Get too rich and the estate tax monster is sure to get you. The question is not if, but for how much. Go ahead. Throw your estimated estate tax liability on the table. Is it $2 million; $20 million; more?

Let’s estimate an estate tax number – say $8 million – to work with for the rest of this article.

But first, stop for a moment.

Write down your “guesstimated” estate tax number. Then, relax and enjoy playing the how-to-win-the-estate-tax game. Yes, you can and will win the game. Guaranteed. The trick is to not get caught in the trap of concentrating all your efforts on lowering the estate tax.

Start by changing your goal, which usually is lowering your estimated estate tax. Using the year 2017 rates your estate tax liability would be $8 million – if you are married – and have a $31 million net worth.

Sure, you are heading in the right direction by trying to lower your tax. Chances are by using basic tax strategies – stuff like family limited partnerships, gifting concepts and various trusts – you can reduce that $8 million tax hit by 35 to 45 percent. Say down to $5.2 million; and when you properly implement these strategies there’s a nice bonus: You still will have absolute control over all your assets – including your business – for life.

But now what, $5.2 million (Did you write down your own number?) is still a whopper estate tax bill. So post a big sign, where you will see it daily, with your new goals: “Transfer all my wealth (in this example, $31 million) to my family – intact, every dollar of it – all taxes paid in full.”

Logic tells you that you must create at least $5.2 million of tax-free wealth, or you can’t accomplish your new goal. The question is, how?

Actually, there is a new, unique and ingenious way to enjoy the wealth-building benefits of life insurance: You don’t pay premiums with cash. Instead, you borrow each premium as it comes due from a bank. Only interest is paid on the loan. The concept is called “premium financing.”

Of course, someday you will get hit by the final bus. Then, the bank will be paid (the loan used to pay premiums) out of the insurance death benefits.

Following are some numbers from our files for a real-life client that shows you how premium financing works. The client (Joe, age 64), and his wife (Mary age 63) would like to create $10 million of tax-free wealth ($5.2 million to pay their estimated estate tax liability and $4.8 million for their family.) Enter premium financing. The actuaries rev up the computer. The key numbers show that $14.5 million of second-to-die insurance is needed: $4.5 million to pay off the premium loans, leaving a net of $10 million (the target amount). The entire $14.5 million is tax-free. No income, gift or estate taxes.

What is the out-of-pocket costs? About $360,000 for transaction costs, to be paid to the bank for various services over Joe’s and Mary’s lifetime. In effect, $360,000, plus about the same amount of interest (paid a little bit at a time) creates $10 million of tax-free wealth.

Is premium financing for you? Maybe not. Obviously, you must be insurable. If married, only one – either spouse – must be insurable. Also, your net worth must be a strong minimum of $5 million (no fudging). The greater your net worth, the larger the amount of tax-free wealth you can create for your family.

Of course, if you qualify, you want more information. Here’s how you get it: Send me: (1) Your estimated net worth; (2) Your last year-end financial statement for your business (if you own all or part of a business) and (3) Your full name and birthday (same for your spouse, if married). Mark “Premium Financing – Eagle” on the page. Send to Irv Blackman, (Premium

Financing) 4545 W. Touhy Ave., # 602, Lincolnwood, IL 60712; or email it to If you have a question, call me (Irv) at 847-674-5295.

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