1. A New Approach to Old Challenges

2. This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code. This material was written to support the promotion or marketing of the products, services, and/or concepts addressed in this material. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here.
For producer use only. Not for presentation to the public.

3. New Approach… Old Challenge
The good news…
Large bonus or commission check
Sale of real estate
Sale of business
The bad news…
These all come with a large tax liability
Qualified plans may not always be an answer
Plan contribution limits
Level annual funding requirements
For producer use only. Not for presentation to the public.

4. New Approach… Old Challenge
Enhanced Charitable Trust creates a way to:
Leverage charitable gifts through purchase of life insurance policy
Provide current charitable income tax deduction
Make meaningful contribution to charity
Transfer significant wealth to loved ones
For producer use only. Not for presentation to the public.

5. New Approach to Charitable Giving
Enhanced Charitable Trust
Charitable Lead Annuity Trust (CLAT)
Small annual lead payout to charity
Large final payout to charity and trust beneficiary at death of insured
For producer use only. Not for presentation to the public.

6. How Does It Work?
Individual has large non-recurring taxable item and makes gift to CLAT
Donor receives charitable deduction to help offset income taxes due
CLAT receives cash and purchases life insurance
For producer use only. Not for presentation to the public.

7. How Does It Work? (Cont.) Upon death of insured:
Portion of death benefit paid to charitable trust beneficiary
Remainder of death benefit paid to non-charitable trust beneficiary (subject to gift tax)
Gift tax based on original gift amount less charitable income tax deduction
If grantor dies before the trust term ends there are issues of the recapture of the charitable income tax deduction and inclusion of estate taxes
For producer use only. Not for presentation to the public.

8. How Does It Work? (Cont.)
CLAT also purchases fixed income vehicle to provide annual income to charity
Grantor trust: Grantor subject to income tax on its earnings paid to charity
Muni-bonds viable option for lead payment to charity
Small annual lead payment to charity
Approximately 10-15% of donated assets goes towards purchase of income producing product
Majority of charitable contribution stems from life insurance proceeds
For producer use only. Not for presentation to the public.

9. Enhanced Charitable Trust Illustrated
1. Taxable Asset
2. Cash gifted to CLAT… Donor receives charitable income tax deduction
3. CLAT purchases muni bonds to provide annual income to charity
4. CLAT purchases life insurance policy
5. Upon insured’s death life insurance proceeds paid out to charity and non-charitable trust beneficiary who also receives remainder of trust assets
For producer use only. Not for presentation to the public.

10. Flexible Design
Ability to customize a strategy tailored to meet client’s specific goals/needs
Amount passed on to charity
Amount passed on to loved ones (subject to gift tax)
Amount of income tax deduction desired
No guesswork, remainder is guaranteed through life insurance
Charity/ Deduction
Loved Ones
Charity/ Deduction
Loved Ones
For producer use only. Not for presentation to the public.

11. Client Profile High net–worth client
Expects to receive large amount of taxable income
Bonus or commission check
Sale of real estate
Sale of business
Needs options on what to do with non-recurring taxable income
High net–worth retirees
Large IRA, Qualified Plan, annuity balance
Age 60 or older
For producer use only. Not for presentation to the public.

12. Hypothetical Example Male business owner, age 60:
Considering selling business valued at $1,000,000
Goals:
Maximize wealth transfer to loved ones
Minimize impact of taxes due to sale of business
Provide benefit to charity
Current and future tax implications:
45% estate and gift tax rate
4.4% Section 7520 rate
For producer use only. Not for presentation to the public.

13. Hypothetical Example (Cont.)
Step 1 $1,000,000 sale of business
Step 2 $1,000,000 gifted to CLAT* $482,950 current charitable income tax deduction
Step 3 CLAT purchases $100,000 in muni bonds, earning 4%, generating $4,000 annual income to charity
Step 4 $3,801,000 TransACE® life insurance policy purchased by trust with single premium of $900,000
Step 5 Upon grantor’s death, charity receives $1,000,000 from trust. Non-charitable trust beneficiary receives $2,801,000 from trust death benefit plus remaining trust assets*
*$517,050 subject to gift tax
For producer use only. Not for presentation to the public.

14. Summary Benefits to the grantor: Current income tax deduction
Leverage assets to pass on wealth to loved ones through purchase of life insurance
Gifted assets removed from estate
Benefit a charity that he/she believes in
Benefits to the charity:
Annual income
Large lump-sum gift at death of insured
For producer use only. Not for presentation to the public.

15. Market Opportunities Business professionals Attorneys Stockbrokers
Executives
Business owners
Real estate investors
High net–worth retirees
Large IRA, annuity or Qualified Plan balances
Have sufficient assets for retirement income
For producer use only. Not for presentation to the public.

16. Enhanced Charitable Trust
TransACE® is a nonparticipating, flexible-premium universal life insurance policy issued by Transamerica Life Insurance Company, Cedar Rapids, IA Policy Form # (CVAT), Group Certificate # (CVAT) for certificates issued under a group policy issued to the Rhode Island National Consumer Protection Trust. Policy form and number may vary, and this policy may not be available in all jurisdictions.
Transamerica Life Insurance Company, Transamerica Financial Life Insurance Company (collectively “Transamerica”), and their representatives do not give tax or legal advice. This presentation is provided for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties must be urged to consult with and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here.
Discussions of the various planning strategies and issues are based on our understanding of the applicable federal income, gift, and estate tax laws in effect at the time of this presentation. However, tax laws are subject to interpretation and change, and there is no guarantee that the relevant tax authorities will accept Transamerica’s interpretations. Additionally, this material does not consider the impact of applicable state laws upon clients and prospects.
Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information is current as of May 2009.
For producer use only. Not for presentation to the public.

17. A New Approach to Old Challenges