THE KUGLER SYSTEM ESTATE CONCEPTS TECHNIQUE BOOK TABLE OF CONTENTS

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1 THE KUGLER SYSTEM ESTATE CONCEPTS TECHNIQUE BOOK TABLE OF CONTENTS Review of Important Terms and Concepts Chapter I: The Proposed Estate Strategy Simple Will Arrangement (assuming Mr. Kugler Predeceases Mrs. Kugler) The Credit Shelter (Bypass) Trust The Life Insurance Trust Arrangement The Marital QTIP Trust rather than Outright Marital Bequest Structuring the Credit Shelter Trust as a Dynasty Trust Utilizing the Estate Assets to Provide Income to the Surviving Spouse Simple Will Arrangement (assuming Mrs. Kugler Predeceases) The Credit Shelter (Bypass) Trust The Life Insurance Trust Arrangement The Marital QTIP Trust Rather Than Outright Marital Bequest Structuring the Credit Shelter Trust as a Dynasty Trust Utilizing the Estate Assets to Provide Income to the Surviving Spouse Creating a New Asset to Help Fund the Payment of Estate Tax (Regardless of which Spouse Dies First) Chapter II: Estate Concepts under Special Circumstances Funding a Credit Shelter Trust to the Maximum State Death Tax Exemption or the Maximum Federal Estate Tax Exemption Using a Lifetime Gift to Eliminate the State Estate Tax Structuring a Reverse QTIP Trust to Maximize the GST Exemption

2 Page 2 Using a Joint Revocable Trust to Fund a Credit Shelter Trust for the Married Estate Owner at the Death of the First Spouse to Die Using a Revocable Trust Funded by the Spouse with a Larger Estate to Fund a Testamentary Credit Shelter Trust for the Spouse with a Smaller Estate Strategies for the Payment of the Estate Tax for the Surviving Spouse with Children Strategies for the Estate Owner with No Children The Married Estate Owner with Children from a Previous Marriage Providing for Two Different Families Outright Bequest vs. Bequest via Trust Arrangement Creating a Living Trust to Save Probate Fees Too Much Joint Property and Problems Allocating Assets to Fund the Credit Shelter Trust The Disclaimer Strategy Special Use Valuation for Qualified Real Property Strategies for the Special Needs Child Installment Payment for Federal Estate Taxes (IRC Section 6166) The Death-Time Estate Freeze via Corporate Recapitalization Chapter III: Lifetime Gifts The Advantage of a Tax Exclusive Tax (Gift Tax) versus a Tax Inclusive Tax (Estate Tax) The Advantage of Lifetime Gifts Paying Gift Taxes within Three Years of Death The Majority Interest Gift Which Qualifies for the Minority Interest Discount Maintain a Minority Interest Valuation Discount by Structuring the Estate Plan to Prevent the Aggregation of IRC Sections to Produce a Majority Business Interest

3 Page 3 Lifetime Gift of Business to Enable Both Spouses to Obtain Minority Interest Discount Gifting the Limited Partner Interest and Retaining the General Partner Interest Gifting the Limited Partner (LP) Units and Retaining the General Partner (GP) Units until Death Gift of GP Units and Subsequent Gift or Sale of the GP Unit within Three Years of Death The Potential Negative Results of Gifting the LP Units via Gift Splitting and Retaining the GP Units until Death The Potential Negative Results When Gift Splitting is Used for LP Units and the Consenting Spouse Dies First and the Surviving Spouse Subsequently Dies Owning GP Units Gifting the General Partner Interest and Retaining the Limited Partner Interest Having the Children Purchase the GP Units and the Parents Purchase the LP Units The Uniform Gifts to Minors Act and the Donor Custodian The Disadvantages of Gifting Capital Assets which Have Declined in Value Gift Tax Exclusion for College Tuition or Medical Care Gift Tax Exclusion for Medical and/or Long-Term Medical Care Insurance Using a Section 529 Plan to Reduce Estate Taxes Chapter IV: Deferred Gifts via GRATs Analysis of the Long Term Maximum Annuity GRAT Calculations (Funded with a Discounted Income Producing Asset) The Long Term Maximum Annuity Reversionary GRAT (Funded with Discounted Income Producing Asset) The Long Term Maximum Annuity Term Certain GRAT (Funded with Discounted Income Producing Asset) Structuring the GRAT Payout to Correlate to the Income Generated by the Asset Transferred to the GRAT

4 Page 4 Analysis of Short Term Maximum Annuity GRATs The Short Term Maximum Annuity Term Certain GRAT (Funded with Non-Income Appreciating Asset) Short Term Maximum Annuity Rolling GRAT Level Contribution (Funded with Non-Income Appreciating Asset) Short Term Maximum Annuity Rolling GRATs (Funded with Non-Income Appreciating Asset) Funding Life Insurance Premiums via a Gift to a GRAT Analysis of Short Term GRAT Comparison The Advantage of the Short Term Rolling GRATs The Advantage of Separate GRATs for Different Assets (where Applicable) Reversionary Grantor Retained Annuity Trust Structuring Long-Term GRAT to Provide an Increasing Annuity Payout Using Life Insurance to Insure the Potential Economic Benefits of a Long-Term GRAT Planning for the Potential GST tax if Child Dies During the GRAT Term Chapter V: Deferred Gifts via Grantor Trusts Sale / Gift of an Income Producing Asset to a Grantor Trust Sale / Gift of a Non-Income Producing Asset to a Grantor Trust Qualified Personal Residence Trust (QPRT) The Minority Interest QPRT

5 Page 5 The Qualified Personal Residence Trust and the Sale of the Residence and Rollover to a GRAT Using a Grantor Trust as the Remainder Interest Beneficiary of a QPRT Funding Life Insurance Premiums via a QPRT The Non-Family Gift via a GRIT Chapter VI: Generation-Skipping Transfers A Unified Credit Gift to a GST Life Insurance Trust Utilizing Gift Splitting and Single Life Coverage A Unified Credit Gift to a GST Life Insurance Trust Utilizing Gift Splitting and Survivorship Life Coverage Limiting the Crummey Withdrawal Right to $5,000 for the Multiple Skip GST Life Insurance Trust Using the Hanging Power of Appointment to Qualify a GST Gift for the Annual Exclusion Qualifying for Both the Gift Tax Annual Exclusion and the GST Annual Exclusion via the Direct Skip Trust Separate GST Life Insurance Trusts for Children and Grandchildren The Predeceased Parent and the GST Problem for Irrevocable Life Insurance Trusts Planning for the Potential GST Tax Problem if a Child Dies before the Parent when the Policy is owned by an ILIT The Deflected Inheritance Chapter VII: Charitable Gifts Selecting Assets to Fund a Lifetime Charitable Gift Charitable Remainder Unitrust

6 Page 6 Charitable Remainder Annuity Trust Term Certain Charitable Lead Annuity Trust (funded with a Non-Income Charitable Remainder Trust with Wealth Replacement Option Net Income Make-Up with Charitable Remainder Unitrust Reversionary Charitable Lead Annuity Trust (Funded with Income Producing Asset) Producing Appreciating Asset) Funding Life Insurance Premiums via a Reversionary CLAT The Charitable Short Term GRAT Funding the Death-Time Charitable Gift with Life Insurance Testamentary Charitable Remainder Trust (funded via Capital Asset) Testamentary Charitable Lead Annuity Trust (for a Term Certain) Private Charitable Foundations Chapter VIII: Life Insurance Arrangements Sale Rather than a Gift of a Life Insurance Policy to Avoid the Three-Year Rule Split Dollar and Subsequent Rollout to Grantor Life Insurance Trust Using a Credit Shelter (Bypass) Trust to Purchase Life Insurance on the Surviving Spouse The Family Limited Partnership In Lieu of an Irrevocable Life Insurance Trust Gifting the Limited Partner Interest to an ILIT (Grantor Trust) Loan to an ILIT to Purchase Life Insurance Funding Analysis of Various Methods to Pay Estate Settlement Costs The Advantages of Using Life Insurance to Maximize the Use of Unified Credit and/or Annual Exclusion Gifts

7 Page 7 Structuring an Irrevocable Life Insurance Trust to Purchase Your Co-Stockholder s Business Interest Life Insurance In Lieu of a Direct Bequest to the Children in a Large Estate Creating a New Asset to Cover the Growing Estate Tax Maximizing the Crummey Beneficiaries and Dealing with the Non-Insured Spouse s Gift to the ILIT The Crummey Withdrawal Right and the Hanging Power of Appointment Chapter IX: Estate Strategies with Retirement Assets Benefits Payable to q Surviving Spouse Via a Disclaimer (Credit Shelter) Trust Benefits Payable to a Surviving Spouse via an Accumulation QTIP Trust Benefits Payable to a Surviving Spouse via a Conduit QTIP Trust Obtaining an Income Tax Deduction for the Estate Tax When An IRA is Paid to a CRAT for the Benefit of a Non-Spouse Beneficiary The Purchase of Survivorship Life Insurance in a Qualified Profit Sharing Plan for Subsequent Transfer to an Irrevocable Life Insurance Trust Utilizing a Qualified Retirement Plan to Enhance Your Estate Distribution IRA Rollover to a Qualified Retirement Plan and Subsequent Purchase of Survivorship Life Insurance Life Insurance to Pay Estate Tax on the Qualified Plan Death Benefit Paying Estate Taxes on Qualified Retirement Plans and IRAs The Advantage of Using Qualified Plan Assets or IRA's to Fund Charitable Bequests Testamentary Charitable Remainder Trust (funded with Qualified Retirement Proceeds) Utilizing the Surviving Estate Owner s Assets to Fund a Credit Shelter Trust for a Spouse that Predeceases with a Large IRA but Insufficient Other Assets to Fund a Credit Shelter Trust

8 Page 8 Chapter X: Resident and Non-Resident Aliens Estate Considerations for Resident and Non-Resident Aliens QTIP vs. QDOT Estate Transfer to a Non-Citizen Spouse Using a Qualified Retirement Plan to Fund a Qualified Domestic Trust (QDOT) A Lifetime Gift to a Non-Citizen Spouse Chapter XI: Strategies for the Terminally Ill Outright Gift of a Discounted Business Interest by a Terminally Ill Owner The Gift to the Terminally Ill Spouse to Utilize Unified Credit and also Arrange for Basis Step-Up of Gifted Assets Establishing an FLP with the Limited Partner Interest Owned by the Estate Owner that is in Poor Health The Income Tax Advantage of a Terminally Ill Grantor Exchanging High Basis Assets for Low Basis Assets Owned by an Intentionally Defective Grantor Trust Reversionary Charitable Lead Annuity Trust for the Unhealthy Grantor Death Bed Strategies via IRA Conversion to a Roth IRA Post-Mortem Strategies: Utilizing the Previously Taxed Property (PTP) Credit for the Terminally Ill Surviving Spouse Self-Canceling Instrument Note (SCIN) Private Annuity Using Standard Mortality Tables for the Estate Owner with Less Than Standard Mortality

9 Page 9 Chapter XII: Strategies for Divorced Estate Owners Spousal Survivor Benefit Rights under a Qualified Retirement Plan That is Subject to Minimum Funding Standards Surviving Spouse's Elective Share Option Non-Probate Assets in Situations Where There is a Pre-Nuptial Agreement Structuring a Marital QTIP Trust for the Surviving Spouse and the ILIT for the Children of the Previous Marriage Valuing a Surviving Spouse's Elective Share QTIP Trust Bequest The Impact of the Increasing Unified Credit Exemption on the Amount Passing to A QTIP Trust Planning for the Estate of a Younger Spouse and Older Children from a Previous Marriage Using Trusts to Control the Ultimate Distribution of the Assets at the Death of the Surviving Spouse

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