The Waterfall Strategy

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Educational only, not tax, legal or investment advice. Examples are illustrative. Have your CPA or tax attorney review your facts before you act.

Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service, and a licensed insurance agent (CA Insurance License #4273294). He is not a CPA or attorney. He is paid a commission only if a structured installment sale is funded; seller financing pays him nothing. Disclosures.

Installment sale + 1031 + ILIT: when is it a slam dunk?

For a large estate, a 1031 exchange, an installment sale and a trust-owned life insurance policy (an ILIT) can work together. It tends to win when most of these are true (2026 figures: the federal estate tax exemption is $15,000,000 per person, $30,000,000 for a married couple):

  1. Your estate is clearly over the line: a projected estate tax bill of $10,000,000 or more.
  2. You are married, age 50 to 60, in preferred health or better. At 75 or older, single, or in a rated health class it usually does not win.
  3. One separate property has stuck (suspended) passive losses at least as big as its gain.
  4. That property earns little: low cap rate, slow growth.
  5. You would sell or borrow anyway, or you do not have the cash on hand to pay the premiums.

Four or five true? Run the numbers. Enter your own estate and ages below, or open the full calculator. Estimates from published rates, not a quote or advice; your CPA and attorney decide.

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Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS. General education, not tax or legal advice for your situation.