The Burgers might fund this DGT(defective grantor trust) with a gift of US1mil, on which gift tas will have to be paid. We are assuming that they will eventually want the DGT to have US10mil in cash to buy intersets in the family partnership at a discounted price. A typical safe-harbor recommendation is that the trust be initially funded with 10% of the amount of the planned installment note. Here, we will assume that the total funding is US10mil, comprising a 1mi cash gift and a US9mil installment nite. the Burgers might then sell assets to the trust, receriving back a US9mil installment note, which they can use, together with the initial 1mil in cash gift to purchase US15mil worth as assets held within a family investment partnership or limited liability company" what is installment note? can someone explain to me what the paragraph means in a simpler language thx
all he does is to have a 50% “valuation discount” because the trust fund is “held within a partnership”.