How One Planning Decision Protected Millions

This small planning move helped one of our clients protect $2M+ from estate taxes.

A partner at a real estate development firm with much of his net worth tied up in the business and real estate investments.

He didn't feel wealthy, but on paper his estate was already above the federal estate tax exemption.

With young kids and significant illiquidity risk, we recommended putting cost effective term life insurance in place.

Life insurance death benefits are generally included in your gross estate if you personally own the policy.

 So adding $5M of life insurance was effectively adding another $5M to his taxable estate.

Between the 40% federal estate tax and DC estate taxes, nearly half of that could have eventually gone to taxes.

Working alongside his estate lawyer, we established an irrevocable life insurance trust (ILIT) to own the policies.

Because the trust, not the individual, owns the policies, the proceeds are outside of his taxable estate.

Not an overly complex strategy, but one that can easily be overlooked without the right team in place. 

Part of our job is recognizing opportunities like this and bringing in the right specialists to help execute.