Q. Why the Side Fund Split-Dollar Solution™?

A. Tax Efficient Funding of:

• Estate Taxes
• Other Liquidity Needs
• Business Continuity Plans
• Buy-Sell Agreements
• Charitable Bequests
• Defective Grantor Trust Installment Notes

• Two Exclusive Tax Regimes under Final Regs. after Sept. 17, 2003
  
  • Taxation as Economic Benefit (Endorsement) Split-Dollar
    or
    
  • Taxation as Split-Dollar Loan
• Measuring Annual Term Cost ("ATC")
  
• IRS Table 2001
• Life Insurance Premium Factors
• Carrier Alternative Term Rates--Open Window of Opportunity?
• Goal: Preserve Favorable ATC Taxation for as Long as Possible
• The Side Fund Split-Dollar Solution™
  • Create Funded Defective Grantor Trust Using Gift Tax Lifetime Exemptions and Annual Exclusions
  • Implement Nonequity Collateral Assignment Split-Dollar Plan between Trust and Grantor (Private) or Employer (Corporate)
  • Repay Grantor from Trust Side Fund or Switch to a Loan in Year in Which No Policy Equity Exists ("Rollout")
  • Pay ATC or Interest from Side Fund
  • Pay Continuing Premium Side Funds During Life or Insurance Proceeds at Death
• Other Options
  • Unfunded Collateral Endorsement Switch-Dollar™
  • Nonequity Split-Dollar for Life
  • Split-Dollar Loans from the Outset
  • Premium Gifts/Bonuses
  • Financed Life Insurance
  • Death Benefit Only (DBO) Plans
    

DURING SPLIT-DOLLAR PERIOD

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AT ROLLOUT

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DURING LOAN PERIOD (IF ANY)

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AT SURVIVOR'S DEATH

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INSURANCE

• Insureds: Mort and Mollie Berg (Ages 65, 60, NS)
• $10M Guaranteed No Lapse U.L. (Survivorship)
• Nonequity Collateral Assignment Split-Dollar Plan
• Grantor (Insurance) Trust Is Applicant, Owner and Beneficiary

We do not express any opinion on the investment, legal, or tax consequences of this plan, and you are responsible for consulting your own investment advisors, legal counsel, and accountants for all such advice.

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