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As of 2024, the gift and estate tax exemption is $12,920,000 per individual, or $25,840,000 for a married couple. Therefore, a $25,000,000 estate of a married couple, if structured properly with an up-to-date will, would not be subject to federal estate tax, as it falls within the exemption limit. If the exemption equivalent were to decrease to $5,000,000 per person, or $10,000,000 per couple, the same $25,000,000 estate would then be taxed on $15,000,000. At a 40% estate tax rate, the tax liability would be $6,000,000 after the death of both spouses.

Description text goes hereThere are solutions to optimize your estate and minimize taxes. You want to be sure your estate is taking advantage of current succession laws, the marital deduction, any particular control you would like on assets, and estate planning strategies beforehand.

Check out this short article: Here's Why You May Need to Update Estate Plan

We hope insurance is never needed. However, history has shown us this is not the case.

Here’s a short article on umbrella coverage: The Importance of Personal Umbrella Policies

It depends, if you have ownership control over a life insurance policy on your life, then, yes the death proceeds are included in your estate for taxes (as of 2020 up to 40% tax). The death proceed is most likely income tax-free to the beneficiary, but your estate will include the proceeds in your taxable estate. For example if you are in the 40% estate tax bracket and own a $1,000,000 policy on yourself. Your succession may owe $400,000 in estate taxes. Of course this defeats the purpose of owning life insurance. Also, if you have ownership control of a policy on your spouse and you die, the cash value of the life insurance on your spouse may be included in your estate as well.

Life insurance is used as a solution for many reasons, but paying more taxes is not one of them. Life insurance can be a prudent solution to provide for your dependents, liquidity to pay estate taxes, provide liquidity for your business and create tax advantaged cash flow.

You will need to give up ownership control on the policy. This may be accomplished by gifting the ownership of the policy to an irrevocable life insurance trust. The trust would name the beneficiary and the time frame when the life insurance proceeds are distributed. Gifting of a policy to a trust has a two-year waiting period to be excluded from your estate.

If you do not want to delay the receipt of the death benefit upon your death you may just change the ownership to the beneficiary. Again there may be a two year wait to not be included in your estate. If the beneficiary is your spouse the insurance would eventually be taxed in your spouse’s estate. If the beneficiary is your children they could be the owners and after the two year wait the proceeds would not be taxed in your estate.

A solution to avoid the three-year wait is to apply for a new policy in an irrevocable life insurance trust. If married and your intent is for the death proceeds to be for estate taxes, you could have this trust apply for a second-to-die policy and most likely get more death benefit than your current single-life policy for the same premium.

A consideration is to terminate the single life policy and use this cash to fund the trust. Income taxes may be due when terminating a life policy. There are other solutions to possibly avoid these income taxes. This takes a coordinated effort of your CPA, tax attorney and wealth advisor.