Free educational tool · The Legacy Leak Calculator

You don't have to want life insurance.

You only have to dislike writing a seven-figure check to the IRS more. Estimate how much of your future estate may leak to estate tax — and whether an ILIT-owned policy could create tax-free liquidity outside the taxable estate. Educational only — not advice.

Always free Illustrative — not advice 2026 federal assumptions

Your situation

Estate today
Married assumes both spouses' federal exemptions (portability).
Most states have no estate tax. State exemptions generally don't transfer between spouses. *Washington reflects the law for deaths on or after July 1, 2026 ($3M exclusion, 20% top rate); deaths January 1 – June 30, 2026 fall under the prior law ($3,076,000 exclusion, 35% top rate).
A policy you personally own is generally included in your taxable estate.
What it could become
Exemption scenario
Current law: $15M per person in 2026, grown ~2.5%/yr. A planning stress test — not a tax forecast.
The ILIT strategy
Tip: a death benefit near your projected tax leak fully replaces it. Enter a carrier illustration figure if you have one — this tool does not price insurance.
Projected estate at death
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Estimated estate-tax leak
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Net to heirs — do nothing
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Legacy improvement with ILIT
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Socrates Crayon finding
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Adjust the inputs to see where the estate stands.

This illustration is for people who don't necessarily want life insurance, but who may prefer trust-owned liquidity over a larger future estate-tax loss. It models premium gifts to a trust-owned policy and compares the resulting death benefit against the projected tax leak.

The two futuresEstate taxILIT benefitNet legacy
Do nothing—$0—
Fund an ILIT———
Difference———
The policy doesn't create value because it's insurance. It creates value because it moves liquidity outside the taxable estate.
Estate-tax leak: the estimated federal estate tax, plus any selected state estate-tax estimate, that may reduce what passes to heirs under these assumptions.
Planning flags
Administration matters: trust-owned insurance generally depends on proper trust design, ownership, premium funding, trustee process, and beneficiary notice procedures where applicable — coordinate with your tax and legal advisors.
Assumptions used
    Not modeled unless selected or entered: GST tax, policy expenses, underwriting, charitable planning, income tax on retirement assets, prior taxable gifts, premium financing, and future law changes. State estate tax is included only when a state is selected, and should be treated as an estimate.
    Important disclaimers

    This is a planning diagnostic — not advice. It is published for general educational purposes only. It is not a life insurance illustration, a tax opinion, a legal opinion, an estate plan, or a personalized recommendation for any specific person. Outputs are illustrative magnitudes.

    Not a regulated firm. Socrates Crayon is a free educational resource published by KMD Squared LLC. It is not a law firm, registered investment adviser, broker-dealer, or accounting firm, and is not affiliated with any securities firm. No advisory, fiduciary, attorney-client, or brokerage relationship is created by use of this page.

    Simplifications. Federal estate tax is modeled at a flat 40% above the exemption (the actual tax is graduated). State estate tax, where selected, applies the state's approximate 2026 exemption and top marginal rate for illustration — the real tax is graduated and some states (e.g., New York) have a "cliff." Washington figures reflect the law for deaths on or after July 1, 2026. A personally-owned policy's death benefit is added to the taxable estate. ILIT benefits depend on proper trust ownership, premium funding, Crummey administration where applicable, avoiding retained incidents of ownership, the three-year rule on transferred policies, and coordination with gift, estate, and GST tax. Insurance is subject to insurability and a carrier illustration.

    Always consult your own qualified attorney, tax adviser, and insurance professional before acting. Tax law changes; figures here may not reflect current law or your facts.