Funded Trusts

continued steps for Funded CST...

2. Enter basic trust information.
3. Enter a name for the trust under Description.
4. Enter the tax rate that is levied on any returns that are held within the trust (i.e., those returns that are not distributed to the member or heirs) prior to the reinvestment of that money in the trust under Trust Tax Rate.
5. Enter a value 0.00 - 1.00 for the ratio used the calculate the generation-skipping transfer tax (GSTT) in the Inclusion Ratio field.
• The value entered here should exclude other factors such as: charitable donations or estate taxes paid.
• The ratio is based on the following calculation:
  1 — (amount of GSTT exemption allocated to the trust or property) ÷ (value of the property transferred to the trust)
• Select the Income Member.
6. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
7. Enter information pertaining to the start of year value and basis of the trust's assets in the qualified and non-qualified sections.
8. Enter the Start of Year Market Value for the underlying qualified and non-qualified portions of the trust assets at the beginning of the current year.
9. Enter the Start of Year Cost basis and Qualified Basis for the underlying qualified and non-qualified portions of the trust assets at the beginning of the current year.
10. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
    OR
    Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
11. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
12. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
13. When you are satisfied with these options, click OK.

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continued steps for Funded Irrevocable trust...

2. For a Funded irrevocable type trust, enter basic information under the Funded Irrevocable heading.
   • Enter a name for the trust under Description.
   • Select the person whose assets fund the trust from the Grantor menu. If you select Other, both the client and co-client can be added as income and remainder beneficiaries of the trust.
     For example, If the client's mother is the Grantor then both the client and co-client may be beneficiaries.
   • Enter the date the trust was Created On as well as its End Date.
     Note: The End Date can be specified as a number of years (starting with the Created On date), as a specific date, or as an event (such as retirement, death, etc).
3. Enter the Start of Year Market Value and the Start of Year Cost Basis for the trust's underlying assets.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded ILIT...

2. For a Funded irrevocable life insurance type trust, enter basic information under the Funded ILIT heading.
   • Enter a name for the trust under Description.
   • Select the person whose assets fund the trust from the Grantor menu. If you select Other, both the client and co-client can be added as income and remainder beneficiaries of the trust.
     For example, If the client's mother is the Grantor then both the client and co-client may be beneficiaries.
   • Under Trust Tax Rate, enter the rate that is levied on any returns that are held within the trust (i.e., those returns that are not distributed to the beneficiaries) prior to the reinvestment of that money in the trust
   • Use the Crummey Trust option to indicate whether a Crummey trust provision applies. In order for life insurance premiums to be eligible for the annual gift exclusion, a Crummey trust provision must be in place. This provision permits the transfer of funds to the trust to pay for life insurance premiums.
   • Enter a Transfer Year, this is the year the life insurance policy was transferred to the trust (must be prior to the current plan year).
   • Enter all Gifts to Trust in <previous year> as well as Gifts to Trust in <two years ago> to the trust for the payment of premiums.
   • Under the Death Benefit Payable to Trust field, enter the percentage of the life insurance death benefit payable to the trust. The difference is payable directly to the remainder beneficiaries on the death of the insured.
3. Enter details about the associated life insurance policy under the Policy subtab.
   • From the Details section, select the Policy Type and Insured, then enter the Effective Date.
   • From the Benefit Details section, enter the Death Benefit and Cash Surrender Value for the policy as well as the Cease Coverage date.
   • From the Premiums Details section, enter the Payer, Amount, and Frequency for the policy as well as the Cease Coverage date. If a waiver is in effect for the policy, select Waived at Disability.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded QTIP...

2. For a Funded qualified terminable interest property type trust, enter basic information under the Funded QTIP heading.
• Enter a name for the trust under Description.
• Enter the tax rate that is levied on any returns that are held within the trust (i.e., those returns that are not distributed to the member or heirs) prior to the reinvestment of that money in the trust under Trust Tax Rate.
• Enter a value 0.00 - 1.00 for the ratio used the calculate the generation-skipping transfer tax (GSTT) in the Inclusion Ratio field.
• The value entered here should exclude other factors such as: charitable donations or estate taxes paid.
• The ratio is based on the following calculation:
  1 — (amount of GSTT exemption allocated to the trust or property) ÷ (value of the property transferred to the trust)
• Select the Income Member.
• Select the Reverse QTIP Election option to cause the transfer of assets to the trust to be considered from the donor spouse to the remainder beneficiaries for GSTT purposes. Any remaining GSTT exemption of the donor is applied against any GSTT that results from the trust. If this option is not selected, GSTT implications on the death of the member selected will be considered.
3. Enter information pertaining to the start of year value and basis of the trust's assets in the Qualified and Non-Qualified sections
• Enter the Start of Year Market Value for the underlying qualified and non-qualified portions of the trust assets at the beginning of the current year.
• Enter the Start of Year Cost Basis and Qualified Basis for the underlying qualified and non-qualified portions of the trust assets at the beginning of the current year.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded QRPT...

2. For a Funded qualified personal residence type trust, enter basic information under the Funded QPRT heading.
   • Enter a name for the trust under Description.
   • Select the person whose assets fund the trust from the Grantor menu. If you select Other, both the client and co-client can be added as income and remainder beneficiaries of the trust.
     For example, If the client's mother is the Grantor then both the client and co-client may be beneficiaries.
   • Enter the date the trust was Created On.
   • Enter the Start of Year Market Value and the Start of Year Cost Basis for the trust.
   • Enter the trust's duration under Term in Years.
   • Enter the trust's anticipated increase in value under Growth Rate.
3. Enter the Present Value of Remainder Interest (gift) in the trust at the time the trust was created. This represents the gift for gift-tax purposes at the time of trust funding.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded Marital trust...

2. For a Funded marital type trust, enter basic information under the Funded Marital heading.
   • Enter a name for the trust under Description.
   • Enter the tax rate that is levied on any returns that are held within the trust (i.e., those returns that are not distributed to the member or heirs) prior to the reinvestment of that money in the trust under Trust Tax Rate.
   • Enter a value 0.00 - 1.00 for the ratio used the calculate the generation-skipping transfer tax (GSTT) in the GSTT Inclusion Ratio field.
     • The value entered here should exclude other factors such as: charitable donations or estate taxes paid.
     • The ratio is based on the following calculation:
       1 — (amount of GSTT exemption allocated to the trust or property) ÷ (value of the property transferred to the trust)
3. Enter the Start of Year Market Value and the Start of Year Cost Basis for the trust.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded Generic Testamentary Trust...

2. For a Funded generic testamentary type trust, enter basic information under the Funded Generic Testamentary heading.
   • Enter a name for the trust under Description.
   • Enter the Start of Year Market Value and the Start of Year Cost Basis for the trust.
   • Enter the tax rate that is levied on any returns that are held within the trust (i.e., those returns that are not distributed to the member or heirs) prior to the reinvestment of that money in the trust under Trust Tax Rate.
   • Select the client or co-client who is the original income beneficiary of the trust for Income Member.
   • Enter a value 0.00 - 1.00 for the ratio used the calculate the generation-skipping transfer tax (GSTT) in the GSTT Inclusion Ratio field.
     • The value entered here should exclude other factors such as: charitable donations or estate taxes paid.
     • The ratio is based on the following calculation:
       1 — (amount of GSTT exemption allocated to the trust or property) ÷ (value of the property transferred to the trust)
3. Enter information about trust income in the following fields:
   • Select Unitrust to indicate that a percentage of the trust's market value is to be distributed as income.
     • If you selected Unitrust, enter the percentage of the trust's market value to be distributed as income under Trust Payment % and enter a Frequency for these distributions.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded FLP...

2. For a Funded family limited partnership type trust, enter basic information under the Funded Family Limited Partnership heading.
   • Enter a name for the trust under Description.
   • Enter the date the trust was Created On.
   • Enter The discount rate that will be applied because of a lack of secondary market in which to sell the interest under Marketability Discount Rate.
     
   • Enter the discount available within a family limited partnership when transferring partnership interests to a family member under Minority Interest Discount Rate.
     
3. Enter the Start of Year Market Value and the Start of Year Cost Basis for the trust in the Details section.
4. From the Partners subtab, select for Add Partner and add a partner from the list.
   • Enter the percentage of the partnership that is owned by the specified partner. This ownership is sub-divided into General and Limited categories.
5. From the Income Distributions subtab, select Add Income Distribution.
   • Enter an Amount and Frequency for the distribution.
   • If applicable, use the Infl, +/- Add'l, and Before Start Date $ fields to model an Increase Amount for the income distribution.
   • Enter a Start Date and End Date for the distribution.
   • If applicable, use the In Today's Dollars field to specify that the fixed amount is to be inflated by the default inflation rate for the plan. The fixed amount will be indexed from today until the effective date when the distribution is made.
     Note: This option is only available when Lump Sum is selected from the Frequency menu.
6. From the Gifting subtab, select Add Gift....
   • Make a selection for Gifted By, Gifted To, and Frequency. This will define who gives the gift to whom and how often.
   • Select one of the following options for Gift Amount:
     • Maximum Exclusion: Specifies that the beneficiary will receive the maximum allowable tax-free gift each year.
     • Fixed Amount: Allows you to enter a dollar amount for gifting.
     • % of Market Value: Allows you to enter a number to gift a percentage of the market value of the partnership interest.
   • Enter a Start Date and End Date for the distribution.
   • If applicable use the Claim Cost Basis for charitable deduction (instead of Market Value) option to determine the value of the gift as a percentage of the cost basis rather than a percentage of the market value. This option is available only when the amount is gifted to a charity.
7. If applicable, go to the Return Rates tab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded GRT...

2. For a Funded grantor retained type trust, enter basic trust information under the Funded GRT heading.
   • Enter a name for the trust under Description.
   • Select the person whose assets fund the trust from the Grantor menu.
   • Enter the date the trust was Created On.
   • Enter the Start of Year Market Value and the Start of Year Cost Basis for the trust in the Details section.
   • Enter the Present Value of Remainder Interest (gift) in the trust at the time the trust was created. This represents the gift for gift-tax purposes at the time of trust funding.
3. From the Income Distribution section, enter details for the income distribution for the trust.
   • Select one of the following options for the trust's Type:
     • Annuity: Periodic fixed payments over a set time.
     • Unitrust: Periodic payments based on a fixed percentage of the value of the assets in the trust.
     • Income: Periodic payments based on the investment income generated from the assets in the trust.
   • Enter the amount of income (in dollars) that the payment beneficiaries are receiving each year from the trust under Annual Payment Amount.
     Note: This field only applies to annuity and income type distributions.
   • Enter the percentage of the trust’s market value that is distributed as income in the Trust Payment % field.
     Note: This field only applies to Unitrust payments.
   • Enter a Payment Frequency for the distribution.
   • Define the transfer strategy for the trust using the following fields:
     • In Kind:
       If selected and the income earned by the trust assets is not enough to cover the trust payment, NaviPlan Select will transfer similar assets from the trust (in-kind) instead of selling principal and creating capital gains within the trust.
       If not selected, the balance of the trust payment is made by selling trust assets that may result in the realization of capital gains and tax consequences.
     • To Account: Account selected to receive the in-kind transfer.
       Note: This menu is only available when the In Kind option is selected.
     • Account Details: Allows you to enter additional details about the in-kind account. See the Account Details Help page for more information.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded Rolling GRAT...

2. For a Funded rolling grantor retained annuity type trust, enter basic trust information under the Setup tab.
   • Enter a name for the trust under Description.
   • Select the person whose assets fund the trust from the Grantor menu.
   • Enter the date the trust was Created On (End of Year) (this will always be December 31 of the specified year).
   • Enter the IRS-determined rate used to calculate the remainder interest (taxable gift) at the end of the Rolling GRAT term under the IRC 7520 Rate field.
   • Enter the total GRATs in Series.
     • For example, the number “2“ means that a total of two GRATs would be modeled: GRAT 1 being the original GRAT, and GRAT 2 being one additional GRAT that is funded from the first trust payment of the original GRAT.
       Note: This field includes the total number of GRATs in the original series only. This includes any GRATs that may have already terminated, which means the first GRAT may not necessarily be GRAT1.
   • Enter the GRAT Term in Years for each individual GRAT in the series.
     Note: Each GRAT can only be 2 or 3 years maximum; the intent of the Rolling GRAT is to allow for a series of shorter-term GRATs versus one longer-term GRAT.
   • NaviPlan will now calculate the Total Years Remaining indicating the number of years remaining for the GRAT series using the following calculation:
     (GRATs in Series + GRAT Term in Years) - 1
   • Enter a Payment Frequency.
3. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
4. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
5. From the Funded GRATs section, review the entries for Start of Year Market Value, Start of Year Cost Basis, and Scheduled Annuity Payment. If desired, enter new data into any of these fields.
6. If desired, you can select for both the funded or future GRAT. From the GRAT Details dialog box you can edit details about specific GRATs in the series.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded CRT...

2. For a Funded charitable remainder type trust, enter basic trust information under the Funded CRT heading.
   • Enter a name for the trust under Description.
   • Select the person whose assets fund the trust from the Grantor menu.
   • Enter the date the trust was Created On.
   • Enter the Start of Year Market Value and the Start of Year Cost Basis for the trust in the Details section.
3. From the Income Distribution section, enter details for the income distribution for the trust.
   • Select one of the following options for the trust's Type:
     • Annuity: Periodic fixed payments over a set time.
     • Unitrust: Periodic payments based on a fixed percentage of the value of the assets in the trust.
     • Income: Periodic payments based on the investment income generated from the assets in the trust.
   • Enter the amount of income (in dollars) that the payment beneficiaries are receiving each year from the trust under Annual Payment Amount.
     Note: This field only applies to annuity and income type distributions.
   • Enter the percentage of the trust’s market value that is distributed as income in the Trust Payment % field.
     Note: This field only applies to Unitrust payments.
   • Enter a Payment Frequency for the distribution.
   • Define the transfer strategy for the trust using the following fields:
     • In Kind:
       If selected and the income earned by the trust assets is not enough to cover the trust payment, NaviPlan Select will transfer similar assets from the trust (in-kind) instead of selling principal and creating capital gains within the trust.
       If not selected, the balance of the trust payment is made by selling trust assets that may result in the realization of capital gains and tax consequences.
     • To Account: Account selected to receive the in-kind transfer.
       Note: This menu is only available when the In Kind option is selected.
     • Account Details: Allows you to enter additional details about the in-kind account. See the Account Details Help page for more information.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded CLT...

2. For a Funded charitable type trust, enter basic trust information under the Funded CLT heading.
   • Enter a name for the trust under Description.
   • Select the person whose assets fund the trust from the Grantor menu.
   • If this Non-Grantor is selected: The grantor is not taxed on the annual income that is generated by the trust and does not receive a charitable deduction for the donation. The income generated from the trust is taxed at the trust's tax rate and the trust receives an unlimited income tax deduction equal to the amount of the annual charitable payment.
     If Non-Grantor is not selected: The grantor receives a charitable deduction in the year of the donation based on the value of the gift to the charity and is taxed on the annual income generated by the trust.
   • Enter the tax rate that is levied on any returns that are held within the trust (i.e., those returns that are not distributed to the member or heirs) prior to the reinvestment of that money in the trust under Trust Tax Rate.
   • Use the Payment Distribution to specify how the income from the trust is distributed (Unitrust or annuity method).
3. Define the payment information for the trust.
   • Enter the percentage of the trust’s market value that is distributed as income in the Trust Payment % field.
   • Enter the amount of income (in dollars) that the payment beneficiary or charity is receiving each year from the trust under Annual Payment Amount.
   • Enter a Payment Frequency for the distribution.
   • Enter the length of time that payments will be paid from the trust under Payment Period.
   • Enter the duration of the trust under Term in Years.
   • Enter the Start of Year Market Value and the Start of Year Cost Basis for the trust in the Details section.
   • Enter the Present Value of Remainder Interest (gift) in the trust at the time the trust was created. This represents the gift for gift-tax purposes at the time of trust funding.
   • Enter the date the trust was Created On.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
5. For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
   OR
   Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
6. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
7. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
8. When you are satisfied with these options, click OK.

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continued steps for Funded QDOT...

2. For a Qualified Domestic type trust, enter basic trust information under the Funded QDOT heading.
   • Enter a name for the trust under Description.
   • Enter a Trust Tax Rate and GSTT Inclusion Ratio as applicable.
   • If more than one client is a non-US resident select the appropriate client from the Income Member menu.
3. Enter the Start of Year Market Value and Start of Year Cost Basis for the Qualified and Non-Qualified portions of the trust.
4. From the Remainder Beneficiaries container, select for Add Beneficiary and add all relevant beneficiaries for the trust.
   • For each beneficiary, enter the percentage of the remainder income attributable to the selected beneficiary.
     OR
     Select Pro-Rata to split the remainder equally among all beneficiaries added to the trust.
5. If the trust has income beneficiaries and if any trust income is to go to the surviving client, enter this percentage under the Income Beneficiaries container.
6. If applicable, go to the Return Rates subtab and enter the expected return rates for each field. By default, the investment income is reinvested into the trust.
7. When you are satisfied with these options, click OK.