It debilitates most successful business owners, then, ravages some or all of the kids and eventually hurts the grandkids.

Known by various names, the most common name is “estate-tax-itus.” It drains family wealth.

Some people don’t even know they have the disease. Most know because they have the painful symptoms (a huge tax bill) and search in vain for a cure. They attend seminars, read articles, special reports and books. They go from advisor to advisor looking for relief.

The key question is: “Is there a cure?”

The answer is a resounding :Yes!”

This article shows you how to start the process to totally cure estate-tax-itus for yourself, your family and your business — every time, no matter how young or old you are, whether you are worth $1 million, $10 million (or much more).

There are many ways to fight the disease, but the best way is to build a “tax-immune system.” For best results, start today.

Here’s a three-step process that works every time. Steps No. 1 and No. 2 make the diagnosis. Step No. 3 accomplishes the cure.

Step No. 1: Prepare a personal financial statement for you and your spouse. Divide your assets into the following five categories.

— Residence

— Business

— Qualified plans (pension, profit-sharing, 401(k), rollover IRA or other qualified plans)

— All other assets (typically, investments)

— Life insurance

Step No. 2: Make a list of your goals (actually three lists) — (1) for you and (if married) your spouse; (2) for your family (typically children and grandchildren); and (3) your business.

Here are the typical core goals we see in practice:

For list (1) — Maintain your lifestyle for as long as you (husband and wife) live and allow you to control your assets for as long as you live;

For list (2) — transfer your assets to the children and grandchildren intact — free of the estate tax-and educate your grandchildren;

For list (3) — transfer your business to the business child (or children) tax-free and treat the non-business children fairly.

Step. No. 3: Find an advisor who knows how to identify and implement the exact tax strategies that accomplish your goals using the specific assets on your financial statement.

Following are the are most often-used strategies we use in our practice to accomplish a typical client’s goals, based on the assets owned.

Your Residence. Use a Qualified personal residence trust to remove the residence from your estate, yet live in it and control it for as long as you live.

Your Business. Transfer your business to the business children using an Intentionally Defective Trust. It removes the business from your estate, transfers business to kids (tax-free to you and the kids), yet allows you to keep control for life (because you retain voting control).

Qualified plans. The funds in these plans are double-taxed, robbing your family of about 75 percent of the plan funds (i.e. the tax collectors get about $750,000 if you have $1 million in the plans, your family receives only $250.000).

Create a Subtrust or retirement plan rescue (RPR) to buy life insurance. This usually triples (or more) the amount you have in the plan, and your heirs get it all tax-free. For example, $1 million in the plan (worth only $250,000 to your family) will turn into $3 million (or more) for your family with a Subtrust or a RPR. And the entire $3 million is tax-free.

All other assets. Transfer these assets (all your assets, except those in the first three categories; for example, publicly traded stocks, bonds, real estate and other investments) to a family limited partnership, which legally reduces the value of these assets for tax purposes by 35 percent (yes, $1 million of real estate, stocks, bonds, etc. are only worth only $650,000 for tax purposes.)

Insurance. Get it out of your corporation and transfer all policies you or your spouse own to an irrevocable life insurance trust (But a Subtrust is best, if you can use it. See 3. above). Also, check out premium financing, a wonderful concept that allows you to buy huge amounts of life insurance ($3 million, $10 million or more) without paying premiums.

Finally, if your estate plan is already done, and it does not effectively eliminate the estate tax, get a second opinion.

If you are worth about $6 million (or less) the answer to the question is almost always ‘Yes’; worth more, usually, ‘No.’ Let’s talk real numbers. Joe is worth $10 million and Jack is worth $20 million. Both are married. Joe’s estate tax damage (using 2011 rates) would be about $4 million; Jack’s, a tragic $9.5 million.

The higher your wealth, the less chance you have for killing the estate tax. Ah, but we can always — yes, always — entirely avoid the impact of the estate tax. For example, if you are worth $8 million, we know how to get the full $8 million (all taxes paid in full) to your family; worth $80 million, the entire $80 million to your family. Yes, it can always be done, whether you’re single or married, young or old, and even insurable or uninsurable.

Let’s play the game together. Substitute your own numbers into the little example that follows: Suppose you are worth $12 million and married. Subtract $2 million ($1 million if single), which leaves $10 million; then 50 percent times $10 million gives you your bitter estate tax bite; add 55 percent for your worth in excess of the $10 million.

Now, here’s the secret for legally avoiding the estate tax: create tax-free wealth. There are two ways: charity and life insurance. Both, if you do it right, put you in a tax-free environment.

Here’s a real-life story of Joe, a 63-year old business owner from Nebraska and married to Mary, age 62. Joe and Mary are worth $23 million. Using our little example above, the estate tax monster would eat $11.05 million of their wealth.

We designed a comprehensive and coordinated succession and estate plan for Joe and Mary that included four significant strategies: An intentionally defective trust to transfer Joe’s business to his kids tax-free; A family limited partnership for their investment assets (a stock and bond portfolio and real estate) and two different life insurance strategies, which are described below.

A side note before continuing: Every case is different. Different people, businesses, situations and facts. A big factor for Joe and Mary was their health: excellent for their age. So insurance went front and center.

So Joe has $.7 million in his company’s 401(k) and $1.4 million in various IRAs, which we transferred into the 401(k) a tax-free transfer. Then, we used a strategy called “retirement plan rescue” (RPR) — for the 401(k) — that purchased $6.5 million of second-to-die life insurance on Joe and Mary. Because of double taxation — first income tax and then estate tax —the $2.1 million in the 401(k) (without the RPR) would only net about $.6 million to Joe’s heirs. Sorry, but the tax collector would get the rest: $1.5 million.

The RPR allows the entire $6.5 million of life insurance to go to Joe’s and Mary’s heirs tax-free. In effect, we turned $.6 million into $6.5 million. Good for the kids, bad for the IRS. Neat!

One more point: We showed Joe how to invest his $2.1 million funds in his 401(k) in TIPs (“transfer insurance policies,” a form of senior settlements). TIPs currently earns 15.82 percent on average per year, without “Wall Street” risk. TIPs are the brainchild of a public company (sells on the NASDAQ). Joe’s prior investments were averaging a seven percent annual return with stocks, bonds and mutual funds.

Another strategy: Joe and Mary needed an additional $5 million of life insurance. At their age (if you don’t use a RPR) the premiums are normally very expensive. We used a strategy called “premium financing” (PF) to buy $5 million of life insurance on Joe’s life. PF allows you to buy life insurance without paying your premiums in cash. Instead, premiums are paid by having a trust you create pay each premium by the trustee signing a note to the lending bank.

Interest is added to the loan. All premium loans, plus accrued interest, will be paid out of the death benefits when Joe dies. The only costs paid by Joe are to the banks for initiating and maintaining the loan: about $60,000 paid the first year and an additional $180,000, which is paid in small amounts each year to age 100. Really an economic homerun: getting $5 million tax-free to Joe and Mary’s heirs for a small out-of-pocket cost of $240,000 (or less), which is paid over about a 30-year period. No question about it, PF is the most inexpensive way to buy life insurance (whether you buy $5 million, $10 million or more). You must qualify to use PF by being credit worthy and worth a minimum of $5 million.

These subjects — RPR, TIPs and PF — always create a blizzard of questions. So, if you would like to get more information about a RPR fax me your birthday and your spouse’s (if married). Also the total value of all of your qualified plans: 401(k), IRAs, etc. (total should be $200,000 or more). Write “RPR” at the top of the page.

Interested in premium financing? Fax me birthdays for you and your spouse and your net worth (must be at least $5 million, more is better). Write “Premium Financing” at the top of the page.

Interested in earning 15.82 percent on average per year? Fax me the estimated amount you may invest ($50,000 minimum). You must be an accredited investor. Write “TIPs” at the top of the page.

Please fax all inquiries to Irv Blackman at 847-674-5299: Include your name, your company name, home or business address, e-mail address and all phone numbers where you can be reached (home, business and cell) and all additional info requested above for your area of interest.

Finally, if you want to know how to create your own business succession plan and/or estate plan that totally conquers the estate tax, check out one of my web sites:

www.taxsecretsofthewealthy.com

Irv Blackman is a certified public accountant who lives part-time on Marco Island and specializes in estate planning, business succession and asset protection.

You’ll like what you are about to read: How to actually make money while giving it away.

An important task for tax advisors (particularly those doing estate planning) is to make sure they have a clear understanding of each client’s goals. So, one of the questions yours truly (or my staff) would ask each client was (and still is), “Do you have charitable intent?” Most clients answered, “No” and that was that. For those that said, “Yes,” we had a large arsenal of tax-advantaged charitable strategies that would enrich not only charity, but substantially enrich our clients too. Every client always made an economic-after-tax-profit.

One day (about 10 years ago) we decided to dig a bit deeper when a client said, “No” to our charity question. Following are the two most important questions we asked, the answers and what (to our surprise) we learned.

First, a simple one word question: “Why?” (did you say “No”). About two out of every three clients responded with something like, “I don’t want to reduce the amount of my children’s and grandchildren’s inheritance.”

After learning this, it made good sense to follow with the next question. Actually two questions designed to get a ‘Yes.’ First, “Would you consider making a substantial gift to charity, if it would not reduce your heirs’ inheritance?” And if that didn’t do the trick, then second, “Would you make a large charitable gift if you could actually make an after-tax profit?” Then, almost all clients say “yes” or “show me how” or something similar.

The simple fact is that the tax law has two tax-free environments: charity and life insurance. Marry them and you are on the road to tax heaven. Let’s stay away from the technical stuff (like charitable remainder trusts and charitable lead trusts and their many ways to help you and charity) and look at two basic examples.

Suppose Joe and Mary (married and both age 65) buy a 15-year pay, $4 million second-to-die life insurance policy. The annual premium is $20,618 per $1 million payable for 15 years or a total of $1.237 million ($20,618 X 15 X 4). Joe and Mary set it up so their favorite charity is irrevocably the beneficiary of the policy.

Let’s take a look at the tax consequences of this charitable gesture by Joe and Mary. They are in a 40 percent income tax bracket (counting State and Federal combined), a 55 percent estate tax bracket (using 2011 rates).

First, let’s look at the estate tax picture: in a 55 percent estate tax bracket, the real story is that the IRS paid 55 percent of that $1.237 million. Since it’s gone, the IRS can’t tax it. So, the real out-of-pocket cost to Joe and Mary (after estate tax consideration) is only $557 thousand (45 percent of $1.237 million).

Second, let’s look at the income tax consequences of the transaction. In a 40 percent income tax bracket, Joe and Mary save $8,247 ($20,618 X 40%) each year as a charitable deduction.

Next, Joe and Mary buy $1.6 million of 15-year pay, second-to-die life insurance in an irrevocable life insurance trust (to keep the proceeds out of their estate). What’s the annual premium cost (only for 15 years)? You guessed it. Their annual $8,247 income tax savings.

Finally, let’s put it all together. Favorite charity will wind up with $4 million. Joe and Mary’s family will make over a cool $1 million ($1.6 insurance proceeds less the after tax cost-$557 thousand-of the premiums paid for the gift to charity).

Yes, it’s easy to “enrich your family (actually make a profit) and charity too.”

The above is only the tip of the iceberg. There are dozens of similar strategies to enrich your family while you enrich charity. This example (the one with the best leverage) is “premium financing” where $500,000 can be turned into $6.5 million for Joe and Mary and then shared with their favorite charity. Joe and Mary can divide the $6.5 million, $5 million to their family and $1.5 million to charity (or in any other ratio they desire). Now, $500,000 turned into $6.5 million. That’s tax and economic leverage!

Most of the time favorite charity is your own family foundation, that bears your name. By now you get the idea: if you (or your spouse or both) are lucky enough to be insurable, you can leverage small amounts of capital (a $500,000 investment or less, paid out in small amounts over many years) to mushroom into large tax-free amounts ($5 million or more). Divide your tax-free profits between your family and charity any way you desire.

Join the tax-free wealth-creating fun. For more information on how-to-do it for your family (and/or your favorite charity) send a copy of your personal financial statement to Irv Blackman, 3960 Deer Crossing Court, Unit #102, Naples, Florida 34114. Please include all phone numbers where you can be reached: work, home and cell.

“Irv, can you help me avoid (or beat/or kill/or finesse/and many more variations) the estate tax?” Often, an obscenity or two are tossed into our conversation.

If you are worth about $6 million (or less), the answer to the question is almost always “Yes.” Worth more? Usually, “No.”

Let’s talk real numbers: Say Joe is worth $10 million and Jack, $20 million. Both are married. Joe’s estate tax damage (using 2011 rates) would be about $4 million and Jack’s a tragic $9.5 million.

The higher your wealth, the less your chance for killing the estate tax. Ah, but we can always — yes, always — entirely avoid the impact of the estate tax.

For example, if you are worth $8 million, we know how to get the full $8 million (all taxes paid in full) to your family, or, if you are worth $80 million, the entire $80 million to your family.

Yes, it can always be done, whether you’re single or married, young or old, and even insurable or uninsurable.

Let’s play the game together. Substitute your own numbers into the little example that follows: Suppose you are worth $12 million and married.

(a) Subtract $2 million ($1 million if single), which leaves $10 million;

(b) then 50 percent times $10 million gives you your bitter estate tax bite;

(c) add 55 percent for your worth in excess of the $10 million.

Now, here’s the secret for legally avoiding the estate tax: create tax-free wealth. There are two ways: charity and life insurance. Both — if you do them right — put you in a tax-free environment.

Here’s a real-life story of Joe (a 63-year old business owner from Nebraska and married to Mary, age 62), who winters in Florida. Joe and Mary are worth $23 million. Using our little example, the estate-tax monster would eat $11.05 million of their wealth.

We designed a comprehensive and coordinated succession plan and estate plan for Joe and Mary that included four significant strategies:

(1) an intentionally defective trust to transfer Joe’s business to his two business kids, tax-free;

(2) a family limited partnership for their investment assets (a stock and bond portfolio and real estate);

(3 and 4) using two different life-insurance strategies, which are described below.

A side note before continuing: Every case is different. A big factor for Joe and Mary was their health: excellent for their age.

Now, Strategy No. 3: Joe had $.8 million in his company’s 401(k) and $1.5 million in various IRAs, which we transferred into the 401(k), a tax-free transfer.

Then we used a strategy called the “Qualified Plan Rescue” (QPR) for the 401(k) that purchased $6.5 million of second-to-die life insurance on Joe and Mary.

Because of double taxation — first income tax and then estate tax — the $2.3 million in the 401(k) (without the QPR) would only net about $600,000 to Joe’s heirs. Sorry, but the tax collector would get the rest: $1.5 million.

The QPR allows the entire $6.5 million of life insurance to go to Joe’s and Mary’s heirs, tax-free. In effect, we turned $.6 million into $6.5 million. Neat!

One more point: We showed Joe how to invest his $2.1 million funds in his 401(k) in TIPs (“transfer insurance policies,” a form of senior settlements). TIPs earn in excess of 16 percent on average per year, without risk. Joe’s investments were averaging only 7% per year with stocks, bonds and mutual funds. TIP investments are the creative idea of a 14-year-old public company (trades on the NASDAQ) that has paid a 16.36% average annual return since it has been in business.Ask your professional to check out QPRs and TIPs.

Finally, Strategy No. 4: Joe and Mary needed an additional $5 million of life insurance. At their age (if you don’t use a QPR) the premiums are steep. We used a strategy called “premium financing” (PF) to buy $5 million of life insurance on Joe’s life. PF allows you to buy life insurance without paying your premiums in cash. Instead, premiums are paid by having a trust you create pay each premium by the trustee signing a nonrecourse note to the lending bank. Interest is added to the loan.

All premium loans, plus accrued interest, will be paid out of the death benefits when Joe dies. The only costs paid by Joe are to the banks for initiating and maintaining the loan: about $60,000 paid the first year and an additional $180,000, which will be paid in small amounts each year to age 100.

Here a real economic home run: getting $5 million tax-free to Joe and Mary’s heirs for a small out-of-pocket cost of $240,000 (or less), which is paid over about a 30-year period.

No question about it, PF is the most inexpensive way to buy life insurance (whether you buy $5 million, $10 million or more). You must qualify to use PF: be credit worthy and worth a minimum of $5 million.

These subjects — QPR, TIPs and PF — always create a blizzard of questions. So, if you would like to get more information about a QPR (and/or TIPs), send me your birthday and your spouse’s birthday. Also the total value of all of your qualified plans: 401(k), IRAs, etc. (total should be $100,000 or more). Write “QPR” at the top of the page.

Interested in TIPs? Fax the estimated amount you may invest ($50,000 minimum).

You must be an accredited investor. Write “TIPs” at the top of the page.For all inquiries please include your name, your company name, home or business address, e-mail address and all phone numbers where you can be reached (home, business and cell).

Would you believe that the basic tax law, the Internal Revenue Code and regulations, is about 50,000 pages long with no logical, organized theme? There’s also a constant stream of Internal Revenue Service rulings and case law. No one person can know it all—not Congress, which passes the law, nor the IRS, which enforces it.

There are three main ways the federal tax law picks your pocket and becomes your legal partner: payroll taxes, the income tax and the estate tax. So, how can you fight back? One day, just for fun, we (four tax guys) started to count the ways to legally get around paying the three taxes listed. We were just getting warmed up when we counted 227 options and stopped. The following are five areas in which you can save money from taxes:

1. Payroll Taxes. This money-stealing parasite is persistent and expensive: This year, $16,404 on the first $106,800 of your earnings goes to the tax man. That’s a scandalous 9.76 percent. For earnings of more than $106,800, you pay an additional 2.9 percent.

Here are examples of the three most common ways to lose payroll taxes to the IRS: The first mistake involves Joe, the owner of an S corporation who taxes a large salary (often $500,000 or more) and takes a huge bonus at the year’s end to bring down profits. For this S corporation, a tax-free dividend instead of compensation would save a bundle of unnecessary payroll taxes and would cost no more in income taxes. A second payroll tax mistake is when owners’ wives and moms take a salary when they either don’t work or are overpaid. It is much better tax-wise to give them a gift. The third mistake is operating a business as an LLC, which makes all income to the owner(s) subject to payroll taxes.

2. Asset Protection. In a heartbeat, your family wealth, including your business, can be depleted or even destroyed by a lawsuit.

Keep your business thin by keeping only those assets—typically, necessary cash, inventory and receivables—needed for operations in your business. Here are some basic sub-strategies: Elect S corporation status; personally own (via separate LLCs) any new real estate or expensive equipment, and lease it to your operating company; and never own delivery vehicles in your operating company. Put the vehicles into a separate corporation or LLC.

The sad fact is, we can’t protect the assets inside of your operating company, but we can protect you and your spouse. All of your significant assets are simply retitled using typical lifetime planning documents—such as family limited partnerships, LLCs and appropriate trusts.

3. Life Insurance. You can save money in taxes whether you, your spouse or your kids own the insurance.

Critical issues concerning life insurance are premium cost, the death benefit and the tax due on the benefit at death (usually the estate tax). The following are common ways to modify insurance plans to save premiums or increase the death benefit without additional costs:

• For single life or second-to-die insurance, you can get a cash-surrender value of more than $200,000 on a policy that is 9 years old or older. This results in significantly more death benefit for the same premium cost or a significantly reduced premium cost for the same death benefit.

• If you, the husband, are at least 55 years old, worth more than $5 million and have insurance on your life only, you are wasting premium dollars. Second-to-die coverage with your wife will typically give you the same death benefit for about 35 percent less premium cost.

• If you have more than $400,000 in a qualified plan such as a 401(k) or IRA, that amount is subject to a double tax (income and estate) of as much as 73 percent to the IRS. On average, you can turn every $270,000 of after-tax dollars into $3 to $5 million (tax-free), depending on your age and health. This plan works for second-to-die or single life insurance.

4. Business Succession. This affects your business and your business kids. The typical business owner wants to transfer the business to his kid(s) so that he and his kid(s) don’t get killed by taxes. He also wants to treat his non-business kids fairly, ensure that he controls his business for as long as he lives and ensure that the company stock stays in the family by never going to a kid’s ex-spouse. Every one of these goals is easily accomplished. Best of all, the business can be transferred tax-free, with no income tax, gift tax or estate tax for the owner or the kids.

5. Estate Plan. A proper estate plan is actually two plans: a lifetime plan and a death plan. The plans are designed to cover every significant tax-saving possibility—from the minute the lifetime plan is created until after you get hit by the final bus (covered by the death plan).

Interesting quote, huh?

Most readers of this column call me with tax problems because they have attained wealth (no doubt they have and do keep score with money) and they don’t want to share that wealth with the IRS — perfectly normal. Yet, it’s amazing. Once the reader realizes that we really do know how to pass their wealth — all of it and intact — to their family, the conversation turns to other ways that they might keep score. Sure, they are delighted to find there are legal ways to totally win the estate tax game. But they readily admit that they don’t know how to deal with the other problems (other ways to keep score).

The other problems fall into the general category of little kids, little problems; big kids, big problems.

Stuff like which of my kids should run the business? How do I treat the kids fairly? What about the non-business kids?

What happens if one (or more) of my kids get divorced? How do I take care of my wife (the second one who is 15 years — or more — younger than the caller)? The callers tell me about family problems, business problems and/or assorted personal problems. To me every word is important, even though I’ve listened to so many tales of woe before. But, although similar, each problem has its own peculiar twists and turns.

Let’s face it — stuff happens. After years of solving wealth transfer problems, business succession (usually the business is at center stage) and estate planning problems, experience has taught me that solving only the money problems can never yield a perfect plan.

The human stuff — your spouse and kids support your plan — must be solved too.

What about your son-in-law or daughter-in-law? I know. It sounds like cornball. But if you really want to win the game of life after you have won the money game (really the easy part), you must attempt to solve the human part, the emotional stuff.

Here’s my suggestion to start the process. Make two lists: the money-problem list and the human-problem list.

Solve the money problems first (usually you are home free if you solve these three money problems:

• maintain your lifestyle — and your spouse’s — for as long as you live;

• transfer your business to the business kids — tax-free; and

• kill the estate tax.

Then, it’s easier to tackle the human-problem list. Interesting, many times solving the money problems also solve some (often all) of the human problems.

Finally, you must work with experienced professionals who know how to solve both problems: the money problems and the emotional human problems that come with accumulating wealth and trying to pass it on.

One more thing: Each piece of your plan must be part of a single comprehensive and integrated plan, all implemented at the same time. Piecemeal planning, based on my 50 years of experience, is a disaster that not only enriches the IRS, but fails to satisfy the normal human desires of a typical family and its business.

If you are worth around $6 million or less, the answer is almost always yes. If you are worth more, the answer is usually no.

Let’s talk real numbers. Consider that taxpayer Joe is worth $10 million and his neighbor Jack is worth $20 million. Both men are married. Joe’s estate tax estimate, using 2011 rates, would be around $4 million.

Jack’s would top out at a tragic $9.5 million.

The higher your wealth, the lower your chance for avoiding the estate tax.

But there are ways to entirely avoid the impact of the estate tax.

If, for example, you are worth $8 million, there are ways to get the full $8 million (all taxes paid in full) to your family. Similarly, if you are worth $80 million, the entire $80 million can go to your family. It can always be done, whether you’re single or married, young or old, or even insurable or uninsurable.

Let’s play the game together.

Substitute your own numbers into the little example that follows.

Suppose you are worth $12 million and married. First, subtract $2 million ($1 million if you’re single), which leaves $10 million. Multiply $10 million by 50 percent to get your bitter estate tax bite. Finally, add 55 percent for your worth in excess of the $10 million.

Now, here’s the secret for legally avoiding the estate tax and creating tax-free wealth. There are two ways: charity and life insurance. If you do them right, both put you in a tax-free environment.

Here’s a real-life story of Joe.

He’s a 63-year-old business owner from Nebraska who winters in Florida and is married to Mary, 62. Joe and Mary are worth $23 million. Using our little example above, the estate tax monster would eat $11.05 million of their wealth.

We designed a comprehensive and coordinated succession plan and estate plan for Joe and Mary that included four significant strategies: an intentionally defective trust to transfer Joe’s business to his kids tax-free, a family limited partnership for their investment assets (a stock and bond portfolio and real estate), and the two different life insurance strategies, which are described below.

A side note before continuing: Every case is different. Different people have various businesses situations and factors. A big factor for Joe and Mary was their excellent health for their age. So insurance was front and center.

Now, to the third strategy: Joe had $600,000 in his company’s 401(k) and $1.5 million in various IRAs, which we transferred into the 401(k), a tax-free transfer. Then we created a subtrust for the 401(k) that purchased $6.5 million of second-to-die life insurance on Joe and Mary. Because of double taxation, first income tax and then estate tax, the $2.1 million in the 401(k) without the subtrust would net only about $600,000 for Joe’s heirs. Sorry, but the tax collector would get the rest, $1.5 million.

The subtrust allows the entire $6.5 million of life insurance to go to Joe and Mary’s heirs tax-free. In effect, we turned $600,000 into $6.5 million. Neat!

One more point: We showed Joe how to invest his $2.1 million in his 401(k) in TIPs, or transfer insurance policies, a form of senior settlements.

TIPs earn in excess of 16 percent on average per year, without risk. Joe’s investments were averaging only 7 percent per year with stocks, bonds and mutual funds

Ask your professional to check out subtrusts and TIPs.

The final strategy: Joe and Mary needed an additional $5 million of life insurance. At their ages — if you don’t use a subtrust — the premiums are steep. We used a strategy called premium financing, or PF, to buy $5 million of life insurance on Joe’s life. PF allows you to buy life insurance without paying your premiums in cash. Instead, premiums are paid though a trust you create that pay each premium by the trustee signing a nonrecourse note to the lending bank.

Interest is added to the loan.

All premium loans, plus accrued interest, will be paid out of the death benefits when Joe dies. The only costs paid by Joe are to the banks for initiating and maintaining the loan equaling about $60,000 paid the first year and an additional $180,000, which will be paid in small amounts each year to age 100.

It’s an economic home run that nets $5 million tax-free to Joe and Mary’s heirs for a small out-of-pocket cost of $240,000 or less, which is paid over a 30-year period.

No question about it, PF is the most inexpensive way to buy life insurance (whether you buy $5 million, $10 million or more). You must qualify to use PF, be creditworthy and be worth a minimum of $5 million.