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5 Simple Gifting Strategies. Give comfort Give security Give knowledge Give opportunity 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. 1. #1 Give Comfort.
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5 Simple Gifting Strategies Give comfort Give security Give knowledge Give opportunity 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.
1 #1 Give Comfort • Answer the “what ifs” while you are able • In times of crisis, the unknown can hurt you • Preparation is key: • Be prepared for emergencies– Personal– Financial • Create a will
1 #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
1 #1 Give Comfort Be prepared for emergencies Financial 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 Download these forms today at www.jhfunds.com
2 #2 Give Security • What would make you — and your family — feel secure? • Today • If something happened to you
2 #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? Simple assets and liabilities forms are available at www.jhfunds.com or ask your financial professional
2 #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
2 #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 Hypothetical example only
2 #2 Give Security Go to www.socialsecurity.gov to estimate your social security payment or surviorship benefits Lump sum assets Dollars Interest rate* Annual income 100,000 4,000 • Pension $_______ x 4% = __________ • 401(k)/Rtmt-plan $_______ x 4% = __________ • IRAs $_______ x 4% = __________ • Life insurance $_______ x 4% = __________ Subtotal __________ 200,000 8,000 80,000 3,200 200,000 8,000 23,000 Monthly income source Monthly 1,000 12,000 • Social Security $_______ x 12 = __________ • Rental income $_______ x 12 = __________ • Other________ $_______ x 12 = __________ Subtotal __________ Total yearly __________ income available to your family N/A 0 12,000 35,000 *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.
2 1.9 X 4% million $75,000 #2 Give Security • To replacethe $75,000income shortfall,$1.9 million inlife insuranceis needed. need $75,000 Income shortfall $110,000 35K *These examples are for illustrative purposes only and do not represent any particular investment
3 #3 Give Knowledge • 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 #3 Give Knowledge • 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.
4 #4 Give Opportunity • Many people are concerned that the next generation will have financial struggles. • How to help? % Source: U.S. Trust Survey of Affluent Americans, 6/2005
4 #4 Give Opportunity • Help them start early! • Investment success depends on: • The amount invested • The rate of return • How long themoney is invested *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.
4 #4 Give Opportunity • 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 The power of time Final Value = $867,000 • Penalty free withdrawals for • College • First Home • Plus contributions come out tax free *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.
4 #4 Give Opportunity Give the gift of a college education • College graduates can earn more Higher Earnings Source: Federal Reserve Board Division of Research and Statistics, 1/03. Data as of 2001.
4 #4 Give Opportunity College graduates are unemployed less Less unemployment Source: Bureau of Labor Statistics, 12/03.
4 529 Plans Can Make College Savings Easier 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!** • 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.
4 The power of gifting with 529s GRANDPARENTS: Remove $900,000 from estate and maintain control
5 #5 Give Back • To your family • To your community • To those less fortunate
5 #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 Top PrivateU.S. Charity Efforts** 9/11……….. $2.8 billion Hurricanes Katrina and Rita….. $2.7 billion(to date) Tsunami of 2004……. $1.55 billion *Wealth Management Letter, 8/31/05 **USA Today 11/14/05
5 #5 Give Back – Energy • Habitat for Humanity • Building playgrounds • Coaching a children’s sport • A race for cancer
5 #5 Give Back – Time • Mentor programs • Visit the elderly or infirm • Cuddle a premature baby • Help at an animal shelter
5 #5 Give Back – Money • 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 #5 Give Back – Money • 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 #5 Give Back • Unique ways to donate • www.ModestNeeds.org • www.DonorsChoose.org • AdoptAClassroom.com • BooksForSoldiers.com • www.SpiritOfAmerican.net • www.pajamaprogram.org • Match donations from family members,to encourage charitable giving
5 #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
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” scenarios • Explore websites for information and charities • Ask 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!
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