Tax Season

Estate Tax Leverage

During the month of April, we turn our attention to taxes in all forms.  Estate taxes are a hot topic this year.  The increased estate tax exemption limit, set by the Tax Cuts and Jobs Act (TCJA), is expected to expire in 2025.  A significant decrease in the estate tax exemption amount will lead to a greater number of people who are subject to this tax at their mortality.  It is a good idea for wealthy individuals to consider options that will help their heirs pay estate taxes, leaving behind a greater inheritance to build their legacy.

As demonstrated in the graphic below, life insurance provides a way to pre-pay the estate tax with discounted dollars via premium payments.  Some out of pocket cost now can result in less (and in some cases no) out of pocket cost later.  There are even instances where the life insurance amount is greater than the estate tax amount that is due, resulting in additional inheritance going to heirs via the remaining death benefit.  There is a risk in waiting to implement life insurance for estate planning purposes, since the premium increases with age and health impairments.  The higher the premium, the less leverage this concept yields.

Contact us with any questions or opportunities to help you or your clients achieve their goals.  This is what we enjoy doing for only a select number of families, businesses, and charitable institutions each year, and we look forward to hearing from you. 

The tax and legal references attached herein are provided with the understanding that Heirmark is not engaged in rendering tax, legal, or actuarial services.  If tax, legal, or actuarial advice is required, you should consult your accountant, attorney, or actuary.  Heirmark does not replace those advisors.