CH Capital Tek Seminar Final

8/3/2019 CH Capital Tek Seminar Final

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Financial Planning Seminar for Tektronix

Employees

Presented by Sok Cordell

Managing Director

Sr. Financial Consultant

Sr. Commercial Mortgage Banker

Wealth Consultant


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Financial Planning SourcesYouYou

Estate PlanningEstate PlanningInvestmentInvestment

PlanningPlanningRetirementRetirement

PlanningPlanningCredit PlanningCredit Planning

IncomeIncomeProtectionProtectionPlanningPlanning

CharitiesCharities

WillsWills

LLCLLCFoundationsFoundations

TrustsTrusts

DEFINEDDEFINEDCONTRIBUTIONCONTRIBUTION

401(k) PLANS401(k) PLANS

Life InsuranceLife Insurance

IRAsIRAs

DeferredDeferredComp/ESPPComp/ESPP

Incentive ESOPIncentive ESOPNonNon

Incentive ESOPIncentive ESOP

LiabilityLiabilityInsuranceInsurance

LongLong--term Careterm CarePlanningPlanning

AssetAssetProtectionProtectionPlanningPlanning

GuaranteedGuaranteedInvestmentsInvestments

Health CareHealth CarePlanningPlanning

BusinessBusinessLeasingLeasing

VariableVariableForwardForwardSalesSales

AssetAssetCollateralizedCollateralized

LoansLoans

SmallSmallBusiness LoansBusiness Loans

MortgageMortgagePlanningPlanning

AlternativeAlternativeInvestmentsInvestments

Hedge FundsHedge Funds

Fee basedFee basedAccountsAccounts

AssetAssetAllocationAllocation

InvestmentInvestmentSelectionSelection


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Retirement IncomeSources

O V E R V I E W

1

2 Retirement Planning

3 Financial InvestmentPlanning

4

Medical InsurancePlanning

5 Baby Boomers affect

6 Credit PlanningThe information contained herein is based on sources we believe to be reliable, but its accuracyor completeness is not guaranteed. Neither CH Capital Partners LLC or Securities America norany of its employees provide legal or tax advice. You must consult with your legal or tax advisors

when making decisions about a retirement plan.

2

7

8

Medical InsurancePlanning

Estate Planning


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Ex

ecutive Compensation

Cash Balance Plan

401K Plan

Non-Qualified Deferred Compensation

Stock Based Compensation

Golden Parachute Plans

Split Dollar Life Insurance Plans

Fringe Benefit Programs Employee Leasing Asset Protection plans

Million Dollar Cap / Section 162 (m) on Compensation


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Retirement Income Sources

RETIREMENT INCOMERETIREMENT INCOMESOURCESSOURCES

COMPANYCOMPANY--SPONSOREDSPONSORED

PLANSPLANS

INDIVIDUALINDIVIDUALRETIREMENTRETIREMENT

ACCOUNTSACCOUNTS

EMPLOYMENTEMPLOYMENTCONSULTINGCONSULTINGPARTPART--TIMETIME

WORKWORK

PERSONALPERSONALSAVINGSSAVINGS

CDs STOCKSCDs STOCKS

SOCIALSOCIALSECURITYSECURITY

CASH BALANCECASH BALANCEPLANPLAN

TRADITIONAL IRATRADITIONAL IRAROTH IRAROTH IRA

DEFERREDDEFERREDCOMPENSATIONCOMPENSATION

401(k) PLANS401(k) PLANS

INCENTIVEINCENTIVESTOCKSTOCK

OPTIONOPTION

NONNON--INCENTIVEINCENTIVESTOCKSTOCK

OPTIONOPTION


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Retirement Planning

1


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Retirement Planning

Pension Plan & Cash Balance Plan

401K Plan

Employee Stock Purchase Plan Non Qualified Deferred Comp

Qualified and non-qualified stock options

Golden Parachute

Social Security

IRA and other investments


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Identifying Your Retirement Income Sources

Tektronixs Cash Balance Plan

Tektronix's 401K employer-sponsored

savings plans

Tektronixs Stock incentive options

ESPP (Employee Stock Purchase Plan) Individual retirement accounts (IRAs)

Nonqualified deferred compensation

plans

Social Security

Employment, consulting or part-time

work Other income


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Cash Balance plan features

Plan overview

Entirely funded by Tektronix

Your account automatically grows through pay credits and

interest credits

The plans fiduciaries are responsible for the investment of the

plan assets and Tektronix bears the risk of market returns oncash balance assets


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Eligibility

You are enrolled by Tektronix as soon as you

are eligible

If you are a qualified regular full-time or part-time employee,

you are eligible to participate in the plan

Participation starts January 1 following hire date


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Opening balance

Employees hired before 1/1/98 had their final averagepay pension benefit converted to a cash balance

Pay Credits

Employees hired after 1/1/98 receive pay credits of 3.5%of eligible compensation

Employees hired before 1/1/98 receive pay credits of 4.5%of eligible compensation

Interest Credits

Annual credit rate is 2.75% for 2002

The interest credit rate is reset each year and is basedon the one year treasury constant maturity rate

Vesting

You become vested after four years of service or uponattainment of age 65, disability, or death


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At termination, at any age, a participant

can elect to:

Leave his/her Cash Balance account in the planto grow through monthly interest credits

Roll the Cash Balance account into an IRA

Take the account balance out in a lump sum

Begin to receive a monthly annuity benefit


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R E T I R E M E N T

I N C O M E S O U R C E S

Cash Balance Program for Tektronixs

Account Balance conversion

Reviewing what GATT rate is

Annuity vs. lump sum

Reviewing what longer life expectancy means to you How to formulate your pension plan

Before the reform January 1, 1998

After the reform January1, 1998

Distribution Options

COLA (Cost of living adjustment)


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Cash Balance Program

4 years to vest for retirement income.

Once vested in the cash balance program you have manychoices to take out the plan, annuity method or lumpsum.

The benefit is based upon you annual salary and years ofservice

What is GATT?

What is Pension Guarantee Corporation and how manycorporations pension plan belong to it

What is the life expectancies are used to calculate yourbenefits

Can we create a better plan


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Annuity Payments or Direct IRA Rollover

Taking Annuity Payment

Annuity company takes the risk of investmentInsurance company study life expectancyPayment might not be sufficientNon-spousal beneficiary might not receive any benefit

Taking a Direct IRA Rollover

You take the risk of investments

Your life expectancy is determined by IRS for an IRA

Payment decision is yoursNon-spousal beneficiary will be able to rollover to stretch IRA


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401(k) plan features

Eligibility All regular full-time or part-time employees are eligible

Basic contributions

Tektronix automatically makes a contribution equalto 2% of your eligible pay each pay period

100% invested in Tektronix stock

May be moved out of company stock after age 50 with

at least four years of service, up to 20% per year

E

mployee contributions You can contribute between 1% and 50% of your eligiblepay on a before-tax basis, subject to IRS limitations

($11,000 max in 2002, or $12,000 if age 50 by 12/31/02)


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Company match

Tektronix matches dollar for dollar the first 4% of your

before-tax contributions

Prior to 1/1/98, the match was automatically 100% invested

in Tektronix stock and may not be moved out of stock until you

reach age 50 and four years of service, up to 20% per year

Match made after 1/1/98 is invested in the funds that you choose

for your own contributions

Rollovers Permitted from another qualified plan or IRA

Vesting You are 100% vested in your entire 401(k) account


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Loans Can be requested online or by telephone

Maximum of two loans outstanding

Minimum of $1000

Maximum of 50% of the account, not to exceed $50,000 lessthe highest outstanding loan balance in the previous 12months

5 year maximum repayment term

$75 loan origination fee Interest rate = prime + 1%


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Employee Stock Savings Program

1 to 10% of your eligible

Income

Purchase shares 15%below the market price

That is like having 15%

rate of return a year.

Danahar purchase Tekfor $38.00 a share in

2007

1994

$12.85

2007

$38.00


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Tektronix gets purchased by Danahar

2009 Danahar Stock price is $59.22

Where does that leave former Tektronix employees?

Danahar has taken over the company


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Nonqualified Deferred Compensation Plans

Frequently provided to executives and recipients ofearly retirement incentive programs

Distributions not eligible for any special taxtreatment or rollover to an IRA

Distributions taxable as ordinary incomeDistributions must be received in installments in

order to defer immediate taxation on entire balance


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Social Security

Monthly payments for your lifetime, generally beginning at age 65Payments based on earnings history and indexed annually for

inflation

Benefits can start at age 62, but are permanently reduced Amount of reduction based on age and number of years before full retirement

age (generally, age 65)

Benefits are adjusted if you work and receiveSocial Security before full retirement age

A portion of your Social Security benefits may be taxable based onyour income


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Social Security

Social Security Administration (SSA) mailsstatements annually to individuals over 25 years

oldExpect to receive it three months before the

month of your birth Check the Statement to ensure that it accurately reflects your

earnings history

You can request a copy at any time(800) 772-1213 or www.ssa.gov


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TYPES OF STOCK OPTIONS

Statutory

(also known as Incentive Stock Options)

Non-statutory(also known as non-qualified)

TWO PRIMARY TYPES:


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INCENTIVE STOCK OPTIONS (ISOs)

ISOs are governed by Code 421 and 422

Taxed preferentially compared to non-statutory stockoptions

Not taxed at time of grant or exercise

Long term capital gain treatment when sold as long as

they are not sold until:

Two years after date of grant

One year after date of exercise


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ISOs (Cont.)

Less common than non-statutory stock options. Why?

No tax deduction for employer when exercised

Limit on amountan employee can receive

maximum of $100,000 FMV of options that can

vest per year

options must be exercised within 10 years

$1,000,000 max total per employee

Non-transferable (except at death)


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ISOs and Section 83(b) Elections

Goal: Reduce or eliminate AMT

Risk: Disqualify ISO Holding period

Election effective for AMT

Election 30days after the received date

When the stock vests it is reported as income tax andnot capital gains


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NON-STATUTORY STOCK OPTIONS (NSOs)

Options that dont meet the requirements of

Code 422

Tax treatment is governed by Code 83

Not taxed at time of grantif no readily

ascertainable fair market value (FMV) exists(i.e., not actively traded on an established market)

Generally taxable at the time of exercise Ordinary income equal to difference between

FMV and exercise price


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Much more common than ISOs.

Why?

Employer tax deduction when exercised

No statutory limitations (may be Plan limits)

no limit on amountor transferability

Cashless exercise arrangement often available

Vesting provisions common

NSOs (Cont.)


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TAX COMPARISON

ISO NSO

GRANT OF

OPTION

NO TAX NO TAX

EXERCISE OF

OPTION

SALE OF

STOCK

NO TAXTax on built-in gain

as ordinary income.

Tax on total gain at

long-term capital gainrates.

Tax at long-term

capital gain rateson gain between dateof exercise and dateof sale.


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PLANNING FORSTOCK OPTIONS

(1) Alleviate adverse income tax consequences incurred at

the time of exercise, and/or

(2) Alleviate potential gift or estate tax consequences of

passing the stock or proceeds to heirs

*TWO POTENTIAL GOALS:


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WHO DO YOU KNOW . . .

Who has non-statutorystock options?

Wants to cash in some or all of their options?

Doesnt need the proceeds?

Wants a tax efficient way to pass the value of the options

to their heirs?


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Stock Option Planning

Section 83(b) Elections

AMT Planning (Incentive Stock Options)

Gifting of Options (Nonqualified Stock Options)

Miscellaneous Issues


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AMT Planning

ISO bargain element

Break-even analysis Minimize when appreciating

Disqualify when price dramatically declines after

exercise


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Gifting of Options

Wealth transfer strategy

Safe harbor valuation vs. intrinsic value

Income tax consequences Practical concerns

Risk to the wealth transfer strategies


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Miscellaneous Issues

Deferral opportunities

Rescission of exercise

Pre-IPO valuation for ISO exercise Valuation discounts for public stock


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Golden Parachute

Parachute payment defined is in the nature of compensation and is made or is to be made to or

for the benefit of a "disqualified individual" (i.e., payments made to

an employee, independent contractor, shareholder, officer, or highly

compensated individual (i.e., one of the employer's top one percent

or 250 employees in terms of compensation, whichever group is

smaller) at any time during the 12-month period immediately before

the date of ownership or control change)

is contingent on a change in the ownership of a corporation, in the

effective control of a corporation, or in the ownership of a substantial

portion of the assets of a corporation

has an aggregate present value of at least three times the individual's

base amount of compensation


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Golden Parachute

Excess parachute payments

payments from certain small business corporations (i.e., S

corporations)

payments from corporations that, immediately before the

change in control, have no stock that is readily tradable on an

established securities market or otherwise

payments to or from certain qualified plans, including

pension, profit-sharing and stock bonus plan

certain payments of reasonable compensation for personalservices


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Golden Parachute

Calculating the amount of excess payment.

The key is to determine the portion

of the base amount to be allocated

to each parachute payment. That

portion is figured by multiplying

the base amount by a fraction, the

numerator of which is the present

value of such parachute payment

and the denominator of which is

the aggregate present value of all

such payments. This can also be

expressed in the following formula:

The calculation of an excessparachute payment then becomes

largely a matter of plugging in the

appropriate numbers.

Base amountallocable topayment =

present

value(PV) ofpaymentaggregate PV ofall

payments

xbase


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R E T I R E M E N T

I N C O M E S O U R C E S

Other Income

Personal assetsInheritances

Trusts

Rental real estate


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Retirement Planning

2


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Asset allocation

The process of determining what

percentage of a portfolio to invest in each

asset class such as stocks, bonds, and

cash.

Diversification

Spreading investments among many

different securities or sectors to reducethe risk of owning any single investment.

Asset Allocation and Diversification


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Given a level of risk, there is an optimum portfolio that

maximizes the investors return based on that level of risk.

Potential Risk

Potentia

lReturn

Individualsecurity

contributesto overall

risk ofportfolio

Higher risk =higher potential

return

lower risk =lower potential

return

Optimum portfolio=diversified portfoliogiven a level of risk

Source: Wells Fargo Funds Management, LLC. This chart is for illustration purposes only and does not predict or guarantee the performance of any

Wells Fargo Fund.

Modern Portfolio Theory

RISK

RETURN


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Source: Gary P. Brinson, Brian D. Singer Gilbert Beebower, Determinants of Portfolio Performance II: An Update, Financial Analysts Journal, May-June 1991. Past performance is no guarantee of future results. This chart is for illustration only and does not predict, illustrate or guarantee theperformance of any investment.

1.1%2.8%

91.5%Impact ofAsset Allocation

Impact ofSecurity Selection

OtherImpact of

Market Timing

Asset allocation has determined over 91% ofportfolio performance.

4.6%

Impact of Asset Allocation


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Inflation risk

Market risk

Credit risk

International risk

Economic risk

Specific risk

Retirement income lossrisk

How do you feel about risk?


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Allocation of Assets

Allocations may change slightly, but successfulinvestors follow the diversification models

X O X

O X O

X O X

The chart and table are for illustrative purposes only.

Value Core Growth

LargeCaps

MidCaps

SmallCaps


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X O X

O X O

X O X


Value Core Growth

Large CapsShort

Mid Caps

Short

Small Caps

Short


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X O X

O X O

X O X


Short Interm Growth

High Quality

Medium

Low


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Long and Short Funds

Commodity Index

Short Bonds Long Bonds

FDIC Insured S&P 500 CD

FDIC Insured Dow 30

Reverse Convertibles Alternative Investments

Fixed and Variable Annuity with guarantees


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Emotions May Cloud Investment Decisions

Wow, I feel greatabout this

investment.

Point ofmaximum

financial risk

Point of maximumfinancial

opportunity

Temporary setback.Im a long-term

Investor.

Maybe themarkets just

arent for me.

For illustrative purposes only.


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Market Volatility Illustration

56 up years & 25 down

Average return in up years 22.87%

Average return in down years 12.60%

1926 - 2009

Source: Ibbotson Associates. Data as of 12/31/03. The S&P 500 Index is an unmanaged index considered representative of U.S. large-companystocks. An investment cannot be made directly into an index.

Performance quoted is past performance and cannot

guarantee comparable future results; current performancemay be lower or higher. Index returns include thereinvestment of dividends and distributions.


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7 Habits of Successful Investors

1. Follow a plan

2. Asset allocation

3. KnowR

ule of 724. Dollar cost average

5. Let time work for them

6. Plan for inflation

7. Work with their advisor


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Medical Insurance Planning

Medical insurance planning is an

important aspect to consider

regarding retirement

3


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Health Care available in Oregon

Health Net Program of Oregon

Kaiser Foundation plan of Oregon

ODS health care plan

Pacific Health Care of Oregon

Providence Health Care Plan

Regence Health Care of Oregon

Blue Cross health of Oregon

Aetna of Oregon

Great West Health Care http://www.dhs.state.or.us/healthplan/tools_prov/index.html


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The premium range of Health care

Individuals

Prices usually range from $225 to $345 monthly

Family Prices usually range from $590 to $1190 Monthly

Group Prices usually range from $225 to $455 Monthly


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When do you need the health care?

When you retire until you qualify for Medicare age 65

currently

The premiums ought to be reduce to 50% when you apply

for Medicare A & B

That could be about 5 to 10 years depending on your

individual situation


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Things to look for

Out of pocket expense maximum

Premiums

Maximum dollar coverage

Co-insurance payment Deductible

Prescription Drug program

What benefits they will pay


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Who is eligible for Medicare

People age 65 or older

People under age 65 with certain disability

People withE

nd-StageR

enal Disease The premiums for Medicare is $78.20

http://www.medicare.gov/


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This is a Medicare card


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How does supplemental insurance work

When you receive medical service Your benefit is determined by Medicare A & B, then they pay for their

portion

Any remaining benefit will be paid by your supplemental insurance

Premium Medicare Premium is about $78.20

Your Supplemental insurance is about $63.00 to $120.00

These benefits might not be enough

Benefits

Dealing with the Government http://www.ehealthlink.com/Senior/Default.asp


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Health Care Premiums

Before Medicare about Prices range from $225 to $345

monthly

After Medicare $78.20 plus $120.00 is about $198.00

monthly

One Possible solution is a Roth IRA Distribution is Tax Free

Hold Period is 5 years

Grows Tax Free


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Baby Boomer Affect

4


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Source: The Great Boom Ahead, Harry S. Dent, Jr.

Inflation Adjusted S&P 500 Number of 49 year olds in U.S.

Thousands4600

4100

3600

3100

2600

2100

The Great Boom & Bust Ahead

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030


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The baby boomersretiring???

Baby boomers77 million Americans born

between 1946 and 1964.

First wave turns 55 during 2001, and will start

retiring in the next 5-10 years.

Retirement will last from roughly 2005 until 2035.

At retirementaccording to Fidelity Investments,

roughly half of invested assets are transferred into

bonds or cash.

Source: Fidelity Investments


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Baby Boomers

Someone turns 50 every 8 seconds in the U.S*

Rate will continue for next 18 years*

Behind in saving for retirement:

More twentysomethings have started saving

compared with the number of boomers who waited

until their 30s**

Only 37% say they feel confident in their

retirement savings**

* Source: Bureau of Census

** Source: Fortune Magazine, The Future of Retirement, 2000


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Demographics Defined

Source: Boom, Bust & Echo How to Profit from the ComingDemographic Shiftby David K. Foot with Daniel Stoffman 1996. Thispresentation is not authorized for use with prospective investors unlesspreceded or accompanied by a currently effective fund prospectus,available from your financial advisor, which contains more completeinformation, including sales charges and expenses. Please read theprospectus carefullybefore you invest or send money.

20s

30s

40s

50s


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1950s

Baby Food1: 270 million jars to 1.5 billion jars; 1.5 billion

jars sold in 1953

Cowboy Outfits2: $75 million per year

Elementary Schools3: More built in 1957 than any other

year before or since

1 National Gardening Association

2 Bureau of Labor Statistics

3 US Department of Commerce


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1960s

Teenage Girls1: Bought 20% of all cosmetics and toiletries

Fast Food Craze2: Teenage boomers made millionaires of

founders of McDonalds, Jack-In-The-Box and Kentucky

Fried Chicken in 1965College Enrollment3: Went from 3.2 million in 1965 to 9

million in 1975, and 743 new colleges opened to absorb

glut





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1970s

Zig-Zag1: Roll-Your-Own cigarette papers; profits rose 25%

every year for a decade

The Gap2: Blue jeans:$600,000 in sales first year; 7 years

later:165 stores and $99 million in sales

Identity Crisis3: Personal growth becomes a growth industry

with best-selling books like Im OK-Youre OK. The focus is

on lifestyle experimentation





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1980s

Career Focus1: Wall Street Journal, Esquire, Money, Forbes

and Fortune entered record growth years

Health Club2: Memberships rose from

$277 million in 1972 to $8 billion in 1984Wall Street3: Ballooned as boomers

entered the work force





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1990s Gardening1: Retail sakes of lawn and garden equipment

doubled from 1984 to 1992 as baby boomers lifestyles

moved out of the fast lane

Fighting Wrinkles2: Fruition, an anti-aging cream, was

Estee Lauders most successful product launch ever, sellingone million units in six months, 58% of it to baby boomers

Eating Well3: In 1991, Americans dined out to the tune of

$198 billion, a figure that more than quintupled since 1970





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What about 2000s

Atkins Diet

Voice of Internet Protocol (VOIP)

Cell Phones

HD TV

Medical Technology

China

Credit Crisis Starts

Derivatives

Credit Extension

GDP growth of 4.5% Consumer Spending counts for

70% + of GDP

Banking Crisis

Housing Prices down 30%

The new normal

Consumers spending ends

Easy credit ends

Banks will be zombie banks

Insurance companies in trouble

Credits cards and Commercial RealEstate is the next crisis

Boom and bust economy ends

Preparing for high regulations

Health Care reforms

Medicare reforms


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What about 2010s

Americans reducing debt

Credit Crisis Continues

Worry about Social Security

Worry about US debt 80% of current GDP

Worry about Currency

Worry about Medicare

2015: 50% of 77 million baby boomers will be

withdrawing out of the market, instead of investing into

the market


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Net change in new 47 year olds vs. new 65 year olds

-600000

-100000

400000

900000

1400000

1900000

1999

2002

2005

2008

2011

2014

2017

2020

2023

2026

2029

Source: US Census Bureau Projections. This presentation is for example purposes.

When Is The Retirement Boom?

2005: Decline in number of47 year old vs. 65 year olds

2020: More 65 yearolds than 47 year olds


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What about long-term care facilities?


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Where are they moving to?


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Value of Commercial Mortgages


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Ten year treasury gets assaulted


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Average existing house sales


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Residential and Commercial Construction Starts


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Consumer Debt in US


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Credit Collapse


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House Hold Debt to GDP


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Are we nuts?

??????????????????????????????????????????????????

?????????????????????????????????????????????????


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Credit Planning

5


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Credit Planning

Credit Score

How credit score is determined

Payment History consideration

Amount you owe

Length of credit history

Types of credit

What is a good credit score


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Credit Scores and its Importance

FICO scores

The Three credit reporters: Equifax, Trans Union, and

Experian

Ideas for thought Reduce credit cards and other various credit to 50%

of the total credit available

Write letters to update your credit profile

Whi h t f dit hi t t


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Which parts of a credit history are most

important?

35% - Your Payment History

30% - Amounts You Owe

15% - Length of Your Credit History 10% - Types of Credit Use

10% - New Credit

Source: Experian Credit Bureau


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Payment history considerations:

Number of accounts paid as agreed

Delinquent accounts: length of past-due status

total number of past due items how long it's been since you had a past due payment

Negative public records or collections



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Amount you owe are considered

How much you owe on accounts and the types of accountsyou carry balances on

How much of your revolving credit lines you've used(looking for indications you are maxed-out)

Amounts you owe on installment loan accounts vs. theiroriginal balances (are you paying them downconsistently?)

Number of zero balance accounts



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Credit history length considerations

Total length of time tracked by your credit report

Length of time since accounts were opened

Time that's passed since the last activity

The longer your (good) history, the better your scores



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The types of credit you use

Total number of accounts and types of accounts

(installment, revolving, mortgage, etc.)

A mixture of account types usually generates better

scores than reports with only numerous revolvingaccounts (credit cards)



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Your new credit

Number of accounts you've recently opened and theproportion of new accounts to total accounts

Number of recent credit inquiries

The time that's passed since recent inquiries or newly-

opened accounts If you've re-established a positive credit history after

encountering payment problems

In general, checking to make sure you aren't out thereopening up numerous new accounts

Source: Experian Credit Bureau and A PRIMEDIA

Company


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What's a GoodScore?

Up to 499: 1%

500 - 549: 5%

550 - 599: 7%

600 - 649: 11%

650 - 699: 16%

700 - 749: 20%

750 - 799: 29%

Over 800: 11%

Source: Experian Credit Bureau and A PRIMEDIA

Company


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Tax Planning

Understanding the difference

between taxable, tax deferred and

tax-free investments*

CH Capital Partners LLC does not render legal, accounting or tax advice. Please

consult your tax or legal advisors before taking any action that may have taxconsequences. Certain investors incomes may be subject to Federal AlternativeMinimum Tax (AMT), and state and local taxes may apply.

6


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The New Tax Law

The New Tax Law

The Economic Growth and TaxReliefReconciliation Act of2001

One of most sweeping tax law changes in the past20 years

Provisions phased in over a number of years Important sunset provision

Key Areas of Change

Personal Income Tax

Education Planning

Retirement Planning Estate Planning

Under a Sunset provision, the changes to tax law underThe Economic Growth and Tax Relief Reconciliation Act of 2001 are scheduled to expire on December 31,2010 and do not apply for tax years after this date unless action is taken by Congress. Therefore it is important to confer with your tax advisor as to the potential impactof the sunset provision on your tax decision. CH Capital Partners LLCdoes not render legal, accounting or tax advice. Please consult your tax or legal advisors beforetaking any action that may have tax consequences.


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Personal Income Tax Key Changes

Reduction in marginal tax ratesNew 10% rate bracketPhase-out for itemized deduction and personal

exemption limitations

Relief from marriage penalty taxIncrease in child tax creditRelief from Alternative Minimum Tax (AMT)

CH Capital Partners LLC does not render legal, accounting or tax advice.Please consult your tax or legal advisors before taking any action thatmay have tax consequences.


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Personal Income Tax Rate Reductions

Calendar Year 28% ratereduced to:

31% ratereduced to:

36% ratereduced to:

39.6% ratereduced to:

20011- 2003 27% 30% 35% 38.6%

2004 - 2005 26% 29% 34% 37.6%

2006 - 2010 25% 28% 33% 35%

2011 28% 31% 36% 39.6%

Reduction in Marginal TaxRates

CH Capital Partners LLC does not render legal, accounting or tax advice. Please consult your tax orlegal advisors before taking any action that may have tax consequences.


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New 10% Rate Bracket

Portion of income will be taxed at 10% vs. current 15%

New rate effective July 1, 2001

Maximum refund will be: $300 single filers

$500 heads of households

$600 joint filers

CH Capital Partners LLC does not render legal, accounting or tax advice.Please consult your tax or legal advisors before taking any action thatmay have tax consequences.


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Itemized deduction and Marriage Penalty

Elimination of Phase-out of Itemized Deduction and Personal Exemption

Gradual elimination of both the itemized deduction and personal

exemption phase-out begins in 2006.

Complete elimination of the phase-out by 2010.

Relief from Marriage Penalty Tax

Standard deduction for married couples filing joint return will

increase to twice the standard deduction of a single taxpayer

Effective date: 2005

Fully phased in: 2009

Increase in income limit for 15 percent bracket onlyCH Capital Partners LLC does not render legal, accounting or tax advice.Please consult your tax or legal advisors before taking any action that mayhave tax consequences.


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Child Tax Credit and AMT

Increase in Child Tax Credit

Gradually increases from current maximum of $500to $1,000 by 2010

Dollar-for-dollar reduction against income tax liability

$2,000 deduction for Oregon 529 plan contribution Alternative Minimum Tax (AMT) Relief

For married filing jointly: current exemption of$45,000

Will increase $4,000 through 2005

For single filers: current exemption of $22,500 Will increase $2,000 through 2005

CH Capital Partners LLC does not render legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.

7


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Estate Tax Planning

Understanding the difference

between taxable, tax deferred and

tax-free investments*

CH Capital Partners LLC does not render legal, accounting or tax advice.

Please consult your tax or legal advisors before taking any action that mayhave tax consequences. Certain investors incomes may be subject to FederalAlternative Minimum Tax (AMT), and state and local taxes may apply.

7


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What About A Will?

Do I Need One?

Should I Draw One?

What Should It Say?


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Most People Want To:

Control what happens to them, their property,business, etc.

Avoid delay, expense, paperwork, bureaucracy, and

grief.

Protect their wealth/family from unnecessary taxation.


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Joint Ownership

Survivorship

For Real Estate, Only IfMarried.

Creditors of Each Can GetAt It.

May Create Taxes!

Tenant-In-Common

No Survivorship.

Each has undivided %ownership.

Old English Rules.

Unmarketable.


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Beneficiary Designations

Insurance PoliciesRetirement Plans

Proceeds Taxed to Your Estate, But The Money Goes Elsewhere.Operate No Matter What Your Will Provides -- Separate Instruction.

Avoid Probate, But Not Taxation.Change Requires Changing Each One, Special Forms, etc.


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Intestate Statutes

The Legislature of Each

State Makes A Common Plan!

Property Is Divided

Depending Upon MaritalStatus and Children Surviving.

No Special Treatment For Special Situations, or What YOU Think IsSpecial.

Almost Always Requires Probate - In Court.

Does Not Usually Square With Tax Laws -- Can Cause UnnecessaryTaxes; and Inequitable Burden As To Who Has To Bear The Tax.

Oth G t S l ti


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Other Government Solutions

Your Incompetency/Inability To Care For Yourself orYour Property.

Court Supervised Guardianship.

Additional Costs And Uncertainty.

Possible Conflicts Among Family. Interaction Of State Programs With Your Assets. What You Wanted Isnt Considered.


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What Is Your Current Situation?

You First Need To Carefully Analyze Your CurrentSituation, And Property -- Asset By Asset.

Then See What Would Happen If You Do Nothing.

Do The Results Square With What YOU Want? Will Your Family Be Left In A Jam?

Is The IRS Your Major Beneficiary?


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You Can Have Your Plan; Plus Preserve Wealth!

Utilize Revocable Trusts.

Make A Pour-Over Will. Do Some Financial/Tax Minimization Planning.

Protect Yourself First; Then Pass The Maximum To Your Family.

Shouldnt You Have Your Own Plan? TogetherWith Your Husband/Wife?

Y R bl T t


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Your Revocable TrustA Will Substitute

You Create It During Lifetime, And Retain Control Of It.

You Transfer Your Property To It.

You Direct That Its Property Must Be Used To Care For

You And Your Spouse During Lifetime. You Direct Who Is To Get The Property After

Your/Spouses Death.

The Trustee Can And Must Follow Your Directions --Dont Need Court.


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Plus -- You Coordinate

Beneficiary

Designations/Joint

Ownership

The TRUST

can be the Owner or

Beneficiary!

Dont Need JointOwnership.

One Plan In One Place.

Pour Over Will

The TRUST is theBeneficiary of your Will.

It Catches what you fail to

put into your Trust, andplaces all property underthe same plan.

Easier to Change As YourIdeas Change.


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Two Separate Taxes

Income Tax

You Generally AlreadyKnow About This -- ButDid You Know That:

Extra Income Taxes AreOften Also Due Upon YourDeath - Particularly withIRA & Retirement Plans.

Your Estate / Trust Is AlsoA Taxpayer.

Estate/Gift Tax

Taxes Transfer At FairMarket Value Of AllProperty You Have Or

Control. Like A Sales Tax Without A

Sale.

Cumulative During LifeAnd At Death.

Administered By IRS With

Same Harsh Rules.


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Estate/Gift (Transfer) Tax

Each Person Can Give Tax-Free Unified Credit ($625,000 - $1Million).

+Transfers To Spouse Are Exempt (Marital Deduction).

+Transfers To Charity Are Exempt (Charitable Deduction).

+Annual Exclusion; $10,000 Per Year Per Person Per Donee. Then Tax Starts at 37%; Goes To 55% --Then To 110%

(Generation Skipping).


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Do You Have A Tax Problem?

Earlier Transfers May Have Been Taxable; But YouDidnt File A Return. Are Taxes, Penalties And InterestDue?

How Will You Have The Money Available To Pay TheExpected Tax? -- Liquidity -- The Tax Is Payable, InCash, 9 Months After Death!

Would You Like To Reduce The Tax?

Are You Wasting Your


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Unified Credit?

Since Husband And Wife Can Each Give UnifiedCredit Amount Tax Free To Children, LeavingEverything To Surviving Spouse Wastes The UnifiedCredit Of The First To Die.

Often Results From Joint Ownership. Usual Cost -- $350,000 Extra Tax Is Created.

Better To Plan Credit Shelter.


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Unified Credit Portion

To Special Trust,

Balance to Survivor.

Credit Shelter Arrangement

Credit Shelter Trust:

Survivor For Life,

Remainder to Children.

Survivor

Children Inherit FromBoth

Parents; Maximum Unified

Credit.

Should You Recast Ownership Of Your


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Should You Recast Ownership Of Your

Investment Assets?

Estate/Gift Tax Is Based On Fair Market Value.

Fair Market Value Is Affected By Who Owns, And How Much IsOwned.

Ownership of A Company Has Lower Fair Market Than Ownership

Of The Companys Assets. Gift Of % Of Company Ownership Does Not Transfer

Control/Enjoyment.


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You Might Use an LLC

Exchange Assets For Ownership In A Limited Liability Company.

Transfer Ownership Interests To Revocable Trust and Family, Yet RetainControl.

Ownership Values Are Discounted By Minority Interest And Lack OfMarketability.

Tax Is Substantially Reduced -- Saves 55% of Fair Market ValuationDiscounts.

Assets Are Out Of Harms Way From Government and Other Claims.


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You Might Use Charitable Giving

Charitable Remainder Trust Giving Sets Current Value and IncomeTax Deductions, But Delays The Gift Until You Dont Need ItAnymore.

Especially Useful Where Low Basis Property Will Be Sold.

You Can Design Your Giving To Make It More Profitable To GiveProperty To Your Favorite Charity Than Sell It and Keep TheProceeds Yourself.


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You Will Also Likely Need:

LIVING WILL DECLARATION

Do Not Recessitate Only You Can Decide.

Avoid Artificial Means To ProlongSuffering And Increase Cost.

Dont End Up A Karen QuinlenVegetable.

DURABLE POWER OFATTORNEY

Particularly For Personal andHealth Care Decisions.

Works If You BecomeIncompetent.

Useful Otherwise As Well.


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You May Also Need To Consider

Retirement?

Health And Disability Long-Term Care?

Insurance? Spend Down?

Educational Funds ForGrandchildren?

Roth IRA?

Whatever You Decide


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Whatever You Decide,

Youll Be Glad You Planned

You and Your Family Will BePrepared.

Your Wealth Can BeProtected and Preserved.

You, Your Spouse, YourChildren, Not The IRS, WillBe Your Beneficiaries.

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