggles.
How to help?
0 10 20 30 40 50 60 70 80 90
Stock market won'tdo well
Inflation
Education costs willrise
Terrorism will hurtthe economy
Kids will have ittougher financially
#4 Give Opportunity
Source: U.S. Trust Survey of Affluent Americans, 6/2005
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%
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Help them start early! Investment success depends on:
• The amount invested• The rate of return• How long the
money is invested
#4 Give Opportunity 4
*This chart shows a hypothetical annual investment of $1,340 from the ages of 16, 25 and 35 until the age of 65. It assumes a steady return of 9%, since that has historically been a reasonable long-term rate of return on a stock portfolio. There is no guarantee that future returns will match past returns. We also use a steady return to make the examples easier to understand (and calculate); a real investment will have positive and negative years.
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Help the next generation succeed! Open a minor ROTH IRA for child or grandchild
• No age limit on IRAs• You can contribute 100%of earned income up to $4,000• Little amounts can mean a lot!
#4 Give Opportunity 4
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$0
$250,000
$500,000
$750,000
$1,000,000
16 24 32 40 48 56 64
4,000 from 16 to 21
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*Chart shows six payments of $4,000 made from age 16 to 21 growing at a steady 9% return until the age of 65. It is for illustrative purposes only and is not meant to represent any actual investment.
The power of time
Final Value = $867,000
Final Value = $867,000
Penalty free withdrawals for
College
First Home
Plus contributions come out tax free
Penalty free withdrawals for
College
First Home
Plus contributions come out tax free
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Give the gift of a college education College graduates can earn more
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Average Net Worth
High school
Some college
College graduate
Source: Federal Reserve Board Division of Research and Statistics, 1/03. Data as of 2001.
Higher Earnings
#4 Give Opportunity 4
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College graduates are unemployed less
Source: Bureau of Labor Statistics, 12/03.
0
1
2
3
4
5
6
Unemployment Rate
High school
Some college
College graduate
Less unemployment
#4 Give Opportunity 4
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• Non-qualified distributions of earnings may be subject to income tax and a 10% federal penalty tax.** Donor must elect that the gift be treated as having accrued over a five-year period. If additional gifts are made to the same beneficiary during this five-year period, a federal gift tax may be levied. State tax laws and treatment may vary. If donor dies within this five-year period, a pro rata share will be included in the donor’s estate for estate tax purposes. The above example is based on federal tax law. State gift and estate inheritance tax laws may vary. Investors should consider the tax and other benefits of their home-state 529 plan before considering out-of-state 529 plans.
A 529 Plan allows money to grow tax-deferreduntil needed
If you open the account, you retain control. Of contributions and investment choices Of timing and distributions* Of beneficiaries and plan selection
You can also contribute funds to a 529controlled by someone else.
You can contribute up to $60,000 in oneyear individually or $120,000 if filingjointly — per child!**
529 Plans Can Make College Savings Easier 4
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The power of gifting with 529s
GRANDPARENTS: Remove $900,000 from
estate and maintain control
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$5,000,000 taxable estate:Grandfather & Grandmother
$5,000,000 taxable estate:Grandfather & Grandmother
Son & WifeSon & Wife Daughter & HusbandDaughter & Husband Son & WifeSon & Wife
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
Child$120K
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#5 Give Back
To your family To your community To those less fortunate
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#5 Give Back
Americans gave $245 billion in 2004*
Why do people give? Emotional connections
Causes, issues or organizations peoplefeel strongly about
To help others
As payback for their own good fortune
To set a good example for others
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*Wealth Management Letter, 8/31/05
**USA Today 11/14/05
9/11……….. $2.8 billionHurricanes Katrina and Rita….. $2.7 billion
(to date)
Tsunamiof 2004……. $1.55 billion
Top PrivateU.S. Charity Efforts**
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Habitat for Humanity Building playgrounds Coaching a children’s sport A race for cancer
#5 Give Back – Energy 5
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Mentor programs Visit the elderly or infirm Cuddle a premature baby Help at an animal shelter
#5 Give Back – Time 5
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Donations can be maximized with professional assistance from both your financial and tax advisors, working with the charity.
Donate cash, securities, property, art, valuables
#5 Give Back – Money 5
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Identify the needs of organizations that interest you Well-known mandates like the United Way,
American Cancer, Red Cross, Salvation Army Small charities with identifiable needs
#5 Give Back – Money 5
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#5 Give Back
Unique ways to donate
1. www.ModestNeeds.org
2. www.DonorsChoose.org
3. AdoptAClassroom.com
4. BooksForSoldiers.com
5. www.SpiritOfAmerican.net
6. www.pajamaprogram.org
Match donations from family members,to encourage charitable giving
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#5 Give Back – Family
Ask your financial professional how to: Leave more of what you’ve earned to your family Avoid unnecessary estate taxes Help children and grandchildren go to college Open a ROTH IRA for a minor Ensure your family’s security Maximize charitable giving
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Now it’s up to you!
Ask your financial professional for the emergency checklists and simple life insurance estimator
Talk to your family about the “what if” scenariosExplore websites for information and charitiesAsk your financial professional how to open a 529 Plan
or ROTH IRA. And ask about estate planning techniques like a Stretch IRA
Get involved — and get started!
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The performance data contained in this presentation represents past performance, which does not guarantee future results. Performance, especially for short time periods, should not be the sole factor in making your investment decisions.
For information about any John Hancock fund, please read the prospectus. The prospectus contains more complete information about factors that should be considered before investing, including investment objective, charges, expenses and risks. Please read the prospectus carefully before investing or sending money.
For prospectuses or for performance current to the most recent month-end, call your financial professional or John Hancock Funds at 1-800-225-5291, or visit our Web site at www.jhfunds.com.
SD5GIFT 1/07