➜The ONE Thing
Posts
➜The ONE Thing: How $10M of Tax became $20M of charity

➜The ONE Thing: How $10M of Tax became $20M of charity

One Policy, Zero Estate Taxes, Full Legacy

Mark Halpern
November 12, 2025

Welcome to The ONE Thing! We know you're busy, and long, complicated newsletters aren’t practical. That’s why we bring you The ONE Thing. It’s One, clear, actionable insight in each edition—straight to the point. No fluff, no filler — a smart strategy you can apply immediately to protect your future and make your impact that much greater.

The ONE Idea: Charitable Estate By-Pass Plan

It’s absolutely shocking, if you’re not ready, but most successful families will face a significant tax bill at death — often because the government treats assets as if they were sold on the day of death (“deemed disposition”). This creates a significant tax bill and probate fees, taxing up to 50% of one’s assets (and sometime even more)! With proper planning, however, those tax dollars don’t need to go to the government. They can go to your favorite charities—while your heirs still receive the full value of your estate.

In the year of death*, charitable donations can offset 100% of taxes, including carrying back one year. That means:

For every $2 donated upon death, $1 of tax can be eliminated.

And with a carefully structured life insurance strategy, the donation can be fully replaced so the family doesn’t lose a penny.

*Normally annual donations can only offset tax up to 75% of net taxable income.

How It Works

A clear, step-by-step process:

Step 1: Determine Your Estate Tax Exposure
Work with an advisor to project the size of your estate and calculate the estimated tax owing at death.

Step 2: Choose a Strategy to Address the Tax

Option 1: Do Nothing – pay the tax to the government and take a chunk out of your estate.
Option 2: Use Life Insurance – buy a life insurance policy where the proceeds paid upon death (“death benefit”) equal the tax owed, and have it pay the tax at death.
Option 3: Charitable Estate By-Pass Plan (CEBP) – buy a life insurance policy and make a charity, foundation, or donor advised fund the beneficiary. Upon death, the death benefit will go to the charity, and they will give the estate a charitable receipt that covers all your taxes owed. Your family now receives the full estate all the while creating a large charitable legacy impacting generations to come! (See Case Study)

Step 3: Fund the Plan
Premiums can be paid using cash, corporate funds, real estate, or financing structures to help stretch your dollar even further (to be discussed further in later editions)

Case Study: John & Nancy M.

John & Nancy are both 65 years old with a projected estate of $50M. Based on current rules, their estate will owe approximately $10M in tax at death. They want to protect their family, reduce tax, and still support charity.

Here’s how the Charitable Estate By-Pass Plan works for them:

They purchase a $20M Joint Last-to-Die life insurance policy (paid when second spouse dies) and name their chosen charity(s) or foundation as the beneficiary.
Upon death, the charity receives the $20M tax-free.
The estate receives a $20M charitable receipt, which wipes out the entire $10M tax bill.
Their children receive the full $50M estate without any reduction for taxes.

Cost: The only cost will be the life insurance premiums which is typically pennies on the dollar and can vary depending on the design of the plan.

Savings: Instead of losing $10M to tax, they preserve the full estate and leave $20M to charity minus any cost of the life insurance.

Many families already plan to leave something to charity in their wills—this approach uses life insurance to deliver that gift in a tax-efficient way while protecting the inheritance.

Before & After: Charitable Estate By-Pass Plan

Scenario	Estate Value	Estate Tax Bill	Charity Receives	Family Inherits
Before Planning	$50M	$10M	$0	$40M
After Charitable Estate By-Pass Plan	$50M	$0	$20M	$50M

Scenario

Estate Value

Estate Tax Bill

Charity Receives

Family Inherits

Before Planning

$50M

$10M

$40M

After Charitable Estate By-Pass Plan

$50M

$20M

$50M

✔ RESULT: The family keeps their full inheritance, while the charity receives $20 million—all by redirecting tax dollars instead of paying the government.

The Bottom Line:

Your estate can only go three places: your family, charity, or the government. You can only choose two. With proper planning, it's possible to support the causes you believe in without reducing your family's inheritance—and to eliminate estate tax entirely.

Which two will you choose?

Contact us now to start building a legacy plan that benefits both your family and your favorite charities!

👉 Let’s talk.

Regards, Mark Halpern and The WEALTHinsurance.com Team