Kelley Rating (one asterisk = lowest, to five asterisks = highest):
- Ease of navigation, design of interface and learning curve ***
- Instructional documentation and help system ***
- Carries out the goal of the product as advertised ****
- Overall usefulness ****
ILIT Software from InKnowVision/Wealth Planning Professionals performs cost/benefit analyses for irrevocable life insurance trusts (ILITs) in Excel. The software includes the basic analysis of the estate tax benefits of conventional credit shelter trusts, family trusts and retirement planning.
After you enter family and financial data, this spreadsheet computes the current estate values, projected estate values, estate tax costs of the estate plan and estate tax benefits of the addition of an ILIT to the estate plan. ILIT Software computes and displays the effect of adding an ILIT to the client'(s) estate plan on the net values passing to the heirs.
The software does not include the underlying calculations of other specialized estate-planning techniques, such as grantor retained annuity trusts, grantor retained unitrusts, charitable trusts and detailed qualified plans, but it does prompt the user to enter the current values of these assets. You may enter the value and payout rate of a charitable unitrust or annuity trust and the annual payout is included in the financial report.
You can set up the ILIT premium payment plan to illustrate flexible alternatives in structuring the plan. You can run various "what ifs" using different inflation projections and rates of return. You can also create graphs and charts to assist in client communication.
ILIT Software is periodically updated. Templates for married couples and individuals are available. The Client Information page includes a link to the web page from which updates for both templates may be downloaded.
Competitive Products
Fee-based Excel templates that offer estate-planning features in the same genre as ILIT Software are:
• The Estate Planner (formerly zCalc), which includes a basic estate tax planning facility that allows the entry of the total net values of various asset categories (such as joint, retirement and insurance), overall growth rate of assets (computed from the plan date to the date-of-death of the surviving spouse), and the selection of spousal legacies and credit shelter plans.
• Wealthtec’s Wealthmaster, which does both financial and estate modeling, including the integrated calculation of federal estate tax, split interest trusts, self-canceling installment notes, gift annuities, pension distributions and numerous other planning calculations, with related income tax aspects. The available reports include elaborate graphic displays. Wealthtec also publishes the Foundations module (cash flow modeling for retirement, insurance and integrated estate planning) that integrates with Wealthmaster.
How Does It Work?
ILIT Software has the usual appearance of an Excel spreadsheet. There are sheets for data entry and results and navigation tabs at the bottom of each screen. Macros must be enabled for calculations and the Report.
Client information is entered onto an Excel screen tabbed Personal. The clients' names, ages, income, qualified plan contributions, current estate plan information, life insurance information, required minimum distributions, other pension distributions, income, charitable goals and charitable trust information are entered.
The Personal screen includes prompts for the entry of detailed income tax assumptions that include annual income, number of years this income is expected to endure, projected pension income, social security income, other federal income tax assumptions and the state income tax rate (a comprehensive table of rates for each state may be called up). Here you may enter an assumed federal estate tax rate and select the federal exemption as either current law or a fixed amount beginning in 2010.
On the Personal screen you enter data for ILIT planning, including: the annual premium, years to pay the premium, death benefit, number of Crummey beneficiaries, projected annual exclusion amount and annual maintenance cost. You may also select All to Spouse or By-Pass planning for the first estate of spouses.
The planner’s professional information and the projected estate settlement costs for the client(s) are entered on the screen tabbed Professional.
The next screen, tabbed Family & Goals, is for the entry of the client'(s) family information and articulation of the client'(s) family goals.
Separate screens are provided for the detailed entry of the client'(s) financial information (tabbed Assets) and for the entry of current life insurance benefits (tabbed Insurance).
The program then suggests that you review the report screens for accuracy (tabbed Review). At the Format tab, you can click on Format to instruct Excel to perform the necessary calculations and create the Report.
The key to the efficiency of this software is the entry of the details of insurance and costs of the proposed ILIT. After preparing and formatting the plan, you may return to the Personal tab and enter a different configuration for the proposed ILIT to compare alternate plans.
What Reports Are Furnished?
The Essential ILIT Plan Report begins with a title page, family information and goals. The Report also includes: a bar graph of liquid assets versus the estate taxes projected over the number of years you specified at data entry; a tabulation of liquid and illiquid assets; an introduction to ILITs with an estimate of the dollar effect of implementation of the proposed ILIT strategy; a tabular and graphic comparison of the current plan; the benefit of the recommended ILIT today and at the end of the projected period; flow charts reflecting current and projected values with the flow of funds through the estate(s) with and without the proposed ILIT; and a list of documents essential to the estate plan. An estimated tax on income in respect of decedent distributions is included.
The Report includes tabulations of projected annual summaries by asset class, asset value, taxable income, income tax projections, cash flow projections, first and second estate estimated values and distribution and details of qualified plans for the existing plan, planning without an ILIT and planning with an ILIT. It serves as a basic level retirement planning tool as well as an ILIT planner.
The Report may be printed out in hard copy or saved to a PDF file, if you have that capability (through installation of Adobe Acrobat or comparable software).
What About Help and Support?
Balloons with information on the entry of data at key prompts are included on all the screens for data entry. The publisher provides weekly live training on the use of ILIT Software.
Where Do You Get This Software?
ILIT Software is available for free by download (until July 1, 2010) from the publisher's website.
This software, and the publisher's other services, are available from:
InKnowVision/Wealth Planning Professionals
1111 South Washington Street, Naperville, IL 60540
Phone: 630-596-5090
Website: http://www.wealthplanningprofs.com/public/department57.cfm
Bottom Line
These Excel templates provide a convenient resource to both crunch the numbers on ILIT planning and produce a clear and persuasive client report. And you can't beat the price!
Trusts & Estates magazine is pleased to present the monthly Technology Review by Donald H. Kelley -- a respected connoisseur of the software and Internet resources wealth management advisors use to further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb. He is the co-author of the Intuitive Estate Planner Software, (Thomson-West 2004). He has served on the governing boards of the American Bar Association Real Property Probate and Trust Section and the American College of Tax Counsel. He is a past regent and past chair of the Committee on Technology in the Practice of the American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions on the tech resources available in the practice today. His columns are edited for readability only. Send feedback and suggestions for articles directly to him at [email protected].