Estate Taxation
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Estate Taxation
Plan ahead. (Leave more behind!)
Without a proper legacy plan, a large portion of the estate you have worked so hard
to build could go to the IRS, instead of your heirs. Thankfully, there’s a simple
solution that can help you transfer more of your assets to your heirs. By using
life insurance in a special trust, called a wealth replacement trust, you can cover
the estate taxes due when you pass away, and preserve more of your estate. End result?
Your wealth is transferred to the ones you love.
How it works.
Your life insurance offers a death benefit, which your heirs can use to offset some of your estate taxes. The following table illustrates how it works:
|
Estate value
|
$5,000,000
|
$5,000,000
|
|
|
Life insurance policy paid with
$500,000 of premium — creates a
$2,250,000 payout at death
|
|
|
Total estate value
|
$4,500,000 + $2,250,000 =
$6,750,000
$6,750,000 is new estate value
|
$5,000,000
|
|
Estate taxes (45% of estate value)
|
$3,037,500 taxes
|
$2,250,000 taxes
|
|
Heirs receive
|
$3,712,500
($6,750,000 - $3,037,500)
or 74% of total estate value
|
$2,750,000
($5,000,000 - $2,250,000)
or 55% of total estate value
|
View more information on estate taxes and inheritance tax by state here. (PDF Document)
