Estate Planning with Insurance
Strategically integrate life insurance within your estate plan to provide liquidity, minimize taxes, and ensure your legacy passes to heirs intact across multiple generations.
The Estate Tax Problem
Estates exceeding the federal exemption ($13.61M in 2024) face up to 40% estate tax. For families with illiquid assets—real estate, business interests, art collections— this creates a forced sale scenario at the worst possible time. Life insurance provides the solution: immediate, tax-free liquidity exactly when needed.
The Power of ILITs
Irrevocable Life Insurance Trusts: The cornerstone of sophisticated estate planning
How ILITs Work
Create the Trust
An irrevocable trust is established with carefully crafted provisions for benefit distribution and trustee powers.
Transfer Assets
You make gifts to the trust using your annual gift tax exclusion ($18,000 per beneficiary in 2024).
Trust Purchases Policy
The trust uses gifted funds to purchase life insurance on your life, becoming owner and beneficiary.
Estate-Tax-Free Benefit
At death, proceeds pass to trust beneficiaries completely free from estate taxes, preserving maximum wealth.
Estate Tax Savings
A $10M policy in an ILIT saves $4M in estate taxes (40% rate) compared to outright ownership, allowing the full $10M to benefit heirs.
Creditor Protection
Assets in an ILIT are generally protected from creditors of both the grantor and beneficiaries, providing an additional layer of asset protection.
Control & Flexibility
While irrevocable, ILITs can include provisions for trustee discretion, spendthrift protections, and generation-skipping provisions to control distributions.
Advanced Strategies
Generation-Skipping Trusts
Structure ILITs to benefit multiple generations, skipping estate taxes at each level. Particularly powerful for dynasties looking to preserve wealth for 100+ years.
- ✓ Bypass generation-skipping transfer (GST) tax
- ✓ Create multi-generational wealth
Estate Equalization
When one heir receives the family business while others don't, insurance equalizes inheritance. Business stays intact while all children receive equal value.
- ✓ Prevents family disputes
- ✓ Maintains business continuity
Charitable Planning
Combine insurance with Charitable Remainder Trusts (CRTs) to create income, charitable legacy, and wealth replacement for heirs simultaneously.
- ✓ Immediate charitable deduction
- ✓ Income stream for life
Business Transition Planning
Fund buy-sell agreements with insurance, ensuring smooth ownership transitions without burdening the business or forcing sales to outsiders.
- ✓ Guaranteed funding at death
- ✓ Protects business value
Common Questions
Protect Your Legacy
Let's design an estate plan that preserves your wealth for future generations
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