Presentation on Estate and Financial planning

1. Will Your Loved Ones Be Left Out? A Comprehensive look at the unique financial & legal challenges faced by the LGBT Community Steven W. Schmitt, CFP ® , MBA Kyle D. Young, CFP ® First Vice President – Investment Officer Vice President – Investment Officer Accredited Domestic Partnership Advisor sm Accredited Domestic Partnership Advisor sm (973) 564-699 (973) 564-6983 [email_address] [email_address] Attorney at Law: Philip J. Hoskins, Esq. Law Offices of Philip J. Hoskins 310-209-8080 [email_address]

3. Nationwide Client Base Los Angeles Mettmann, Germany Markham, Ontario San Francisco Palm Springs Sandy, UT Chicago Bloomington Victoria, TX Tuscaloosa, AL Atlanta, GA Charleston, SC Tampa/St. Pete Ft. Lauderdale New England/ NY Metro Washington DC Baltimore Charlotte Cote, WY

7. Our Wealth Management Process Wealth Management Services Financial Independence Liability Planning 2 Estate Planning Services Family Planning Lending Needs 4 Retirement Planning Financial Goals Statement of Goals Financial Plan Investment Management Investment Policy Manager Selection Asset Allocation Stocks, Bonds Alternative Investments Cash Risk Tolerance Retirement Plans 401(k) Beneficiaries IRA’s Social Security Benefit Commencement Decision Healthcare Insurance Long Term Care Tax Planning 1 Taxable vs. Tax Advantaged Tax Reduction Plan Goal Protection Life Insurance Review Corporate vs. Personal Income Protection Disability Insurance Liability Insurance Umbrella Coverage College Planning Child and Grandchild 529 Plans Coverdell Savings Accounts Custodial Accounts Child Living Expenses Special Needs Parents Health are Living Expenses Housing Basic Documents Health Care POA Living Will Durable POA Trusts 3 Revocable Credit Shelter Special Needs Generation Skipping Personal Residence Heirs Beneficiary Planning Annual Gifting Estate Transfer Transfer on Death Asset Titling Charitable Giving 3 Outright Gifts Charitable Trusts Bequests Donor Advised Funds Access to Lending Affiliates Personal Lending Business Lending Home Loans Mortgages Refinancing Security-Based Lending 5 Collateral Accounts Commercial Lending Construction Lending Small Business Lending

9. Spouse v. Non-Spouse (Federal Status)

10. During Life: Financial

11. Let’s begin with taxes… Generic Financial Concern The LGBT Perspective Taxes Retirement Investments Estate & Legal

12. Imputed Income Health Insurance Benefits Imputed Income and the impact it has on your fringe benefits A non-issue for our married colleagues (tax-free fringe benefit) Benefit Equalization/Gross-up of salary from company

13. Recent Tax Legislation Extension of Bush-era tax policy Current Tax Rates 2011 2012 2013 Income (Max) 35% 35% 39.6% Income (Min) 10% 10% 15% Capital Gains (Max) 15% 15% 20% Qualified Dividends (Max) 15% 15% 39.6% Gift (Max) 35% 35% 55% Estate (Max) 35% 35% 55%

14. Unlimited Marital Deduction Federally-recognized married couples have the ability to pass an unlimited amount of assets between them both during life and upon death Non-Spouse couples are NOT eligible for this benefit May have major tax implications – Planning is key!

16. BEWARE! Gift Tax Annual Exclusion of $13,000 (must file Form 709 on anything over this amount) Lifetime Exclusion and Gift Tax Rate ** Lack of Portability for Non-Spouse Partners ** 2011 2012 2013 Exclusion $5,000,000 $5,000,000 $1,000,000 Max Rate 35% 35% 55%

17. Tax Filing Federal Income Tax Filing Must be filed separately due to the Defense of Marriage Act (DOMA) Groundbreaking Ruling issued by the IRS in 2010 will impact ALL California Domestic Partners/Married Partners State Income Tax Filing California requires you to file Jointly if DP/Married

18. Topics of Discussion Investment Planning – Two Perspectives Generic Financial Concerns The LGBT Perspective Taxes Retirement Investments Estate & Legal

19. Funding Company Sponsored Qualified Retirement Plans 401(k), 403(b), 457, TSP, etc. 2011 2012-2013 Under 50 Years of Age $16,500 Indexed for Infl. Over 50 Years of Age $22,000 Indexed for Infl.

21. Action Item! Leave nothing to chance Rollover former qualified plans to a Traditional IRA (Open investment platform, outside ERISA/Federal Guidelines, more flexibility, etc.)

22. Rollover of Former Qualified Plans Former Company Plan IRA Rollover Beneficiary Stretch IRA Transferring assets from old company retirement plans

23. In-Service Non-Hardship Withdrawal Current Company Plan IRA Rollover Beneficiary Stretch IRA In-service, non-hardship withdrawal from qualified plan (ISNHW). Plan may allow plan participants to withdraw a portion of their qualified plan (i.e. 401(k)) prior to retirement or termination of service. (IRC/402c)

24. Protecting Your Defined Benefit Plans (Pension Plans) Many company Pension Plans are NOT eligible for rollover to non-spouse beneficiary upon the passing of the employee partner!! Default death benefit payout options utilize ERISA guidelines and are NOT advantageous to non-spouse beneficiaries

25. Action Item! Leave nothing to chance Contact your Pension Plan provider to inquire about company beneficiary policies Elect your desired death benefit payout option For those companies that simply do not allow non-spouse beneficiaries, alternative planning will be necessary

35. Preparing for Death: Financial

37. Federal Estate Tax Exemption Amount and Max Unified Gift and Estate Tax Rate ** Lack of Portability for Non-Spouse Partners ** 2011 2012 2013 Exemption $5,000,000 $5,000,000 $1,000,000 Max Rate 35% 35% 55%

39. Social Security

40. What Your Partner Could to Lose This leaves your surviving partner or heirs with a fraction of the assets left to them!! 2011 2012 2013 Federal Estate Tax 35% 35% 55% Federal Income Tax 35% 35% 39.6% State Estate/Inheritance Tax Varies by State Varies by State Varies by State

41. Importance of Insurance Protection Protect Large outstanding debt, education for children, probate fees and expenses Provide Liquidity Avoid liquidation of assets to pay tax liabilities Asset Protection/Replacement Loss of social security income, loss of pension income, other assets used to pay tax liability Supplemental Retirement Planning

59. The Schmitt-Young Investment Group Our Team: 2 CERTIFIED FINANCIAL PLANNERS sm / Accredited Domestic Partnership Advisors sm 1 Financial Advisor 1 Client Associate Nationwide Practice (we work in 25 states across the county) 95%+ of our practice consists of LGBT individuals/couples Expert In-house Money Management of your Assets Comprehensive Financial Planning Working with the LGBT community is our Expertise and our Passion!

60. © 2009 Wells Fargo Advisors, LLC. All rights reserved. 0509-1794 [74566-v1] 5/09 Steven W. Schmitt, CFP ® , MBA Kyle D. Young, CFP ® First Vice President – Investment Officer Vice President – Investment Officer Accredited Domestic Partnership Advisor sm Accredited Domestic Partnership Advisor sm (973) 564-6997 NJ: (973) 564-6983 [email_address] [email_address] Independent Attorney: Philip J. Hoskins, Esq. Law Offices of Philip J. Hoskins 310-209-8080 [email_address]