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Thomas contributes $1,643,388 in cash or high basis assets to establish a Family Limited Partnership. |
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Thomas receives General Partnership and Limited Partnership units in exchange. The value of the Limited Partnership units are discounted in value to reflect a lack of control and lack of marketability. |
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Thomas contributes the Limited Partnership units to a Super CLAT. |
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Since the Super CLAT is established as a Grantor Trust, Thomas receives an income tax deduction of $1,119,666 for the portion of the assets that are estimated to pass to the Family Foundation. |
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The Super CLAT pays an annuity of $136,664 (12%) to the Family Foundation for a period of 10 years. |
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As General Partner of the Family Limited Partnership, Thomas purchases a Variable Life Insurance policy on his life, paying the premiums with excess interest earned from tax-free municipal bonds. |
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After the term of the Super CLAT expires, the Limited Partnership units in the trust which include the insurance policy pass to Thomas' heirs. |
