Top Estate and Tax Planning Strategies

1. Top Tax & Estate Planning Strategies
Spring 2009

2. FAMILY TRUSTS
Gift assets to a trust for the benefit of family members, and control access
to principal, further ensuring sustainability of wealth.

3. Family Trusts
Trustee
Spouse
Distributes
Income/
Principal
Grand Children
parent
Trust
Grand
children

4. Common Trust Distribution Provisions
 “Discretionary” Trust
 Income [and Principal, if desired] subject to an
“ascertainable standard” (for health, support, maintenance
and education only)
 “Total Return” Trust
 A percentage of trust assets annually, paid out of income
and capital gains
 “Incentive” Trust
 Distributions depend on beneficiary achievements
 Often “matching” distributions based upon child’ salary or
other meritorious achievements
 “Dynasty” Trust
 A trust can be structured to “skip” generations and avoid
estate inclusion in the next generation
 Child’s control over principal must be limited

5. GRANTOR RETAINED ANNUITY TRUST
Transfer future appreciation on assets over a short term of years, without losing
access to the current value of the underlying asset transferred, and without
paying gift tax.

6. Grantor Retained Annuity Trust
Transfer Appreciation. Retain Principal. Reduce Gift & Estate Tax.
Appreciated
Property
Senior
Family Trust
Member Annuity
For Term of
Years Remainder
Advantages:
Interest
1. Transaction is ignored for income tax purposes
2. Any appreciation in excess of IRS interest rate is Junior
effectively transferred without gift tax Family
Member
3. Taxable gift is limited to the present value of the
remainder – annuity can be set high enough to
“zero-out” the taxable gift and get back principal
entirely

7. Grantor Retained Annuity Trust
 What is a GRAT?
 A GRAT is an irrevocable trust
 Grantor transfers appreciating property to the trust
 Grantor receives an annuity amount for a short term of years
(usually 2-5 years)
 Grantor continues to pay income taxes on any income or gains
earned on the property, and annuity is disregarded
 When the trust term expires, the remainder interest passes to the
Grantor’s heirs, outright or in further trust
 A taxable gift is computed when the property is transferred to the
trust, based only upon the value of the remainder interest
 If properly structured, GRAT performance may be
enhanced with valuation discount planning

8. Grantor Retained Annuity Trust
 The annuity amount may be structured to
Advantages
result in no taxable gift to the heirs
 Future appreciation during the trust term in
excess of an IRS interest rate (2.4% in May
2009) is transferred to heirs free of any gift
tax
 Grantor must outlive GRAT term
 Income tax paid on the trust property is
essentially a tax free gift to heirs
 If IRS challenges the asset valuation, the
annuity self-adjusts, resulting in no
unexpected taxable gift
 GRAT is sanctioned under the Internal
Revenue Code

9. Example #1
Situation:  Solution:
Parent
wants to  Parent creates a $1,000,000 GRAT
“freeze” the
value of his with a three-year term
taxable
estate to the  Parent receives an annual annuity
current payment for three years of $349,455
value,
because he  Parent has made no taxable gift
expects
certain  If the assets appreciate at 8% per
assets to
appreciate year for the three year term, the child
rapidly will inherit a tax-free gift of $125,242

10. Example #2
Situation:
 Parent transfers $5,000,000 business to a 10
year GRAT
Parent owns  Parent retains an annuity of $260,000, satisfied
a business from company distributions for 10 years
that he wants
to move  Taxable gift of $962,650 (assuming valuation
down to his discount of 35%) is sheltered by his lifetime
children tax-free gift allowance of $1million
without
paying gift  At the end of 10 years, Parent is still alive and
tax. He the business is transferred outright to children
would like a with no gift tax
retirement
 At that time, at 10% growth & income, it is
cash flow
from the worth $8.8 million
business.  Children can run and/or control the company
during the GRAT term, if desired

11. The Fine Details of Strategy
Get the Most
 We can help with all the details to ensure
Out of Your your GRAT is protected and performs:
GRAT  Trust agreement is flexible, to deal with
uncertain asset performance, a premature
death, and potential transfers
 Analysis of optimal GRAT term & annuity
amount
 Rollover and asset substitution options
 Marital deduction planning
 Accurate gift and income tax reporting
 GST exemption allocations are frequent, costly
errors
 Accurate and timely annuity payments
 Proper computations of asset ownership
between Grantor and Trust

12. Inter-Family Loans
Transfer future appreciation on assets, without losing access to current
value of the underlying asset transferred, and without paying gift tax.

13. Inter-Family Loan (Alt. #1)
Transfer Appreciation. Retain Principal. Reduce Gift & Estate Tax.
Property
Senior Junior
Family Family
Installment
Member Member
Note

14. Inter-Family Loan (Alt. #2)
Transfer Appreciation. Retain Principal. Reduce Gift & Estate Tax.
Appreciated
Property
Senior
Family Installment Grantor
Member Note Trust
Balance of
Trust Assets
Planning Point:
This Structure Avoids the
Recognition of any Junior
Taxable Gain on the Transaction Family
Members

15. Inter-Family Loan (or Sale)
 What is an Inter-Family Loan?
 A parent loans cash, or sells assets to child, or to a
trust for the benefit of child
 Parent receives an installment note (alternatively, a
demand note) for a term of years (usually a term less
than parent’s life expectancy)
 During the note term, any appreciation above the
interest rate on the note is transferred free of gift tax
 If the note amount equals the fair market value of the
assets loaned (or sold) no taxable gift results
 If properly structured, loan performance may be
enhanced with valuation discount planning

16. Inter-Family Loans
Advantages  Get assets to children currently without gift
tax
 Future appreciation during the note term in
excess of an IRS interest rate (approx. 2%
in 2009) is transferred to heirs free of any
gift tax
 If loan is between Grantor and his Grantor
Trust
 Entire transaction is disregarded for tax purposes
 Income tax paid on the trust property is
essentially a tax free gift to heirs
 The transaction can be structured as a
generation-skipping planning vehicle

17. Example #1 Balloon Note
Parent  Solution:
wants to
“freeze” the  Parent sells $1,000,000 asset to child
value of his (or a trust for the benefit of child)
taxable
estate to the  Parent takes back a 9-year balloon
current note for $1,000,000 with a 2% interest
value, and
wants to rate
help kids
fund an  Parent has made no taxable gift
important  If the assets appreciate at 8% per
purchase,
perhaps and year for the 9 year term, the child will
business inherit a tax-free gift of $749,000
(before any income tax effect).

18. Example #2 Self-canceling Note
Parent  Solution:
needs to do  Parent is 80 years old. She sells
estate $1,000,000 asset to a “grantor” trust for
planning to the benefit of child.
minimize
 Parent takes back an 8 year note with a
estate tax.
Parent also
2.4% interest rate
wants to  Note is self-canceling, if Parent dies
give her within 8 years
children a  Parent receives $185,400 a year for
cash three years, then dies and note is
generating extinguished
asset.
 $443,800 is transferred to heirs at
Parent’s death without gift or estate tax

19. The Fine Details of Strategy
 We can help with all the details to ensure your
Get the Most transaction is protected and performs:
out of Your
Loan  Loan documentation must be flexible and
Arrangement complete
 Prepayment terms, adequate interest,
renegotiations, transferability, self
canceling features, downside valuation
protection
 Timely payments
 Capture upside appreciation
 Gift and income tax reporting must be
aligned
 Creative capitalization options for a trust
purchaser

20. Qualified Personal Residence Trust
Transfer your second home to your children in the future at a significantly
reduced current gift tax cost, and retain the right to use the home indefinitely

21. Qualified Personal Residence Trust
Transfer Vacation Home. Right to Use. Reduce Gift &
Estate Tax.
Vacation
Home
Senior
Family
Personal
Member Trust
Use
for term of
years
Remaining
Assets
Junior
Family
Member

22. What is a Qualified Personal
Residence Trust?
 Grantor transfers home to a Trust
 Grantor retains the right to use the home for a fixed period of
years
 At the end of the trust term, the house passes:
 To a continuing trust for the benefit of children, or for the
benefit of spouse and children, or to children outright
 A taxable gift occurs when home is transferred to the trust
 The taxable gift is a reduced amount, equal only to the
value of the trust remainder (after the fixed term)
 If Grantor wants to continue to use the home after the fixed
term:
 Grantor can rent the house back from children, or
 Grantor can access the home through his surviving
spouse’s income interest in a continuing trust, if any

23. Qualified Personal Residence
Trust
 Reduced upfront gift tax cost and the home is
Advantages removed from your estate
 Grantor must outlive QPRT term
 Any future appreciation on the home is a tax-free gift
to heirs
 Grantor must outlive QPRT term
 Continued use of home
 Grantor may have to rent, after QPRT term ends
 If home is sold and not replaced, QPRT converts to a
GRAT
 Nothing changes for income tax purposes, during
the term
 The QPRT can sell the home and you can still use
your income tax exemption
 You still deduct all the expenses during the QPRT term

24. Example
 Grantor, age 60 transfers $1,000,000 family
“heirloom” vacation home to a trust
 Grantor continues to use the home for a period of
15 years
 At the end of 15 years, the home is transferred to
a continuing trust for the benefit of spouse and
children
 Grantor can continue to use the home rent-free
while is spouse is living, and thereafter must pay
FMV rent
 Grantor’s taxable gift in year one is only $495,150
 The home transferred to children free of gift tax in
year 15 is worth $2,078,000 at 5% appreciation

25. Example: Qualified Personal
Residence Trust with Continuing Trust
Step 1
Vacation Home
Senior
Family
Personal Trust
Member
Use
for Term of Step 2
Years Vacation Home
Remaining Step 4
Assets
Step 3 Junior
Spouse Family
Personal Trust Member
Use
for Life

26. The Fine Details of Strategy
Get the Most  We can help with all the details to ensure
Out of Your your QPRT is protected and performs
QPRT  Proper gift tax return reporting
 Gift-splitting elections and GST exemption
allocations are frequent, costly errors
 Flexible document to address potential “real-
life” situations in terms of what eventually will
happen to the home
 Proper planning for real estate tax impact
 Advanced structuring options, including
fractional share transfers, home exchanges,
and reverse QPRT arrangements, and
continuing spousal trusts

27. Charitable Remainder Trust
Reduce income and estate tax on an appreciated asset. Retain family
access to cash flow from the asset. Benefit charity in the future.

28. Charitable Remainder Trust
Sell Appreciated Asset. Reduce Income & Estate Tax. Benefit Family & Charity.
Appreciated
Property
Senior
Family
Member Annuity or
s Trust
Unitrust
Interest for
Life or Term
of Years Remaining Assets
Charitable
Organization

29. What is a Charitable Remainder Trust?
 Grantor transfers an appreciated asset to a
trust
 Grantor retains an income interest for life(lives)
or a term of years (20 year max), or shorter of
 Income interest is based upon a fixed percentage,
trust income, or both
 The
fixed percentage is either an annuity (% of initial
FMV) interest, or a unitrust (% of annual FMV) interest
 At the end of the income interest the trust
assets are distributed to an outside charity, or
a family foundation

30. What is a Charitable Remainder Trust?
 Different Types of CRTs:
 Unitrust (CRUT): Fixed percentage of annual FMV
 Annuity Trust (CRAT): Fixed percentage of initial FMV
 Net Income CRUT (NICRUT): lesser of trust income or
fixed percentage
 Net Income with Make-up CRUT (NIMCRUT): lesser of net
income or fixed percentage, with a make-up distribution in
years when net income exceeds % of FMV
 FLIP CRUT: Lesser of income or % of FMV until a
specified event, then flips to a standard CRUT
 Income interest must be 5%-50% of trust value per
year
 Actuarial value of charitable remainder must be at
least 10%

31. Charitable Remainder Trust
 An appreciated asset may be sold inside a CRT
Advantages without current income tax
 Good business succession strategy when coupled
with a corporate redemption
 Good diversification strategy for concentrated stock
position
 Income and gift (and/or estate) tax charitable
deduction for the future value of charity’s interest,
if properly structured
 Retirement income tool, similar to an IRA
 Grantor can only access income interest
 CRT is a tax-deferred vehicle, similar to an IRA
 Distributions to Grantor are taxable

32. Example #1 Sale of Appreciated
Asset
 Solution:
Situation:
 65 year-old Grantor creates a CRT and
Grantor transfers $1,000,000 of appreciated assets
needs to sell
some  CRT sells the assets and realizes a
undiversified $750,000 gain, but recognizes no gain for
holdings to tax purposes
protect her
retirement.  Grantor retains the right to 7% of the annual
The income fair market value of the trust assets, totaling
tax on the
gain would
$1,290,000 (before taxes) for life (at an 8%
be significant. rate)
Grantor also  Charitable deduction in year one is $357,050
needs estate
tax planning. and charity receives $1,180,000 in year 18,
at Grantor’s death
 Grantor’s estate receives an estate tax
deduction for CRT assets included in estate

33. Example #2 Succession Planning
Situation:  Solution:
Grantor  65 year-old Grantor creates a CRT and
wants to sell transfers $1,000,000 of XYZ stock
appreciated
business to  CRT stock is later redeemed by XYZ
children. He  Grantor retains the right to a % of the
doesn’t want
to pay a annual fair market value of the trust
significant assets for life
income tax.
 Children can operate the business, and
He wants
retirement now own 100% of it.
cash flow.
 Business can purchase life insurance on
Parent to replace redemption proceeds,
if desired

34. Charitable Remainder Trust #2
Charitable Bail-Out of Business
Cash to
XYZ Stock Redeem
Stock in
Senior
XYZ
Family XYZ
Member Annuity or
CRT
s Unitrust XYZ Stock
Interest for
Life or Term
of Years Remaining Assets
Charitable
Organization

35. The Fine Details of Strategy
 Detailed analysis of income interest options:
Get the Most
 CRUT, CRAT, NIMCRUT, NICRUT, FLIPCRUT –
Our of Your
the options are dizzying
CRT
 “Spigot” planning with an LLC investment to
enhance strategy performance through more
income tax deferral
 Business succession planning with CRT and a
subsequent corporate redemption
 “Unwinding” options and analysis
 Flexible document so that:
 a private foundation is a remainder charity option
 a charity can be switched
 an income interest can be revoked
 a hard-to-value or special asset is suitable

36. Charitable Lead Trust
Transfer an income interest to charity for a term of years . When charity’s term
ends, trust assets are distributed to family. Reduce or avoid significant income
and estate tax.

37. Charitable Lead Trust
Reduce Significant Income & Estate Tax. Benefit Family & Charity.
Income
Interest
for Term of
Years
Appreciated
Senior
Property Charitable
Family
Organization
Member
s Trust
Remaining
Assets
Junior
Family
Member
s

38. What is a Charitable Lead Trust?
 Grantor (or Grantor’s estate) transfers assets to a
trust for the benefit of charity and his family
 Charity receives a specified amount annually for a
term of years
 The amount can take the form of an annuity (fixed %
of initial FMV), or a unitrust (fixed % of annual FMV)
 When the term ends, assets are transferred to
heirs, or back to Grantor
 May be structured to be suitable for use with a
private foundation
 May be structured to be suitable for a contribution
of a closely-held business

39. Charitable Lead Trust
Advantages  A CLT can produce significant estate & gift tax
savings if heirs receive the trust remainder
 Taxable gift or estate is reduced by the value of
charities income interest
 CLT postpones assets to heirs, which may be
desirable if heirs are young
 Lifetime CLT may be structured as a “grantor trust”,
in which case Grantor receives an income & gift tax
deduction (but also pays tax on the CLT income)
 Testamentary CLT can be based on a formula
designed to effectively eliminate estate tax
 If properly structured, can be a tremendous way to
use generation-skipping tax exemption

40. Example #1 No estate tax plan
Grandfather  Grandfather dies and his estate transfers
wants to use $4 million to a ten year, 7% CLUT
his
generation-  $2 million of his Generation-skipping tax
skipping exemption is used
exemption of
$2 million at  $2 million charitable deduction is created
his death
and also  The CLT assets grow at 8% per year
wants to
fund his
 His foundation receives a 7% unitrust
family payment per year for ten years, totaling
foundation $2.9 million
to avoid any
estate tax  In year eleven, his grandchildren inherit
exposure $4.4 million without further estate tax

41. Example #1
Testamentary Charitable Lead Unitrust for Generation-Skipping
Unitrust
Interest
for Term of
Appreciated
Years
Senior Property
Family See Note 1
Charitable
Member’ Organization
s CLUT
Estate
Remaining
Assets
Grand
Note 1: A formula may be used to
children
peg the GST exemption remaining

42. Example #2 Testamentary Charitable Lead
Annuity Trust For a Family Business
Situation: Solution
 Parent revises his estate planning documents to set-up a
Parent has Testamentary Charitable Lead Annuity Trust, and gives his
significant children the option to buy the business from his Estate in
estate tax exchange for a Note
exposure.
 When Parent dies, children may own and operate the business
He likes the
immediately (once probate court approves of it)
idea of
forming a  The children make interest payments on the Note (with cash from
family the business operations)
foundation ,  This cash is used to fund the Annuity to the family Foundation
but wants
 When the CLAT terminates, the Note may be effectively
his kids to
extinguished because the children are on both sides of the Note
have the
family  Estate tax may be effectively eliminated, and some future
business. appreciation during the TCLAT term may be an additional tax-free
gift

43. Example #2 Testamentary Charitable Lead
Annuity Trust for a Family Business
Step 3: CLAT satisfies income
Interest with Note payments
Step 2: fund CLAT
with Note
Income
Senior Installment Interest
Family Note
Member’ Charitable
s Organization
CLAT
Estate
Step 1: probate Business
court approval Remaining
Installment
and sell Assets
Note
business to
Junior
children Step 4: When term
Family
Member ends, Note is effectively
extinguished, because
s
children inherit the
CLAT remainder
The Result: estate tax elimination, and children immediately own the business

44. The Fine Details of Strategy
 We can help you structure your CLT to
Get the Most ensure that it is protected and performs
Out of Your
Charitable  Proper structure to accommodate the
Lead Trust funding of a family business or investment
company
 Proper structure to accommodate the use of
family foundations
 Creative financing structures to get family
access to CLT assets during the term
 Flexible funding options, including funding
formulas and powers of appointment
 Zero estate tax options and projections

45. Family Limited Liability Company
Reduce estate tax, retain control, simplify asset management across
multiple family members, protect assets from creditors.

46. Family Limited Liability Co.
Investment
Assets
Contributed
Senior
Family
Member Voting &
s LLC
Nonvoting
Interests
Received
Nonvoting
Interests
Gifted or Sold
Over Time Junior Typical Structure on
Family Day One, is 98%
Member nonvoting, 2% voting
s

47. What is a Family Limited Liability Co.?
 Family members contribute investment assets to an LLC
 Family members take back a membership interest in the
LLC, based upon a their share of the total value of
assets contributed
 Membership interests can be voting and nonvoting
 Typical structure is 98% nonvoting, 2% voting to
concentrate control among senior family members
 LLC is operated by its Manager, a senior family member
 Family members must abide by LLC operating
documents, which lays-out access to distributions,
transfers of ownership limitations, and liquidation
proceeds
 Distributions of income or principal are generally to be
made on a prorata basis

48. Family Limited Liability Company
Advantages  Asset Management Benefits to Pooling Resources:
 Access to alternative investments (especially for
trusts or individuals who don’t meet the
accredited investor definition)
 Opportunity for better fee arrangements
 Centralize family asset management with the
most capable family members
 Some investments, like private equity aren’t
transferable, so they can be “wrapped” in a family
LLC beforehand
 Creditor Protection Benefits
 Operating agreement restricts outsider or ex-
spousal access to underlying assets

49. Family Limited Liability Co.
Advantages,  Family Acrimony
continued  Arbitration, versus litigation mandates
 Control Benefits
 Nonvoting junior family members have little
control over LLC operations, and discretionary
access to LLC assets
 Simplify gift administration of real estate or other
assets that aren’t easily divisible
 Avoid out of state probate on real estate
 Valuation discounts on gifts or bequests may be
possible if properly structured
 IRS could challenge discount amount

50. Example
 Parents contributes real estate LLCs and
Parents portfolio of securities to a family LLC
need estate
tax planning,  Parents receive voting and nonvoting interests
and is willing in the family LLC
to transfer  Over time, parents gift family LLC nonvoting
appreciating interests to children
real estate  Parents manage the family LLC
properties
and
 Valuation expert determines that a 35%
securities to
valuation discount is applicable for lack of
children over
control and marketability
time, but  $1,000,000 of ownership may be taxable as
aren’t ready only a $650,000 gift .
to give up  This gift can be offset by the $13,000 per person
control . annual exclusion over a period of several years

51. Fine Details of Strategy
Get the Most  Does Your Family LLC have a
Out of Your business purpose?
Family LLC
 We can help you structure your Family
LLC to that it is protected and performs
 Careful monitoring of case law & legislation
 Valuation discount historical data
 Tracking of “bad fact” scenarios
 Careful administration of LLC
 Documentation of gifts, business meetings,
capital accounts, prorata distributions
 Careful drafting of LLC to optimize control
aspects and valuation discount potential

52. Life Insurance Planning
Avoid estate taxation of life insurance proceeds. Replace wealth going to
charity. Use proceeds to fund estate tax, business buy-outs, or spousal
support.

53. Life Insurance Trust – During Life
Avoid Estate Tax on Proceeds. Benefit Spouse & Family. Provide Liquidity.
Insured
Cash Gift
for
Premiums
Insurance
Policy Insurance
Premiums Trust

54. Life Insurance Trust – After Death
Avoid Estate Tax on Proceeds. Benefit Spouse & Family. Provide Liquidity.
Insurance
Proceeds
Insurance
Policy
Trust
Income Principal
Childre
Spouse
n

55. What is a Life Insurance Trust?
 Grantor transfers cash to a trust
 Trust is authorized to purchase insurance on the
life of the Grantor, within the terms of the trust
agreement
 Trust purchases life insurance on Grantor’s life
 Grantor funds the trust every year with sufficient
cash to pay the required insurance premiums
 At Grantor’s death, trust collects the proceeds,
and may use the proceeds to benefit surviving
spouse and heirs, make loans to grantor’s estate,
or buy-out a business partner

56. Life Insurance Trust
 If properly structured, life insurance proceeds
Advantages
are not included in Grantor’s estate
 Plan to avoid the ‘three year rule”
 Leverage of insurance vehicle can pass
tremendous wealth in the event of a
premature death
 Surviving family members can access trust
income and principal
 Insurance premiums can be covered with
annual exclusions to avoid gift tax
 Liquidity source to pay debts, death taxes,
and redemptions
 Creditor protection for trust assets

57. Example
Situation:
Solution
 Grantor gets pricing on a $1,000,000 insurance
Parent wants
to buy policy
insurance to  Grantor funds an insurance trust with sufficient cash
protect his
spouse and to purchase the policy
provide  Trust applies to buy insurance on Grantor
liquidity upon
his death to  Trust pays the premiums directly to the insurance
redeem out a company
business
partner. He  Grantor dies, and $1,000,000 proceeds are
already has a collected by the trust, saving $450,000 in estate tax
taxable
estate, and  Trust uses cash to buy-out business partner
wants to
avoid further  Trust supports spouse with income from the
exposure. business

58. Fine Details of Insurance Planning
 We can help you plan to ensure your insurance
Get the Most trust is protected and performs
Out of Your
Insurance  Creative structuring to avoid three-year rule for
existing policies
Trust
 Creative financing structures for large premiums
 Insurance leverage using qualified plan assets
 Document drafting that ensures no estate tax
inclusion
 Trust administration to avoid incidents of
ownership in the policy (causing estate inclusion)
 Advanced planning to couple with charitable
vehicles, family LLCs, buy-sells, and dynasty
trusts

59. Concentrations in a Single Stock Position
Diversify and avoid immediate income taxation

60. Stock Diversification Strategies
 Borrow Against Stock Position
 Up to 50% of the value, typically
 Invest loan proceeds in a diversified portfolio
 Still retain upside (and downside) on stock position
 Put Options
 Downside protection in the event of a decline
 Purchase put with cash premiums
 If stock declines, you may:
 Sell the stock at a put option price which is higher than
current market price, or
 Sell the option at a gain

61. Stock Diversification Strategies
 Variable Prepaid Forward
 Effective collar around the stock, with full
downside protection and certain upside
participation
 Receive substantial upfront cash advance related
to a future stock sale agreement
 Stock is pledged as collateral
 Cash may be invested in a diversified portfolio
 Transaction stays open 3-5 years, and capital
gains tax may be deferred during that time frame

62. Stock Diversification Strategies
 Zero-Cost Collar
 Investor sells a call option, and purchases a put
option, so net cash outflow
 Investor receives some downside protection, and
some upside participation
 At maturity
 If stock is below the call option exercise price you pay
cash to brokerage firm (or deliver stock) for the
difference
 If price is below put option exercise price, brokerage
firm will make a cash payment for the difference

63. Stock Diversification Strategies
 Exchange Fund
 Investor contributes concentrated stock position
to an investment partnership
 Other investors contribute stock positions, and
the result is a diversified portfolio
 Limited partnership may invest in other asset
classes, like real estate to enhance diversification
 After 7 years, the limited partnership terminates,
and investors receive their share of the diversified
portfolio of at least 10 stocks with incurring capital
gains tax

64. Stock Diversification Strategies
 Transfer stock to a charitable trust or public
charity
 Defer (or avoid) income taxation on stock
proceeds over your life
 Receive income tax deduction for value expected
to go to charity
 Avoid estate tax on stock
 Receive an income stream for life, to support your
retirement:
 Charitable Remainder Trust,
 Pooled Income Fund, or
 Charitable Gift Annuity.

65. Disclosures
 This presentation is for informational purposes only and is not
intended to, and does not constitute tax advice.
 Any U.S. federal tax advice contained in this document is not
intended or written to be used, and cannot be used, for the
purpose of (i) avoiding penalties under the Internal Revenue
Code, or (ii) promoting, marketing, or recommending to
another party any transaction or matter that is contained in
this document.
 AVANT is a brand that refers to AVANT Financial, LLC and
AVANT Advisors, PLLC. AVANT Financial, LLC is not a law
firm or investment advisor and does not provide legal, tax or
investment advice. AVANT Financial, LLC is an affiliate of
AVANT Advisors, PLLC, a Michigan law firm.
 Please consult your personal legal and tax professionals
before proceeding with any financial, tax or estate planning
strategy.