Strategic wealth preservation and legacy planning through sophisticated life insurance structures. Estate tax mitigation, irrevocable trusts, wealth transfer, and tax-efficient retirement income — designed for discerning clients.
Life insurance provides the liquidity to pay estate taxes without forcing the sale of assets, businesses, or real estate.
Estimate based on current federal exemption ($13.61M per individual, $27.22M per couple)
The most powerful estate planning tool involving life insurance
Gift premiums to trust
Owns the policy
Receive benefit tax-free
Annual gifts to the ILIT (to pay premiums) qualify for the gift tax exclusion ($18,000/year per beneficiary in 2024) through Crummey withdrawal notices. This lets you fund the trust without using your lifetime gift exemption.
The grantor cannot be the trustee. Choose an independent trustee (attorney, CPA, trust company) or a trusted family member who is not a beneficiary. The trustee manages the policy, pays premiums, and distributes benefits.
If you transfer an existing policy to an ILIT and die within 3 years, the death benefit is pulled back into your taxable estate. New policies purchased by the ILIT from inception avoid this rule entirely.
A $5M policy in an ILIT saves your heirs $2M in estate taxes (at 40%). The death benefit passes outside your estate, providing liquidity for your heirs to pay estate taxes on other assets without selling them.
Fund a dynasty trust with life insurance to provide multi-generational wealth transfer that avoids estate taxes at each generation. Particularly powerful in states without a rule against perpetuities.
Use the GST tax exemption ($13.61M in 2024) combined with life insurance to transfer wealth directly to grandchildren, bypassing one layer of estate tax entirely.
PPLI allows ultra-high net worth clients to hold alternative investments (hedge funds, PE, real estate) inside a life insurance wrapper, providing tax-deferred growth and tax-free access via policy loans.
Overfund an IUL policy to build substantial cash value, then access it in retirement through tax-free policy loans. No contribution limits, no required minimum distributions, no income limits.
For high net worth business owners, life insurance is the funding mechanism behind buy-sell agreements, key person protection, and deferred compensation strategies at the executive level.
Palmwood coordinates with your corporate attorney and CPA to structure coverage that aligns with your overall business succession plan — not just the insurance component.
See Business Owner Strategies →HNW clients can borrow to pay premiums, keeping capital invested in higher-returning assets.
Arbitrage between loan rates and policy cash value growth
Borrow premium amount from a lending institution
Loan funds pay life insurance premiums
Cash value serves as collateral for the loan
Repay loan from cash value or death benefit
ILIT Strategy
A married couple with a $20M estate faced a potential $2.5M estate tax liability (post-2026 sunset). Illiquid assets (real estate, business equity) meant heirs would need to sell to pay taxes.
Succession + Key Person
A manufacturing company with 3 partners needed buy-sell funding for each partner's share plus key person coverage on the CEO who drove 60% of revenue.
Charitable + Wealth Replacement
A retired executive wanted to donate $5M in appreciated stock to their alma mater while still providing for their children.
Palmwood coordinates with your complete advisory team to ensure your life insurance strategy aligns with your overall estate and financial plan.
Trust structuring, ILIT formation, buy-sell drafting
Tax implications, gift strategies, income planning
Overall portfolio, asset allocation, retirement
Policy design, carrier selection, ongoing service
Our high net worth specialists work on a confidential, consultation-only basis. We will review your estate structure, identify tax exposure, and design a custom life insurance strategy — in coordination with your existing advisory team.