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Thomas contributes $1 million of assets to a Family Limited Partnership. |
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Thomas receives General Partnership and Limited Partnership units in return for this contribution. |
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Thomas makes a gift of Limited Partnership units to the Grantor Deemed Owner Trust to give the trust viability to enter into future transactions. |
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Thomas sells the Grantor Deemed Owner Trust the remaining Limited Partnership units. |
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The trust purchases the remaining Limited Partnership units by providing Thomas with an interest-only note for the purchase price. The interest on the installment sale provides Thomas continued current income. |
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The Trustee of the GDOT purchases a second-to-die insurance policy on Thomas and his wife. |
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The trust pays for the insurance policy with excess funds generated by the Limited Partnership. |
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The corpus of the GDOT, including the life insurance policy or death benefits, pass to the children per terms of the trust. |
