Give Away Your Estate Twice

Why would somebody want to give their estate away twice? Well, let’s say you want to provide for your family and the charities you support after your passing. We have a strategy that allows you to give an equal inheritance to both.

Say you have a $10 million estate that will owe approximately $5 million in taxes upon your death. Your first step is to establish an Irrevocable Life Insurance Trust (ILIT) and have that trust purchase an amount of insurance that equals your estate value. If your estate is worth $10 million, you will have the trust purchase a $10 million policy. At this point, you may be thinking to yourself: That will be very expensive—can I afford that? Well, if you have $10 million, which is capable of generating somewhere between $500,000 – $600,000 each year in dividends and interest, and you only use, say, $100,000 of that to live on, then you probably can afford the policy.

So you and your spouse each gift your “lifetime exemption” of $1 million to the ILIT. That $2 million will then buy $10 million of insurance on you and your spouse. When you pass away, the trust will receive $10 million, which the trustees can pay out to your family. The remaining $8 million in your estate (which may likely be worth much more than that due to market growth) can be left entirely to charity. This is how you can give your estate away twice.  

To reiterate the significance of this strategy, consider this: If you simply passed away with $10 million in your estate, your kids and charity would split up the $5 million left after paying estate taxes. Instead, you now have $10 million to give to your family and $10 million to give to charity. What a legacy!

At Howard Kaye, we want to help you understand that life insurance is an excellent tool for preserving and transferring wealth. Strategies, such as the one above, present a real opportunity for you to pass more money along to future generations of your family and charity. Call us today at 800-DIE-RICH and learn how you can start doing the same.