Broker Check

Giving Away Your Estate Twice

Do you want to give your estate away twice to your family and your favorite charity? BNJA has a strategy that allows you to give an equal amount to both.

Let’s say you have a $12 million estate that will owe approximately $6 million in taxes upon your death and you want to reduce the taxes your family would have to pay. The first step is to establish an Irrevocable Life Insurance Trust (ILIT) and have that trust purchase an amount of insurance that equals your estate. If your estate is worth $12 million, then you would have your ILIT purchase a $12 million life insurance policy. At this point, you may be thinking to yourself, that’s going to be very expensive, I can’t afford that! Well, if you have $12 million in your estate, which is capable of generating somewhere between $600,000 – $720,000 each year of income, and you only use $250,000 of that to live on, then you probably can afford the policy.

At this point, you and your spouse each gift your “lifetime exemption” of $1 million to the ILIT. That $2 million will buy $12 million of insurance on you and your spouse. When you pass away, the trust will receive $12 million from the life insurance policy. The trustees can then pay that $12 million out to your family. The remaining $10 million in your estate, which will likely be worth much more due to your investment growth, can be given entirely to your favorite charity.


Another way of looking at this is:

If you simply passed away with $12 million in your estate and did not do any planning, your family and charity would split up only $6 million ($3 million each) of what’s left after paying estate taxes. By using this planning concept, you now have $12 million to give to your family and $12 million to give to your favorite charity. It’s as simple as that. I don’t know about you, but I’d much rather have my estate go to my family and charity, rather than taxes. Now you’re giving 4 times as much to both your family and charity.

At BNJA 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 favorite charity. Contact us today and learn how you can start doing the same.