Wealth Preservation

Estate can destroy your wealth if you let them 404 File Not Found

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Example: The Smarts’ end up with an estate valued at $10M (after using their exemptions). In a conservative tax environment, how would estate taxes impact their heirs?

Value of taxable estate


Less estate taxes at 55%


Net to Heirs


With proper planning at age 42 and 41, the Smarts’ can remove assets from their taxable estate by making tax free gifts or loans to a Irrevocable Life Insurance Trust.

An Irrevocable Life Insurance Trust (ILIT) is a trust that owns a life insurance policy on an insured(s) instead of the insured owning the life insurance policy directly. Internal Revenue Code Section 2042 (2) allows life insurance proceeds inside of the ILIT to be excluded from the decedent’s estate.

Taxable Estate

Taxable estate after funding ILIT ($51k, 15 annual gifts)


Less estate taxes at 55%


Net to Heirs


Irrevocable Life Insurance Trust- Not Taxable

Life Insurance


Total Net to Heirs


The estate tax amounts specified in this presentation have been calculated based on gross approximations and simplifications of various characterizes of the estate in question. The estates actual tax liability may be significantly different from amounts specified in this presentation, which is intended for illustrative purposes only. Please consult your legal or tax advisor to determine a more exact amount of potential liability.