Posted on May 05, 2004 at 21:35:44:
You can leave $1 million to your children or grandchildren—even if you don’t have $1 million yet.
Individuals can give up to $11,000 a year ($22,000 for couples) to as many recipients as they wish, free of gift tax. But the gift can be worth more if the money is used to pay the premiums on a life insurance policy. And with a properly structured life insurance trust to own the policy (or policies), that money could be free of income and estate taxes.
It’s most economical with a second-to-die life insurance policy. A couple might spend as little as $13,000 a year for each policy, paying premiums for 15 years, when the policy could become self-financing. The total outlay is less then $200,000 for each policy, but the eventual gift is impressive. It’s smart to get expert professional help before proceeding.