THE SIDE FUND SPLIT-DOLLAR SOLUTION™

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Q. Why the Side Fun 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
    

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• 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

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