So if a family’s networth was over the $10million limit, how would WLI make sense?
There are a number of ways you can use insurance to help with estate tax. Couple of examples:
Large, illiquid family business that can't afford to take a 40 or 50% hit when the patriarch or matriarch dies. E.g., family farm. Term or whole life insurance can be used to hedge against possibility of having to sell half the farm to pay the estate tax.
Insurance held outside of taxable estate, funded by annual exclusion gifts, etc., can provide a large estate tax free benefit while also burning down the taxable estate to the extent of the annual exclusion gifting.
You're still paying a lot of money for the insurance, particularly as you get older and the cost of insurance goes up. The premium payments on a $5M or $10M policy are enormous when you're in your 60s or 70s. There is no free lunch. But for some situations, it works.
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