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Click to see samples of seven planning tools that can achieve more than half of the 50 goals reflected by "Your Purpose" below:
Charitable Remainder TrustComprehensive PlanEmployee Stock Ownership ProgramGrantor Deemed Owner TrustQualified Plan StrategySuper CLATThe Optimized Portfolio System
 
Comprehensive
Plan


MAIN STRATEGIES

1
 Thomas and Virginia contribute $4,500,000 of Marketable Securities and $1,250,000 of Real Estate to a Family Limited Partnership.
2
 Thomas and Virginia receive General Partnership and Limited Partnership units in exchange for their contribution. The Partnership assets are appraised and the Limited Partnership units are valued at a 30% discount due to lack of control and marketability. General Partnership units are ignored in this example.
3
 The Smith's make a gift of $350,000 of Limited Partnership units to a Grantor Deemed Owner Trust. The gift serves to give the trust the viability required to directly enter into an Installment Sale with the Smiths. The Trust purchases $2,500,000 of Limited Partnership units from the Smiths.
4
 The Trust pays the Smiths for the Limited Partnership units with a 6% note, ensuring that the Smiths retain an income stream from their assets while transferring ownership to their heirs.
5
 The Trust assets transfer to the heirs based on terms of the trust.
6
 The Smiths establish a Family Foundation with an initial gift of cash. The foundation, which in this case is a Supporting Organization, allows the Smiths to direct their social capital to charities of their choice.
7
 Thomas and Virginia contribution $1,000,000 of highly-appreciated, Marketable Securites to a Charitable Remainder Unitrust.
8
 The Unitrust pays the Smiths 8% of the trust corpus annually. The use of this trust defers the income tax liability on the marketable securities until distributions are actually taken. By using this type of a trust, current assets can be diversified in a tax-efficient manner.
9
 Upon the deaths of Thomas and Virginia, the remaining trust corpus passes to their Supporting Organization.
10
 The Smiths contribute $1,175,000 of Limited Partnership units to a Charitable Lead Annuity Trust.
11
 The Smith's Supporting Organization receives an annuity amount of $115,150 for 10 years. Following the completion of this term, the remaining trust corpus passes to their desired beneficiaries. By using this technique, the Smiths receive a gift tax deduction. No matter how much eventually passes to their heirs from this trust, the value of the taxable gift will always be $311,191, an amount determined when the trust was established.

DISTRIBUTION OF FIRST ESTATE

12
 Upon the first death, Thomas' gross estate is determined. He is allowed to pass up to $1,000,000, free of estate taxes, to whomever he wishes. He had previously established that a Credit Shelter Trust be established at his death to hold his allowable amount for his children. Since he had previously used some of his unified credit when he established the Charitable Lead Annuity Trust and the gift to fund the GDOT, he is able to retain $713,404. The trust corpus will pass to the children after Virginia's death.
13
 Thomas also directed that a Marital Trust be established at his death to hold assets which qualify for the Marital Deduction.
14
 After the gross estate is reduced by allowable deductions and expenses, taxes are assessed. In this case, there is no estate tax levied. Thomas' net estate, after allowable deductions, is the $713,404 amount which passed, estate-tax free to the Family Trust.
15
 Depending on the terms of the trusts, Virginia may be able to receive income and principle from both the Family and Marital Deduction Trusts.

DISTRIBUTION OF SECOND ESTATE
Virginia's gross estate includes her own assets, assets passed to her from her spouse and assets contained in the Marital Deduction Trust. Since the Smiths' goal was to pay no estate taxes, several techniques are used to eliminate this tax.

16
 Qualified Plan assets are not only taxed on an estate level, but will also be taxed as income when distributions are taken by Thomas and Virginia's heirs. Because of these taxes, only a small portion of these assets will actually pass to the heirs. It is much more efficient to pass these assets directly the the Supporting Organization.
17
 After Virginia's credit exemption, the amount she can pass tax free to her heirs is determined, the remainder of her assets pass to a Testamentary Charitable Lead Annuity Trust.
18
 By using the government's current Section 7520 rate, it was determined that a 100% gift and estate tax reduction could be obtained if the trust make an annuity payment of 11.03% of the trust corpus to the Supporting Organization for a period of 13 years.
19
 After the 13 year period elapses, the remaining trust corpus passes the the Smiths' heirs, tax free.
20
 In total, the Smiths' heirs receive $9,967,641 comprised of: Thomas's unified credit amount of $713,404; Virginia's unified credit amount of $713,404,;current value of the GDOT - $350,000; insurance held in GDOT - $6,000,000; NPVs of future CLAT distributions - $2,190,832.
U.S. Treasury Circular 230 requires that this firm advise you that any tax advice provided was not intended or written to be used, and cannot be used by you, for the purpose of avoiding penalties that the IRS could impose upon you.