by Steven Levey

Planners are finding that there can be times when using a specialty software application is preferable to utilizing a comprehensive financial planning program.

There are times when detailed calculations are required, and other times when a “down and dirty” illustration is all that a planner needs. Retirement and estate planning, calculating minimum distributions and early distributions, or illustrating estate-planning concepts with GRITS, GRATS and trusts are some of the tasks that these programs can tackle.

Estate Plan Plus/Visual Estate Plus
Selden Integrated Systems

Estate Plan Plus is a comprehensive and easy-to-use program that includes over 35 “drill down” reports showing how calculations are performed. Estate Plan Plus offers GRAT, GRUT, GRIT and QPRT calculations; charitable lead and remainder trust analysis; family limited partnerships; and up to 10 plan comparisons.

Starting the program reveals a screen that shows radio buttons for current data, adjusting asset ownership, gift programs, charitable trusts, insurance trusts, discount gifts, grantor trusts, and estate dispositions. A click on the current data tab reveals tabs for profile, general assets, life insurance, IRAs/pensions/annuities, mortgages/debts/claims, and taxable gifts.

After entering client data, the planner can enter the name of the project - there is space for a description of each plan - such as original, add GRAT, add GRIT and ILIT, etc. The program also has buttons for adjusting the GSTT, the annual gift exclusion, plus adding donees and beneficiaries.

When “adjust asset ownership” is selected, assets can be separately reallocated, or the percentages of ownership can be changed by sliding a bar. A default bar graph shows the results of reallocation. The planner can also change the kind of graph from bar chart to pie chart, scattergraph, or any of 13 others.

Further customizations allow for as-is versus proposed and several joint tenancies, or loading separately owned property adjustments. The general assets tab reveals entry by ownership - joint, community property, or individual.

Detailed entries for cash, personal property, traded securities, notes, closely held businesses, principal residence, commercial real estate, future income, expected inheritances, other property, and income accounts make up a comprehensive system to start the planning process. In the middle of the screen are other calculations including gifts/GST, state death tax, special use, family business, installment, and liquidity.

The user also has index tabs on the bottom to select from one to 10 plans and reports. The gift program provides input for lifetime, annual, or lump-sum gifts, and also shows graphs corresponding to the selection by donor. The planner can select charitable trusts and toggle them as either inter-vivo or testamentary with remainder annuity/unitrust, or lead annuity/unitrust.

Once the trust name is entered, then the value of assets donated, the specific assets dedicated to the trust, the beneficiary, and the payout rate are easily selected. Pushing on the “view results” tab shows the basis and factors for the calculations, along with the charitable deduction and warnings if the trust fails any of the required tests. Similar results can also be obtained from the insurance trusts, discount gifts, grantor trusts, and estate dispositions tabs.

Reports are a great feature on this program. Reports are organized in general headings for techniques, state death tax, other calculation reports, trust result reports, and drill-down sections for estate taxes, income taxes, and special use. Any combination of the current plan along with plans two through 10 can be consolidated for comparison. Before selecting a report, the user can read a description of what the report does at the right of the report title. A handy preview button allows you to see the report before printing it.

Visual Estate Plus is included with the purchase of Estate Plan Plus, or it can be purchased as a stand-alone for $395, with a $195 annual renewal fee.

The initial program screen has boxes for selecting current data, changes of ownership, charitable remainder trusts, irrevocable life insurance trusts, lifetime gifting programs, marital and charitable deductions, client letters, and reports.

A click on current data reveals input screens for client name, birth date, year, and projected date of death. Beneficiaries can be designated as children, heirs, issue, or family. The current $11,000 annual gift exclusion can be adjusted and toggled on or off, as needed. File tabs on top are for past taxable gifts, life insurance policies, pensions and IRAs, mortgages/ claims/expenses, present wills, and property and accounts. Past taxable gifts has an input for prior gifts and taxes paid. The life insurance policies tab allows for policy descriptions, death benefit, cash value, insured, owner and beneficiary.

A click on the pensions and IRAs tab allows the planner to enter the type of plan, plan owner, present value, annual contribution, a withdrawal starting date, and an annual growth rate. The property tab allows for total or detailed input for cash, jewelry, securities, closely held businesses, commercial and residential real estate.

Growth rate, liquidity, and ownership allocations are easily input. Push the “change in ownership” button and a warning box alerts the planner that all percentages will be adjusted if you proceed. A sliding bar allows the user to change ownership percentages and see the change in a graph above the bar.

The charitable remainder trusts section shows graphs for both income and estate tax deductions. Moving the cursor over the graph, just click, and the amount corresponding to the graph pops up.

A useful feature on the family limited partnership section determines the amount of business interest transferred into the FLP, along with the selection of both marketability and minority ownership discounts. There are even sound clips that pop up describing the reason for using a FLP.

The reports module can show financial statements, estate tax projections, disposition, details, taxes, flowcharts, liquidity, a complete comprehensive report, a balance sheet, and instructions not to print a descriptive text. Reports are well illustrated, show tables in an easy-to-read format, and have color graphs and flowcharts.

In 2001, the Internal Revenue Service attempted to simplify distributions from qualified plans. The IRS has issued new life expectancy factors for the three life expectancy tables that IRA owners and beneficiaries use to compute required minimum distributions. The three tables are the Uniform Lifetime Table, the Single Life Table and the Joint Life Table.

The final regulations changed the life expectancy tables ever so slightly and, in summary, the required distributions and the resulting income tax will still be slightly lower, with most people paying a little less tax. The Uniform Lifetime Distribution Table will be used by most for figuring lifetime-required distributions after reaching age 70.

The only IRA owners who will not use this table will be those who have a spouse as their sole beneficiary for the entire year, where the spouse is indeed more than 10 years younger (known as the “spousal exception”).

The Joint Life Table is used only for lifetime distributions and only when the spouse is the sole beneficiary and is more than 10 years younger than the IRA owner. The Single Life Table is used by designated beneficiaries to compute required minimum distributions on inherited retirement accounts. You might wonder why, with this simplification, you would want to purchase a software program when you can easily look up the correct table.

One other task is calculating pre-age 59-1/2 distributions, and selecting the proper method out of the three choices available can be daunting. Here are two programs that might change your mind.

DTS-IRA Distribution Planner
Denver Tax Software Inc.

The opening screen displays file, view, inputs, options and help. A click on the input button reveals general and IRA input. The general tab has an input for the IRA owner’s information (name), the IRA owner’s birthday and distribution calendar year. A radio button can select required minimum distribution, other, pre-age 59-1/2 (under IRC 72(t)). There are three radio button options for pre-age 59-1/2 distributions -minimum distribution calculation, amortization, or annuity. Input allows for the table to be used and the annuity factor, too, if the spouse is a beneficiary, spouse’s birthday and, if applicable, date of death.

The IRA tab allows the planner to list a description of the account, and more radio buttons for a spouse as beneficiary or a non-spouse beneficiary. If the non-spouse button is pushed, there is a place to list the non-spouse beneficiary and their birthday. The balance in the account, first-year minimum distribution, amounts distributed already this year, and rate of return round out this page. Separate accounts are easily added and deleted at the touch of a button.

Vendor directoryEstate Plan Plus/Visual Estate Plus
Selden Integrated Systems
1175 58th Ave., Suite 200 Greeley, Colo. 80634
Phone: (800) 288-9169
Pricing: $895; $495 annual renewal; call for network pricing.

DTS-IRA Distribution Planner
Denver Tax Software Inc.
P.O. Box 5308 Denver, Colo. 80217-5308
Phone: (800) 326-6686
Pricing: $199; call for multi-user/network pricing.

Pension Distribution Planner
Brentmark Software
3505 Lake Lynda Drive, Suite 212 Orlando, Fla. 32817
Phone: (407) 306-6160
Pricing: $249; annual renewal $59.

CCH View Plan
CCH Incorporated
2700 Lake Cook Road Riverwoods, Ill. 60015
Phone: (800) 449-8114
Pricing: $890; call for multi-user/network pricing.

Advanced Planning Solutions
Kettley Publishing Co.
20271 SW Birch Street, Suite 200 Newport Beach, Calif. 92660
Phone: (800) 777-3162
Pricing: $349 per module; call for network and multi-user prices.

Page one of the reports generated includes a summary of data input, a listing of each IRA/retirement account, and the options selected, such as spouse or other beneficiary, amounts already distributed, and rates of return.Page two shows the IRA owner data again, along with terminology and definitions of required beginning date, distribution of calendar year, and benefit (which deals with two withdrawals in one year). Page three shows the life expectancy, the factor-for-distribution-period life expectancy, and the minimum distribution required.

For comparison purposes, the amounts under the new regulations versus the old regulations are shown on page four of the reports. For future planning, page five of the reports shows the results of adding an annual earnings/appreciation factor, then projecting out the required distributions for any number of years in the future.

Pension Distribution Planner
Brentmark Software

Pension Distribution Planner has a single input screen that begins with options for minimum distribution or calculating pre-age 59 distribution. Upon selecting minimum distribution, the planner can input the first year of analysis, type of plan, year of first required distribution, 12/31 plan balance, expected plan growth, designated beneficiary, owner’s birth date, whether the beneficiary is a spouse, and “assume death occurs.”

The type of plan choice includes normal, Roth IRA, or less-than-5-percent owner. When “assume death occurs” is checked and “select beneficiary” is pushed, a screen pops up to allow input for owner or spouse radio buttons - there is no death, owner survives; calculate the year of death; or entered year of death. When the spousal rollover option is chosen, the year the rollover occurs can be selected.

To further extend the retirement plan, year of birth and percentage of allocation can enter separate beneficiaries. Results are instantaneously displayed on the right side of the screen, showing the account balance and minimum distribution required. There are also tabs to select both a balance graph and a distribution graph.

Two other features allow for specific addition plan contributions and desired distributions by year, amount, and with a percentage increase. When the pre-age 59 distribution button is pushed, the display screen changes to distribution year, distribution method, calculation method, 12/31 balance, expected plan growth, distribution frequency, distribute at end of period, joint or single life expectancy, owner’s birth date, reasonable interest rate, and annuity factor table.

When distribution method is selected, the planner gets a choice of minimum distributions, amortization, or annuity factor. The calculation method allows a choice of IRS Notice 89-25 or private letter ruling. The annuity factor table also is up to date with Section 1.401(a)(9), as well as UP-1984.

Again, the results are instantly shown and a neat feature is the comparison tab that shows the difference between all three methods.

CCH View Plan
CCH Inc.

CCH ViewPlan provides planners with a powerful and easy way to present visually appealing - and understandable - estate-planning and generation-skipping-transfer-planning proposals.

ViewPlan allows for an unlimited number of plans, and can compare up to three alternative plans at one time to facilitate the client presentation of the optimal planning technique. Each scenario has a built-in explanatory text and allows the planner to append his own notes. In addition, ViewPlan performs federal estate calculations quickly, plus calculations for all 50 states. ViewPlan also allows planners to show clients where there may be additional liquidity needs.

Colorful graphs, flowcharts, spreadsheet-like calculation reports and easy-to-understand explanatory text can be arranged in customizable presentations, adaptable to virtually all planning options. ViewPlan also has a “calculations log,” which creates an audit trail for identifying any input errors.

The program starts with an input screen for name and date of birth. There are buttons on the left of the screen for clients, estate details, plans, comparisons and presentations. Pushing clients reveals a list of the clients the planner has done work for. Estate details lists two radio buttons for either a detailed view or a quick plan view. From here, users can select beneficiaries and distributions, client preferences, assets and liabilities, general gifts, advanced transfers, expenses losses, probate, prior gifts, credits and GST, and liquidity report values.

When beneficiaries and distributions are selected, the names and relationships of beneficiaries can be input, along with selecting distribution options and allocations, QTIP elections, as well as application of GST to the QTIP. Client preferences include income tax rates, inflation factors, selection of trusts for surviving spouse’s property, shared property, marital deduction property, and lifetime transfers.

The advanced selection transfers option opens up a menu for CRATS, CRUTS, NIMCRUTS, GRITS, GRATS, and many other alphabet-soup trusts. A click on the CRAT tab reveals input data including AFR, annuity payout rate and frequency, duration, allocation of remainder, and a trust profile showing growth rate, year to start, and dollar/percentage amounts.

Liquidity report values allow for specific needs, such as college funding, retirement, family support, and other bequests. There is a quick calculators tab, which provides quick calculators for estate taxes, gifts, and all of the CRATS, CRUTS, etc.

Plans reveal various options, such as an “I Love You” will, bypass trust, CRATs, QPRTs, or any other desired option. When an option is selected, a colorful flowchart including numbers appears. The flowchart can be edited further by clicking the shortcuts to add and delete options, such as minority discounts or changing order of death.

Comparisons lets the user select up to three options from plans and view them graphically with numbers to compare. Presentations can show over 60 pages of reports, including multi-colored numeric reports showing the strategies calculated and determined, along with the related flowchart to illustrate the concepts.

Explanations of concepts and a glossary of terms are well laid out and explained as part of the reports. A plus feature is a timeline of the changes that will occur through 2011, with the sunset provisions.

Advanced Planning Solutions
Kettley Publishing Co.

There are programs that provide estate and retirement planning concepts for presentations and sales. Kettley Publishing Co. has provided the Back Room Technician for many years to assist advisors with collateral material.

They have taken this concept further by integrating the sales/presentation package with calculators and applications that actually produce customized reports for use by both the advisor and the client.

Advanced Planning Solutions is a module containing the Business Valuator Quick Plan, the Estate Cost Estimator, the Estate Quick Plan, and the Charitable Quick Plan. The Business Valuator Quick Plan contains reasons to value a business, valuation methods explained, and the advantages and disadvantages of different valuation methods.

Various buy-sell agreements are presented in report and table form, including cross-purchase, wait-and-see, and stock redemption. Key employees, including methods of valuation and ways to provide protection, are also considered. Disability buy-out and redemption illustrations are also available for key employees.

This part of the program was developed with Steve Leimberg, and it also performs business and key employee valuations, models common buy-sell arrangements, and compares funding methods for affordable approaches.

The Estate Cost Estimator starts with a balance sheet and proceeds to current asset and liquidity mix, then allows the planner to select and present proposed asset and liquidity mixes. An estate settlement cost analysis can be presented in both detail and summary format depending on the detail required. Diagrams of the current and proposed plan easily illustrate the concepts that the planner wants to present, including assets passing to heirs and to charities.

The Estate Quick Plan begins with illustrations of the high cost of dying in either summary or detail. The concept of a credit-shelter trust is presented here. The Charitable Quick Plan introduces charitable giving concepts and charts starting with the charitable remainder annuity trust, the charitable remainder unitrust, charitable gift annuities, pooled income funds, charitable lead annuity trusts, and charitable lead unitrusts. Keep, sell, or gift alternatives are presented side by side for informative analysis.

A click on the Business Valuator Quick Plan reveals a BQP input screen with radio buttons for required general information and income statement, as well as a balance sheet and projections, assumptions, owner personal and financial data, valuation and weightings, insurance solution, key employee personal data and costs, and insurance solutions.

As each radio button is selected, an input screen pops up for more information. A click on the income statement button pops up a screen that requests five years of after-tax income, an estimated growth rate, setting up of a base year, and gross sales. Assumptions pops up information on installment payments to heirs, term of payout, whether or not interest is deductible, how many years goodwill is expected to last, the discount rate, and an ownership premium/discount.

Owner financial data has room for redundancy, whereby the cost to replace the owner’s compensation is determined.

Of key importance is the valuation component, where the valuation method for net asset value, discounted future earnings, excess earnings (treasury method), capitalization of earnings and an averaging of these four methods is calculated. Any time that data is changed, a recalculate button at the bottom easily changes the reports.

BQP has a report group box, where any of the tables, concepts, charts, and reports can be collated and printed for the client. A cover sheet can be customized, and the program also allows for the insertion of headers and footers for further customization.

Kettley has uniform input screens and report options for the Estate Cost Estimator, the Estate Quick Plan, and the Charitable Quick Plan. Other modules that are available for purchase are Back Room Technician and Financial Planning Solutions.

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