boma_ex1


Exhibit 1: Sample SERP Swap
  1. Participant forfeits specified excess benefits.
  2. Company pays premiums into a survivorship life insurance contract owned by an irrevocable trust.
  3. Participant contributes, via gifts in trust, part of the annual premium equal to the “economic benefit” of the insurance coverage.
  4. Participant pays gift tax (and GST tax, if applicable) on the economic benefit contributions. Tax may be avoided by using available exemptions.
  5. Company recovers its premium outlay before or at death. Split-dollar agreement terminates.
  6. Life insurance trust receives death proceeds free of income and estate taxes.

 

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