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By the Numbers

By the Numbers. By the Numbers:. $4.3 TRILLION. Seniors hold approximately $4.3 TRILLION in home equity!. By the Numbers. By the Numbers:. Nearly two-thirds of today’s seniors rely on Social Security for half of their income. By the Numbers. By the Numbers:.

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By the Numbers

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  1. By the Numbers By the Numbers: $4.3 TRILLION Seniors hold approximately $4.3 TRILLION in home equity!

  2. By the Numbers By the Numbers: Nearly two-thirds of today’s seniors rely on Social Security for half of their income

  3. By the Numbers By the Numbers: • Average cost of nursing home care in California: • $6,306 per month • Average cost of assisted living in California: • $2,709 per month

  4. By the Numbers By the Numbers: Only 10% of Baby Boomers say it is very important for their parents to leave them financial assets or real estate • 96% of Baby Boomers • said their parents • don't owe them an inheritance

  5. Travel Long-term care insurance Pay off debt Invest for future generation Buy additional real estate Home improvement Estate Planning So, what should you do with your money?

  6. Questions I would have: Questions I would have … ? Who is EquityKey™? How does the EquityKey™ program work and how does it help me? Can you walk me through some examples?

  7. Created in San Diego by Financial Advisors frustrated by lack of options for senior clients Began product development in 2004 2 years of legal, insurance and real estate review Began product distribution in 2006 Offices in San Diego, Irvine, and New York Acquired by KBC Bank in 2006 History of EquityKey™ The History of EquityKey™

  8. Major European Bank serving 11 million customers Employs 50,000 people worldwide Publicly traded with over $450 Billion in assets Ranked Aa3/A+/AA- by Moody’s, S&P, and Fitch Who is KBC Bank?

  9. Seniors are the fastest growing age group in America. Seniors are more active than ever before. Average life expectancy has increased 7 years since 1970. A mixed blessing… A New Generation of Seniors

  10. A Growing Dilemma A Growing Dilemma • Shrinking Social Security benefits • Rising cost of living and medical expenses • Expensive new retirement dreams • Longer life expectancy I need more income than I thought!

  11. “ I own $1,000,000 in real estate and still struggle to pay my bills.” Pat – 71 years old ARE YOU REAL ESTATE RICH, BUT CASH POOR?

  12. If you want more money… …what are your options? Continue working. Sell your home and rent. Traditional mortgage. Reverse Mortgage.

  13. There ARE ways to access your cash… There are ways to access cash… …but they may erode your estate. • Conventional loans and mortgages • Reverse mortgages

  14. Reverse mortgages are helpful, but… Reverse Mortgages are helpful, but… • High origination costs and fees. • Creates new accelerating debt. • Erodes valuable equity. • Interest rate is variable. • Must live in home full-time. • Only applies to primary residence. Still a great product!

  15. THE EquityKey™SOLUTION

  16. EquityKey: Your Partner in Growth EquityKey™- Your Partner in Growth Equity Key will provide debt-free cash to the homeowner in exchange for a percentage of the future appreciation of the property. Your current equity remains YOURS

  17. EquityKey: Your Partner in Growth EquityKey™- your partner in growth Example In 2017: $1,000,000 If 5% growth / year In 2007: $600,000 50 % to EquityKey™ 50 %Appreciation to you Original equity of $600,000 remains YOURS.

  18. “How much money will I receive?” “How Much Can I Get?” One Qualified Homeowner - 50% Participation 12% - 15% Home Value $72,000 - $90,000 Two Qualified – Can choose 100% Participation 24% - 30% of Home Value $144,000 - $180,000 Actual amount paid depends on the health and age of the homeowner as well as the condition and location of the home. Example: Home value of $600,000

  19. Travel Long-term care insurance Pay off debt Invest for future generation Buy additional real estate Home improvement Estate Planning So, what would you do with your money?

  20. What if my property appreciates in value? • YOU keep the money you received from EquityKey! • EquityKey shares in 50% of any appreciation over the Initial Appraised Value of the property.

  21. What if my property depreciates in value? • YOU keep the money you received from EquityKey! • The money distributed is not a debt. EquityKey accepts the risk of the real estate depreciating in value. • If your property loses value at the time of your death or sale, then EquityKey will lose the money they paid you.

  22. The Rest of the Story • National annual appreciation over the last 40 years: 6.1% • 2006 – Change in CA home values: -2% • 2006 – Change in # of homes sold: -23% • 2007 – Projected U.S. home prices: -8.7%

  23. Why would EquityKey take the risk? EquityKey believes that real estate over the long term is a good investment. With a long-term investment horizon, EquityKey is willing to invest some money today for a return in the future. EquityKey purchases, pays for and holds a Life Insurance policy on every client.

  24. Why a life-insurance policy? • Protects EquityKey in the event of your untimely passing. • Enables EquityKey to purchase your home upon your passing and pay your estate quickly. EQUITYKEY PAYS THE FULL COST OF INSURANCE

  25. How do I qualify for EquityKey? “How Do I Qualify With EquityKey™?” • Must be at least 65 years old • Must be a property owner • Must be insurable (reasonably healthy)

  26. What are the costs? • A small refundable deposit of $300 • Refunded if not medically qualified • Refunded if you sign the EquityKey Investment Agreement • Acquisition Cost = Actual costs we incur to sell your property after we have acquired it…if we acquire it. • We will hold back 8% of the FMV to cover the costs to sell the home if we take possession.

  27. The actual costs to sell the home. These costs include: Making the property ready for sale at end of agreement – normal reconditioning costs. Real estate listing commissions Closing costs Keep in mind that your heirs will incur costs to sell the property with or without EquityKey. With EquityKey, we take care of it! What does the Acquisition Cost cover?

  28. Cash Flow Income Replacement For Future Medical Needs (LTC Ins.) Upon Death of Spouse (Life Ins.) Estate Planning / Tax Reduction 3 Uses for EquityKey™

  29. How does EquityKey help me? Cash Flow Example Example only. Please consult your advisors to see if this example is appropriate for you and your situation.

  30. Bob’s Story This is Bob. He is 73 years young. Bob is a good-looking, healthy male. His home today is worth $500,000. Let’s assume he will live 12 more years. Each year, home prices go up by 3.2%*. EquityKey will pay Bob $67,500. * Source: Moody’s Economy.com – San Diego 10 yr projection

  31. Bob’s Story 12 years later, upon Bob’s death Final Appraised Value of Home $800,000 Initial Appraised Value of Home-$500,000 Home Appreciation $300,000

  32. Bob’s Story Final property value: $800,000 EK share of appreciation: - $150,000 Acquisition costs: - $64,000*max Bob’s estate receives: $586,000 *Actual selling costs ended up at $48k, so $16,000was credited back to the estate. AND Bob received $67,500 from EquityKey Total that Bob and/or his estate received: $669,500

  33. The tax on the money received is not determined until: Our client passes – or – 2. The home is sold Based on our extensive legal review, we believe the money received will be calculated as long term Capital Gains at the time the house is sold, not when you receive the money. Of course you must consult your tax advisor. What about the taxes?

  34. How does EquityKey help me? Income Replacement Example Example only. Please consult your advisors to see if this example is appropriate for you and your situation.

  35. $24,000….John’s Pension (50% Survivor Benefits) $19,200 ………… Soc. Sec. (John) $10,200 …………. Soc. Sec. (Irma) $53,400 …………. Total Income John & Irma Smith’s Story John & Irma Smith Smiths: John 73, Irma 70 - Good Health Home Value: $750,000 with no debt

  36. $12,000 …………. John’s Pension (now cut in half) $19,200 ………… Soc. Sec. (Irma keeps John’s) $ 0 …………. Soc. Sec. (Irma) $31,200 …………. Total Income (loss of $22,200/yr) John & Irma Smith’s Story The Smiths’ challenge: What happens to Irma if John passes away first?

  37. John & Irma Smith’s Story • Started with a free, no-obligation consultation to discuss the EquityKey™ option. • Solution was a fit and John was able to qualify. The EquityKey™ Plan for the Smiths Initial Appraised Value of Home $750,000 3. John and Irma received an offer of: $100,000 Lump Sum payment from EK

  38. John & Irma Smith’s Story The Smith’s accepted the EK offer and purchased a $345,000 life insurance policy on John’s life. The EquityKey™ Solution for the Smiths If John dies first, Irma can use the $345,000 to replace the $22,000 in annual lost income. AND IF Irma dies first, John cashes in or sells the policy he no longer needs to replace Irma’s lost Social Security

  39. Estate Planning Example How does EquityKey™ help me? How does EquityKey™ help me? Example only. Please consult your advisors to see if this example is appropriate for you and your situation.

  40. The “Catch-22” of Estate Planning Estate Planning Catch 22 Estate Before Taxes: $$$$$ Estate After Taxes: $$

  41. Miriam’s Story Age: 74 Miriam lost her husband 3 years ago. She has good health, and is happy and active, with a 14-year life expectancy. CURRENT ESTATE IRA $1,700,000 Home $1,000,000 TOTAL $2,700,000

  42. Miriam’s Story Concern: How can we reduce the growing estate tax burden and leave more to her heirs? FUTURE ESTATE – in 14 yrs IRA (If she lives off interest) $1,700,000 Home (5% appreciation) $2,000,000 TOTAL$3,700,000 Taxable

  43. Miriam’s Story • Step 1 • Held a consultation with her Financial Advisor Step 2 Signed up for the EquityKey™ program and put in place an estate planning strategy for the money. Initial Appraised Value of Home $1,000,000 Income Received from EquityKey $ 120,000 • Step 3 • Miriam gifted the EK funds ($120,000) into an Irrevocable Trust • Her Trust used the funds to purchase Life Insurance on Miriam with • a Death Benefit of $485,000.

  44. Miriam’s Estate Value With & Without EK Without EK Program $2.215 Million Net Estate With EK Program $2.381 Million Net Estate Gave 166kmore to her estate by using the EK Program.

  45. What else should I know about EquityKey™? ?

  46. 2 appraisals are ordered EquityKey pays for BOTH appraisals on the front end Homeowner chooses one appraiser EK chooses one appraiser Average the 2 to determine the home’s value Same process at the end of agreement – appraisal costs are included in acquisition costs How is the value of the house determined?

  47. EquityKey wants to participate in the growth of real estate in California. EK will partner with you on: Primary residence Investment Properties Second Homes Commercial Properties What type of properties qualify? What types of property qualify?

  48. Can I move? Can I move? Yes. You may move at any time. Unlike a Reverse Mortgage, you do not have to live in the property. You can move out of the property but will continue to share in the appreciation with EquityKey until you sell or pass.

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