Financial Underwriting Tips in the Estate Market

 The One Big Beautiful Bill Act of 2025, which was signed into effect in July, brought much needed permanence to the estate, gift, and generation skipping transfer tax (AKA transfer taxes) exemption. The biggest issue with not having a permanent federal transfer tax exemption was that it made estate planning unnecessarily complicated. Accordingly, for many years, estate planning attorneys have had to grapple with how to navigate the possible sunset. Some clients decided to take a wait and see approach, while others created plans designed to maximize their exemptions should the law sunset.

Now that the transfer tax exemption is permanent, at least until changed by a new administration, it’s time to revisit your high-net-worth clients. Those clients who were on the fence because of the uncertainty might be willing to move forward with their estate plans. As a result, it’s important to refresh ourselves about how to package an estate case from a financial perspective to achieve a “yes” from an underwriter. The following are ten tips that can help you position your estate planning cases.

1. Describe the “Big Picture.” The estate plans of families with significant wealth are often complex; frequently involving distributions to multiple generations through numerous trusts and business entities. To provide clarity to the underwriter you need to paint the “big picture.” Of course, part of this description should include an explanation of the estate objectives. It’s also helpful for an underwriter to have an understanding of the “family tree.” Finally, the policy structure (insured, ownership, and beneficiary designations) often requires an understanding of trusts/business entities established by the family – so you must make sure you provide sufficient details about these entities for the underwriter to “make sense” of the structure.
2. Provide a Net Worth Statement. Problems often occur because of insufficient financial data. This is especially true for clients with significant wealth because of the wide variety of assets that they frequently own. You should try to provide a complete net worth statement, including any business interest, benefit plans (qualified and nonqualified), interests in trusts, patents, royalties, mineral rights etc.. You may find that some clients will only want to provide the minimum amount needed to justify the amount requested. While it’s possible to achieve financial justification based on a less than complete net worth statement, you will want to make sure that the statement is large enough to justify both the existing coverage as well as the amount “applied for.” Be aware that carriers will require that the financial documentation come from an independent third party when the insurance face amount is over a specific amount (amount varies by carrier).
3. Be Consistent. The application, cover letter, and supporting data should all tell the same story. Conflicting numbers and statements need to be explained. Build your strengths, but don’t hide the negatives – explain them.
4. Reveal Team. When working with client’s attorneys, CPAs, and other advisors you will want to reveal their involvement in the planning process. This will provide independent credibility.
5. Provide a Clear Statement of the Life Insurance Purpose and the Owner/ Beneficiary Structure. As indicated above, in the estate market life insurance sales generally fall into one of the following categories: estate liquidity, cover IRD (income in respect of decedent), charitable legacy, and dynasty trust. Clearly identify the purpose(s) that the life insurance policy will serve. Remember, there can be more than one need for the insurance. Be careful that the ownership/beneficiary structure you propose is consistent with the estate objective. Be aware that while it’s possible to have a business as an ownership/beneficiary, in an estate case you will need to provide the underwriter an explanation of how the arrangement will work because this structure can be misunderstood as a business case.
6. Be Clear on How the Face Amount was Determined. If the amount you are requesting is outside the normal guidelines, realize that you will have to include supporting facts as to why the normal parameters should be stretched for your particular case.

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