The document describes a split dollar life insurance agreement between parents and their child. The parents take out a $15 million life insurance policy on the child and pay the premiums. The child loans the parents $6.12 million, which is used to pay the premiums. If the parents die first, their estate receives benefits including using the child's gift tax exemption and a discounted split dollar loan value. If the child dies first, the life insurance proceeds pay off the split dollar loan.

1. $6.12 Note at AFR
Child
Mom and Dad
Split dollar
agreement
Premiums for $15.0
$5.12 Gift Mil Life policy
Life Insurance
GST Grantor
Company
Trust
Result # 1: Mom and Dad die first. Major benefits
include:
1. Use of child’s $5.12 mil exemption while available
2. Potentially discounted value of the split dollar loan
in parent’s estate
3. Creation of liquidity for child’s estate by using life
insurance.
4. Graegin Loan applicability?
Result # 2: Child dies first:
1. Life proceeds pay off split dollar loan.
COPYRIGHT 2012 STEVEN R. BERTINO ALL RIGHTS RESERVED