Case Study: Wealth Transfer

Case Study 1: Male 82 Female 81

Ken age 82 and Ann age 80, are in below average health and have accumulated a $40 Million estate. One of the assets in their estate is a 49% interest in a business that their son runs. The approximate market value in their estate is $2.7 million. Their attorney created an FLP with the stock and had it appraised with a 35% discount due to lack of control and limited marketability. They have exhausted their lifetime exemptions and current annual "Crummey" powers fall short of their wealth transfer objectives. Ken wishes to transfer the stock in the business to his son. He is not interested in a plan that would require him to pay gift taxes and is looking for creative short term wealth transfer solutions. They are not interested in paying for life insurance today but may like to have the option to have trust owned life insurance in the future.

Case Study 1: Plan

• Ken enters into a C-PASS agreement with his grantor trust that will pay him $5,508,226 per year for three years of his life if shorter.
• Based upon their ages, and a 5% current 7520 rate, the first year payment to the trust for the right to receive the annuity is $848,970. Ken makes an in kind payment of discounted FLP's.
• Trustee purchases $18 million UL policy to fund the annuity if the contingency is triggered and finances the contract.

Case Study 1: C-PASS Calculations
Case Study 1: C-PASS Calculations With Universal Life

Case Study 2: Male 73 Female 71

Dan and Ruth, are in average health for their age and have accumulated a $50 Million estate. Their attorney has created a FLP and had the partnership appraised with a 30% discount due to lack of control and limited marketability. Initially, they would like to transfer$4 million to their trust for the benefit of their children and grandchildren. They have exhausted their lifetime exemptions and current annual "Crummey" powers fall short of their transfer objectives. He is not interested in a plan that would require him to pay gift taxes and is looking for creative wealth transfer strategy that will allow his trust the option of owning life insurance in the future if needed for additional wealth transfer planning.

Case Study 2: Plan

• Ruth enters into a C-PASS agreement with her grantor trust that will pay her $15,423,032 per year for three years of her life if shorter.
• Based upon their ages, and a 5% current 7520 rate, the first year payment to the trust for the right to receive the annuity is $1,374,817. Ruth makes an in kind payment of discounted FLP's.
• Trustee purchases $47 million UL policy to fund the annuity if the contingency is triggered and finances the contract.

Case Study 2: C-PASS Calculations
Case Study 2: C-PASS Calculations With Universal Life