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

By the Numbers

$4.3TRILLION

Seniors hold approximately

$4.3 TRILLIONin 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

Average cost of nursing home care in California:

$6,306 per month

Average cost of assisted living in California:

$2,709 per month

By the Numbers:

By the Numbers

96% of Baby Boomers said their parents

don't owe them an inheritance

Only 10% of Baby Boomers say it is very important for their

parents to leave them financial assetsor real estate

By the Numbers:

• 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?

Questions I would have …

1. Who is EquityKey™?

2. How does the EquityKey™ program work and how does it help me?

3. Can you walk me through some examples?

?Questions I would have:

History of EquityKey™

• 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

The History of EquityKey™

• 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?

• 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

A Growing Dilemma

I need more income

than I thought!

• Shrinking Social Security benefits

• Rising cost of living and medical expenses

• Expensive new retirement dreams

• Longer life expectancy

A Growing Dilemma

ARE YOU REAL ESTATE RICH, BUT CASH POOR?

“ I own $1,000,000 in real

estate and still struggle

to pay my bills.”

Pat – 71 years old

Continue working.

Sell your home and rent.

Traditional mortgage.

Reverse Mortgage.

If you want more money…

…what are your options?

There are ways to access cash…

…but they may erode your estate.

Conventional loans and mortgages

Reverse mortgages

There ARE ways to access your cash…

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!

Reverse mortgages are helpful, but…

THE EquityKey™ SOLUTION

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

EquityKey™ - Your Partner in GrowthEquityKey: Your Partner in Growth

50 % Appreciation to you

Original equity of

$600,000remains YOURS.

50 % to EquityKey™

50 % to EquityKey™If 5% growth / year

Example

EquityKey™ - your partner in growth

In 2007:

$600,000

In 2017:

$1,000,000

EquityKey: Your Partner in Growth

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.

“How Much Can I Get?”

Example: Home value of $600,000

“How much money will I receive?”

• 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?

• YOU keep the money you received from EquityKey!

• EquityKey shares in 50% of any appreciation over the Initial Appraised Value of the property.

What if my property appreciates 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.

What if my property depreciates in value?

• 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%

The Rest of the Story

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.

Why would EquityKey take the risk?

•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

Why a life-insurance policy?

“How Do I Qualify With EquityKey™?”

• Must be at least 65 years old

• Must be a property owner

• Must be insurable (reasonably healthy)

How do I qualify for EquityKey?

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.

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?

3 Uses for EquityKey™

• Cash Flow

• Income Replacement – For Future Medical Needs (LTC Ins.) – Upon Death of Spouse (Life Ins.)

• Estate Planning / Tax Reduction

Cash Flow Example

Example only. Please consult your advisors to see if this example is appropriate for you and your situation.

How does EquityKey help me?

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

Bob’s Story

Final Appraised Value of Home $800,000

Initial Appraised Value of Home -$500,000

Home Appreciation $300,000

12 years later, upon Bob’s death

Bob’s Story

Final property value: $800,000EK share of appreciation: - $150,000Acquisition costs: - $64,000*maxBob’s estate receives: $586,000

*Actual selling costs ended up at $48k, so $16,000 was credited back to the estate.

AND

Bob received $67,500 from EquityKey

Total that Bob and/or his estate received: $669,500

Bob’s Story

The tax on the money received is not determined until:

1. 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?

Income Replacement Example

Example only. Please consult your advisors to see if this example is appropriate for you and your situation.

How does EquityKey help me?

John & Irma Smith

Smiths: John 73, Irma 70 - Good Health

Home Value: $750,000 with no debt

$53,400 …………. Total Income

$24,000….John’s Pension (50% Survivor Benefits)

$19,200 ………… Soc. Sec. (John)

$10,200 …………. Soc. Sec. (Irma)

John & Irma Smith’s Story

The Smiths’ challenge:What happens to Irma if John passes away first?

$31,200 …………. Total Income (loss of $22,200/yr)

$12,000 …………. John’s Pension (now cut in half)

$19,200 ………… Soc. Sec. (Irma keeps John’s)

$ 0 …………. Soc. Sec. (Irma)

John & Irma Smith’s Story

Initial Appraised Value of Home $750,000

3. John and Irma received an offer of:

$100,000 Lump Sum payment from EK

1. Started with a free, no-obligation consultation to discuss the EquityKey™ option.

2. Solution was a fit and John was able to qualify.

The

EquityKey™ Plan

for the Smiths

John & Irma Smith’s Story

The Smith’s accepted the EK offer and purchased a $345,000 life insurance policy on John’s life.

If John dies first, Irma can use the $345,000 to replace the $22,000 in annual lost income.

Irma dies first, John cashes in or sells the policy he no longer needs to replace Irma’s lost Social Security

AND IF

The

EquityKey™

Solution for

the Smiths

John & Irma Smith’s Story

How does EquityKey™ help me?

Estate Planning Example

Example only. Please consult your advisors to see

if this example is appropriate for you and your situation.

How does EquityKey™ help me?

Estate Planning Catch 22

Estate Before Taxes:

$$$$$

Estate After Taxes:

$$

The “Catch-22” of Estate Planning

Age: 74Miriam 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

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

Miriam’s Story

Step 1 • Held a consultation with her Financial Advisor

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.

Step 2Signed up for the EquityKey™ program and put in place an estate planning strategy for the money.

Initial Appraised Value of Home $1,000,000Income Received from EquityKey $ 120,000

Miriam’s Story

Without EK Program

$2.215 Million Net Estate

With EK Program

$2.381 Million Net Estate

Miriam’s Estate Value With & Without EK

Gave 166k more to her estate by using the EK Program.

What else should

I know about

EquityKey™??

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?

What type of properties qualify?

• 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 types of property qualify?

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.

Can I move?

You may sell at any time…but, like a CD there is a penalty for early withdrawal since the real estate has not had sufficient time for appreciation.

Costs at Early Sale =

50% of appreciation (to date) +

Early Sale Charge …a sliding scale beginning in year 1 at 15% of IFMV and decreasing by 1% each year.

After 10 years or upon death, there is no Early Sale Charge.

What if I want to sell?

Can I move this program to a new property?

Yes, with approval

No Early Sale Charge

• You may qualify as long as the mortgage owed is less than 70% of the value of the home

• OK if you have traditional 1st mortgage.

• OK if you have Home Equity Line.

Reverse Mortgages and other Negative Amortization loans are not allowed.

What if there is an existing mortgage?

What happens when a spouse passes away?

If an EquityKey qualified homeowner passes, the surviving homeowner may :

1. Continue to own the property and share the appreciation with EquityKey.

2. Offer EquityKey the right to acquire the property, or

3. Pay EquityKey 50% of the appreciation and retain ownership of the property.

If non-qualified spouse passes:

Current EK program remains unchanged

Can the kids keep the home?

Your children may buy out the EquityKey portion of the appreciation and keep the home after your death.

Acquisition Cost is waived.

Can my children keep the home?

• 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?

Questions??