2. Planning with LI in Uncertain Times
Presented by
Robert W. Finnegan Brian Simmons

3. Everything we discuss today is geared towards helping your clients move forward with Planning

4. Today Changes to Estate Tax under the Tax Act
Prime Directive – Client, “What’s in it for me?”
Threats-to-Wealth – Not just taxes!
Dual Spousal Lifetime Access Trusts (Dual SLATs)
Case Study
The Power of Leveraged Gifts
The Cost of Delay
Private Financing (Briefly)
The Nevada Advantage

5. The Tax Cuts & Jobs Act - Estate Planning
Gift/Estate & GST Exemption
Doubled to $11.18M ($22.36M married couple)
Sunsets 12/31/2025 (back to $5M indexed by chained-CPI = $6.5M estimated)
Indexed chained CPI (slightly lower than CPI)
Does not sunset
Retained
Stepped Up Basis at Death
Portability
Gift/Estate exemption only (not GST)
Annual gift tax exclusion $15,000/per donor per donee
Defective Grantor Trusts
All of our current planning strategies remain valid!!!

6. Why Plan? Estate Planning is not just or even primarily about taxes.
It is about Family Security and minimizing OR eliminating Threats-to-Wealth.
With the substantially increased exemptions, strongly recommend that clients review their wills and revocable lifetime trusts

7. Why Plan? Golden age of estate planning is Now Use it or Lose it
Clients unwilling to use increased exemption
Increased exemption expires 12/31/202
Reverts to $5.6M (+ inflation)
Focus on Tax & Non-tax threats to wealth
Retain access & control
Life insurance creates synergies with other planning
Delayed planning = Costs

8. The “Golden Age” of Wealth Transfer Planning!
AFRs are extraordinarily low (2.95% 9/2018 LT AFR).
Discount strategies are available.
Defective Grantor Trusts remain viable.
Gift/GST Exemptions are high & indexed.
Split $ rules are extremely favorable.
Excellent products are available (including NLG).

9. The smart money continues to plan.
Beware Complacency
Higher exemption may make clients complacent
Higher exemption expires in 7 years
Dems may change rules much earlier
The smart money continues to plan.

10. Ensure the Clients’ security!
The Prime Directive
Ensure the Clients’ security!

11. Focus on answering the Client’s question:
The Prime Directive
Focus on answering the Client’s question:
“What’s in it for me?”
Dual Spousal Lifetime Access Trusts (SLATs)
Hybrid Self-Settled Trusts for creditor protection
Beneficiary Defective Inheritors Trust (BDIT)
Loans from Trust to Grantor
Sale and Intra-Family Loan Transactions (No Gifts)

12. Threats-to-Wealth Divorce Creditors Predators
Destructive Family Dynamics
A beneficiary who can’t manage money (Spendthrift)
Spoiling a child with too much too soon
Antisocial behavior - Drugs & alcohol abuse, cults and/or the wrong crowd
Dying too soon/living too long
Delaying Planning
Dilution due to a growing family, inflation and taxes
Taxes

13. Table I – Threats-to-Wealth
I. Clients
II. Beneficiaries
1.       Loss of Access to Trust Assets
1.       Spendthrift Beneficiary
2.       Loss of Control & Planning Flexibility
2.       Divorce/Creditors/Predators
3.       Creditor Protection
3.       Destructive Family Dynamics
4.       Living Too Long
4.       Income, Gift, Estate, GST Taxes
5.       Dying Too Soon
5.       Dilution Due to a Growing Family
6.       Taxes (Income & Estate)
6.      The Cost of Delaying Planning

14. The Hedge Against Threats-to-Wealth
Clients retain access to gifted assets
Clients retain control & planning is flexible
Change trust terms – decanting, protectors, non-judicial settlements
Trustees can be removed and replaced
Control through LLCs
Assets are creditor protected
Protection against dying too soon/living too long
Spendthrift - Protect beneficiaries from themselves
Protect beneficiaries from divorce/creditors/predators
Protect against destructive family dynamics
Funding
Self-completing regardless of tax system in place
Funding does not trigger transfer taxes
Assets protected from gift, estate, GST taxes
Income taxes minimized and control who pays taxes.
* Consult your legal and tax advisors for appropriate planning strategies.

15. “What’s in it for me?” – The Hedge Against Threats-to-Wealth
Clients retain access to gifted assets
Clients retain control & planning is flexible
Change trust terms – decanting, protectors, non-judicial settlements
Trustees can be removed and replaced
Control through LLCs
Assets are creditor protected
Protection against dying too soon/living too long
Spendthrift - Protect beneficiaries from themselves
Protect beneficiaries from divorce/creditors/predators
Protect against destructive family dynamics
Funding
Self-completing regardless of tax system in place
Funding does not trigger transfer taxes
Assets protected from gift, estate, GST taxes
Income taxes minimized and control who pays taxes.
* Consult your legal and tax advisors for appropriate planning strategies.
Clients
Benef.

16. Dual Spousal Lifetime Access Trusts (Dual SLATs)
The role of Life Insurance

17. Chart I – Traditional Solution - Survivorship Life Insurance in Trust
SUL ILIT
Dynasty Trust
DGT
$10M SUL
FBO of
Children, Grandchildren, etc.
H (as Grantor)
Creates
Dynasty Trust 1
Husband
Life Insurance Premiums Paid from cash flow
from spousal assets
via gifts to trust.
Gifts Premiums
Wife
Review Slide Content
W (as Grantor) Creates
Dynasty Trust 2

18. Chart II - Dual SLATs Basic (T&E Attorneys) Husband Wife
Dynasty Trust 1
FBO
Wife
Children, GC, GGC+
$5M Assets
H (as Grantor)
Creates
Dynasty Trust 1
Gifts $5M
Husband & Wife each
Creates a Dynasty Trust
Makes gifts to Trust
Retains access
- 100% while both alive;
% following first death.
Must avoid reciprocal trusts.
Wife
Dynasty Trust 2
FBO
Husband,
Children, GC, GGC+
$5M Assets
W (as Grantor) Creates
Dynasty Trust 2
Gifts $5M
Must avoid reciprocal trusts.

19. Chart III - Dual SLATs Basic (Life Insurance) Husband Wife
Dynasty Trust 1
FBO
Wife
Children, GC, GGC+
$5M Life Insurance
H (as Grantor)
Creates
Dynasty Trust 1
Gifts Premiums
Husband & Wife each
Creates a Dynasty Trust
Makes gifts to Trust
Benefit personally from LI.
Must avoid reciprocal trusts.
Wife
Dynasty Trust 2
FBO
Husband,
Children, GC, GGC+
$5M Life Insurance
W (as Grantor) Creates
Dynasty Trust 2
Gifts Premiums
Must avoid reciprocal trusts.

20. Chart IV - Dual SLATs with Gift & LI on Each Grantor Husband Wife
Dynasty Trust 1
FBO
Wife
Children, GC, GGC+
$5M Assets &
$5M Life Insurance
Each Trust
Purchase LI on the grantor
Cash flow from $5M pays Premiums
On death of grantor, LI proceeds replace assets
Surviving spouse has access to 100%
Example
H dies
W loses access to $5M assets in her trust 
H’s trust receive $5M death benefit, available to support W.
H (as Grantor)
Creates
Dynasty Trust 1
Gifts $5M
Wife
Dynasty Trust 2
FBO
Husband
Children, GC, GGC+
$5M Assets &
$5M Life Insurance
W (as Grantor) Creates
Dynasty Trust 2
Gifts $5M
Must avoid reciprocal trusts.

21. Chart V - Dual SLATs with Gift & Survivorship Life Husband Wife
Survivorship ILIT
Dynasty Trust 1
Dynasty Trust
DGT
$10M SUL
FBO of
Children, Grandchildren, etc.
H (as Grantor)
Creates
Dynasty Trust 1
FBO
Wife
Children, GC, GGC+
$5M Assets
Gifts $5M
LIPremiums
Paid from cash flow
from trust assets.
Wife
Dynasty Trust 2
W (as Grantor) Creates
Dynasty Trust 2
FBO
Husband
Children, GC, GGC+
$5M Assets
Gifts $5M
Must avoid reciprocal trusts.

22. Chart VI - Dual SLATs with Gift, Survivorship Life & Term Insurance
Husband
Survivorship ILIT
Dynasty Trust 1
FBO
Wife
Children, GC, GGC+
$5M Assets &
$5M Term on H
Dynasty Trust
DGT
$10M SUL
FBO of
Children, Grandchildren, etc.
H (as Grantor)
Creates
Dynasty Trust 1
Gifts $5M
Life Insurance Premiums
Paid from cash flow
from trust assets.
Wife
Dynasty Trust 2
FBO
Husband
Children, GC, GGC+
$5M Assets &
$5M Term on W
W (as Grantor) Creates
Dynasty Trust 2
Gifts $5M
Must avoid reciprocal trusts.

23. Non-Reciprocal Trusts
Dynasty Trust 1
Husband Grantor
Dynasty Trust 2
Wife Grantor
NV – Premier Trust
SD – SD Trust Co.
Wife & Independent Trustee 1
Husband & Independent Trustee 2
Wife, Children, GC, GGC, etc., ILIT
Husband, Children, GC, ILIT
H Not a Beneficiary or 
W – HEMS (?)
H – HEMS (?)
Indep. Trustee – Abs. Discretion
Indep. Trustee – HEMS or Other Standard
Wife holds 5x5 & Testamentary SPOA (Issue)
Loans to H (Grantor)
H holds Lifetime SPOA
Among Descendants of H’s Parents
Review Slide Content
Other factors to consider:
Separate trust formation by time (6 mos., 15?)
Fund with different assets & different amounts
W income from day 1
H’s income interest “springs” into being at age 65
Life insurance – different policies/amounts
One trust a Hybrid self settled trust
Life Insurance on grantor of each trust?
Vary special powers of appointment
- One broad, one narrow
- Different classes of beneficiaries
- Lifetime vs. testamentary

24. Dual SLATs, One Spouse Gifts Exemption
In the prior Dual Spousal Lifetime Access Trusts (SLATs) examples (Note: examples ignore inflation):
H & W
Each used $5.6M of gift and GST tax exemptions
Combined $11.2M
If the clients only plan on gifting the combined $11.2M,
Assuming that neither spouse dies before the increased exemption sunset on midnight 12/31/2025
They will have “wasted” the increased exemption.
Is there a strategy to use some of the increased exemption?

25. Dual SLATs, One Spouse Gifts Exemption
H creates a single Spousal Lifetime Access Trusts (SLATs) for the benefit of W, children and grandchildren+
H gifts $11.2M to the SLAT for the benefit of W, C & GC+
W preserves her $5.6M exemption that survives sunset.

26. Chart VII - Dual SLATs – One Spouse Gifts
Husband
Dynasty Trust 1
FBO
Wife
Children, GC, GGC+
$11.2M in Assets
H (as Grantor)
Creates
Dynasty Trust 1
Gifts $11.2M
Husband & Wife Combined
H Gifts $11.2M
W Preserves $  5.6M
Combined $16.8M
Wife
Dynasty Trust 2
FBO
Husband,
Children, GC, GGC+
$5M Insurance on W
W (as Grantor) Creates
Dynasty Trust 2
Gifts Premiums

27. The Nevada Advantage
The Nevada Advantage

28. The Nevada Advantage
Advisors/Attorneys/Clients looking to take advantage of Nevada’s laws
A Nevada trust can last 365 years
No state income tax on trust income when the trustee is located in Nevada
Top rated asset protection laws (#1 by Forbes magazine)
Nevada’s top rated “Decanting Statute” (ability to modify an irrevocable trust)
Nevada top rated asset protection laws (ranked #1 by Forbes magazine)
A Nevada trust can last 365 years
No Nevada state income tax when trustee is located in Nevada
Favorable “Decanting” Statute (ability to modify an irrevocable trust)

29. Nevada Asset Protection Trust
For Financial Professional Use Only.
Nevada Asset Protection Trust
A DAPT is a U.S. asset protection trust in which the grantor is a permissible beneficiary
Nevada:
Two-year statue of limitation
No exception creditors
Fraudulent conveyance – transfer with the intent to hinder, delay, defraud

31. For Financial Professional Use Only.
Dynasty Trust - IDGT
A “Dynasty Trust” is an irrevocable trust that can hold assets in trust for as long as state law allows
Trust assets may pass for generations without estate taxes
Dynasty provisions can be included in any trust

33. Nevada Incomplete Gift Non-Grantor Trust -NING
For Financial Professional Use Only.
Nevada Incomplete Gift Non-Grantor Trust -NING
This strategy is best suited for someone who has significant potential income or capital gains – for instance, a multi-million-dollar portfolio – which is generating Federal and State income tax liabilities. The client may shift the income out of their current state of residence, to Nevada which has No State income tax. The NING generates state income tax savings only. Federal income taxes will be due regardless of the strategy.

34. For Financial Professional Use Only.

35. Beneficiary Defective Inheritance Trust (BDIT)
Irrevocable trust that freezes the value of assets for estate tax purposes.
Assets are sold to the trust by a beneficiary-seller
Beneficiary eligible to receive discretionary distributions from the trust

36. Decanting – “Do Over” Trust
For Financial Professional Use Only.
Decanting – “Do Over” Trust
Just as you can decant wine by pouring it from its original bottle into a new bottle, leaving the unwanted sediment in the original bottle, you can pour the assets from one trust into a new trust, leaving the unwanted terms in the original trust.
The trustee may initiate the decanting at request of client.

37. Common Reasons to Decant
For Financial Professional Use Only.
Common Reasons to Decant
Extending the terms of the trust
Changing a support trust into a discretionary trust
Saving state income tax on undistributed income
Removing a beneficiary
Indirectly adding a beneficiary
Correcting drafting errors or ambiguous terms

38. For Financial Professional Use Only.

39. The Power of Life Insurance
&
The Cost of Delay
To Gift or Not to Gift?

40. Case Study M60/F60 PNT $2M Gift Exemption Need $17M SUL LI
5% Pre-Tax / 4% Net
$3M Assets Available
20% Tax on Earnings
1/3 Discount
Net To Heirs Ages 90/90

41. Plan Today – 3 Scenarios – Net To Heirs
$3M Stays in Estate vs. Gift Alone vs. Gift with LI 1 2 3
Do Nothing
Gift $3M 1
Gift $3M 2
$3M Stays in Estate
to Trust/No LI
to Trust/ With LI 3
1 Make $3M gift to trust. Preserve principal. Use trust cashflow to pay full premium. Cashflow supports $14M death benefit
2 Discounted 1/3
3 Preserve principal in trust and use cashflow to roll-out in year 23: Private Split Dollar gift supports $17M

42. Plan Today - Net to Family
1. No Planning vs. 2. Gift (No LI) vs. 3. Gift & Full Prem ($14M DB)
Life
Expectancy
90/90

43. Net to Family Plan Today (LE 90/90)
No Plan vs. Plan with LI
Improvement
Source
1. No Plan
3. Gift & Split $
3. – 1.
GST Exempt
3,000,000
23,316,325
20,316,325
Estate
3,871,640
(3,415,299)*
(7,286,939)
Total
6,871,640
19,901,026
13,029,386
Wealth Shifting!
*$3,415,299
Equals the estate’s “burn” due to:
i) “tax burn” grantor paying taxes on trust income.
ii) the “premium burn” due to split $ premium advances paid by the grantor.
iii) the loss of the use of those funds, net of estate taxes.

44. The Cashflow From A $3M Gift Buys How Much Insurance:
The Cost of Delayed Planning
The Cashflow From A $3M Gift
Buys How Much Insurance:
The Cost of Delay

45. Net to Family - Plan Today (LE 90/90)
Age 60/60
No Plan vs. Plan with LI
Net
Improvement
Source
No Plan (A)
Gift & Split $ (B)
B - A
GST Exempt
$2,000,000
$23,316,325
$21,316,325
Estate
$4,871,640
($3,415,299)
($8,286,939)
Net To Heirs
@Ages 90/90
$6,871,640
$19,901,026
$13,029,386
Wealth Shifting!
$2M exemption used in both scenarios, taking into account 1/3 discount on $3M; $17M SUL Life Insurance Policy; 5% Gross/4% Net Tax; Roll-out Age 82/82
Tax and Premium “Burn”

46. Premiums for $10M of Coverage1
Insured(s)
Rating(s)
$10M * Full Pay
Prem. Increase %
M60/F60
Preferred NT
91,583
Due to 10-Year Delay in Planning
M70/F70
154,325
169%
Standard NT
208,791
228%
Table B (150%)
268,390
293%
304,595
333%
394,533
431%
Plan Today
Both
Alive
Plan in 10-Years
One
Alive

47. The Cost of Delay Coverage1 Supported by $3M Gift
Insured(s)
Rating(s)
LI Supported
DB Reduction
M60/F60
Preferred NT
$17.0M
Due to 10-Year Delay in Planning
M70/F70
$10.5M
($6.5M)
Standard NT
$8.0M
($9.0M)
Table B (150%)
$6.3M
($10.7M)
$5.5M
($11.5M)
$4.2M
($12.8M)
Plan Today
Both
Alive
Plan in 10-Years
One
Alive
Assumes Protection UL & SUL available and priced as today.
Death benefit reflects private split dollar in all scenarios.
$3M principal preserved in all examples; cash flow funds coverage.

48. Private Financing The Perfect Hedge for Uncertain Times
A Strategy to Fund Any Life Insurance Policy

49. Private Financing Clients lends funds to a Dynasty Trust
Trust invests loan proceeds in order to:
Pay each annual premium as it becomes due
Repay the loan at the end of the loan term
Defective grantor trust
Trust taxes paid by grantor.
In effect, a gift and GST tax free transfer!
Lump sum loan locks in current favorable 4/2018 AFRs:
Mid-Term 2.72% Loan Term (3 years,9 years]
Long Term 3.04% Loan Term > 9-years
Accrue interest (a powerful long term benefit)

50. Mr. and Mrs. Valued Client
PRIVATE FINANCING EXAMPLE
Insureds: Male Age 57 (Preferred NT), Female Age 56 (Preferred NT)
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
April 2018 AFR 
DYNASTY TRUST: Cash Flow & Value of Side Fund (SF)
(SHORT)/Gain
NET TO FAMILY
End of Year
Beginning of Year
End of Year  
End of Year 
2.72%
MT AFR 
Value of 10
6.00%
Repay Loan
Insurance
Total in
Loan
Trust
Annual
Pre-Tax
End of Year
Side Fund
Death
Yr.
Age
Balance
Premiums
Earnings 9
Loan Bal.
Benefit
@ Death
Beg.
5,336,645 1
57/56
5,481,802
(168,545)
310,086
5,478,186
(3,616)
10,000,000
9,996,384 2
58/57
5,630,907
318,578
5,628,220
(2,687)
9,997,313 3
59/58
5,784,068
327,580
5,787,255
3,188
10,003,188 4
60/59
5,941,394
337,123
5,955,833
14,438
10,014,438 5
61/60
6,103,000
347,237
6,134,525
31,525
10,031,525 6
62/61
6,269,002
357,959
6,323,939
54,937
10,054,937 7
63/62
6,439,519
369,324
6,524,717
85,199
10,085,199 8
64/63
6,614,674
381,370
6,737,543
122,869
10,122,869
65/64
6,794,593
394,140
(6,794,593)
168,545
10,168,545
66/65

51. The Perfect Strategy for Uncertain Times
Design so that the client is fully secured in nearly all years!
If policy and trust assets perform as expected, plan can be unwound and client repaid since in nearly all years: Loaned Assets + Policy CSV > Loan Balance
The trustee can choose to repay the loan early.
Clients can feel more comfortable entering into the transaction.
Moves wealth to a dynasty trust without income, gift, estate or GST taxes. The dynasty trust protects against repeat estate taxation and GST taxes.
The plan is not dependent upon making a gift, it is a loan. It rides out whatever tax regimen we have in place. If the gift tax comes and goes, the strategy is unaffected.
Wait and see. Wait until 12/31/2025 (sunset) to forgive loan making a gift.
Income tax planning
Income tax free death benefit.
Preserve gift/estate exemption for stepped up basis on second death.
Use any type product! Single life, survivorship, term, current assumption UL, VUL, indexed UL, WL, term. (Private Split $ requires low CSV product & best with survivorship.)
Use with non-insurance strategies such as Dual Spousal Lifetime Access Trusts that give non-grantor spouse access to trust assets.

52. Reducing the Loan Longer Note & Longer Premium Paying Terms 6% Pre-Tax Return
Note Terms
$10M Life Insurance
***
Note
April 2018
Annual
Years Pay
Required
Scenario
Duration
Term
Rate
Premium
Premiums
Loan 1 9
MidTerm
2.72%
168,545 10
5,336,645 2 20
Long Term
3.04%
107,061
3,009,926 3 30
91,463
2,165,051 5
Life
86,227
Lifetime
1,769,625

53. Funding Hierarchy (Simple to Complex)
Clients Funds
Existing Funded Trusts
$15,000 AGTE
$11.18M Lifetime Gift & GST
Transfer Assets
Discounted Gift to DGT
Discounted Sale to DGT
Discounted GRAT (DGT)
Loan
Premium Structure
Full Premium
Split $ - Economic Ben.
Private Financing
Private Financing & Gift
Split-$ Demand Loan
Pay Gift Tax
OPM (Premium Financing)
Commercial Lender
Local Banking Relationship
Bank Specialize in Premium Financing
Intermediary
Dual Loan
For Advisor and Producer Use Only. Not For Public Distribution.

54. Contact Us Robert W. Finnegan, J. D
Contact Us Robert W. Finnegan, J.D., CLU, AEP Senior Vice President, Advanced Planning Attorney Highland Capital Brokerage Brian Simmons, CFP® Senior Vice President, Trust Officer Premier Trust