| Scenario | Inputs (high level) | Key outputs |
|---|---|---|
| Baseline family estate | Estate: $2,500,000 • Growth: 3.5% • Years: 15 • Debts: $250,000 • Goals: $225,000 • Liquid: $300,000 • Existing: $250,000 | Tax (est.): depends • Gap: depends • Suggested coverage: depends |
| Business owner | Adds succession funding: $750,000 • Higher liquidity reserve • Same tax assumptions | Larger gap • Higher suggested coverage |
| Charitable focus | Charitable gifts: $500,000 • Lower bequests • Inflation enabled on goals | Goal-driven liquidity plan • Coverage sized to timeline |
- Projected Gross Estate = Current Estate × (1 + Growth Rate)Years
- Taxable Estate = max(0, Projected Estate − Exemption) for each jurisdiction
- Estimated Estate Tax = (Taxable Federal × Federal Rate) + (Taxable State × State Rate)
- Inflated Goal = Goal × (1 + Inflation Rate)Years (only for checked items)
- Total Liquidity Needs = Debts + Final Expenses + Goals + Other Needs + Estimated Estate Tax
- Coverage Gap = max(0, Total Liquidity Needs − (Liquid Assets + Existing Coverage))
- Insurance Needed = Coverage Gap × (1 + Buffer)
- Enter your current estate value and a conservative growth rate.
- Set the planning horizon to reflect your timeline.
- Add debts, final expenses, and any bequests or liquidity goals.
- Enter exemptions and tax rates you want to model.
- Input liquid assets and existing life coverage that can offset needs.
- Optionally enable inflation and check which goals should grow.
- Press Calculate to view results above the form.
- Use the download buttons to export CSV or PDF outputs.
Liquidity gaps during settlement
Estate expenses often arrive before assets can be sold. This calculator treats liquidity as a timed need, combining debts, final expenses, legacy distributions, and modeled taxes. For example, a $2,500,000 estate growing at 3.5% for 15 years projects near $4,200,000. If liquid assets are $300,000 and existing coverage is $250,000, the tool highlights any shortfall that could force distressed sales. Use the “other liquidity” line for court fees, appraisals, and temporary carrying costs.
Tax exposure under flat-rate assumptions
The model uses separate exemptions and flat rates to stress-test outcomes. If a $1,500,000 exemption is applied and a 40% rate is used, only the taxable portion is multiplied by the rate. While real systems are more complex, a flat-rate estimate is useful for scenario comparison and for measuring sensitivity to exemption changes and growth assumptions.
Inflation effects on cash needs
Many cash obligations rise over time. When inflation is enabled, selected goals compound by (1 + inflation)^years. A 2.5% inflation rate across 15 years increases a $25,000 final-expense estimate to about $36,000. The same adjustment can be applied to bequests, charitable goals, and succession funding to keep purchasing power consistent.
Offsets, buffers, and coverage sizing
Offsets include liquid assets plus existing life coverage, reducing the coverage gap. The suggested insurance amount then applies a buffer to absorb uncertainty such as valuation swings, tax-law changes, or longer settlement timelines. A 10% buffer converts a $500,000 gap into a $550,000 target, producing a clearer planning range. If your assets are illiquid, choose a higher buffer.
Using results in an estate plan workflow
Run three scenarios: conservative growth, base case, and optimistic growth. Update inputs after major asset changes, beneficiary updates, or business events. Share the exported report with counsel and your insurance professional to align ownership, beneficiaries, and liquidity strategy. Recheck annually, and after any life event that changes goals or obligations. Track which costs are inflated, so assumptions stay consistent across updates and family reviews. Review assumptions quarterly.
1) What does “insurance needed” represent?
It estimates the coverage required to fund modeled taxes and cash obligations, after subtracting liquid assets and existing coverage, then adding your selected buffer.
2) Why are exemptions and tax rates editable?
This tool is designed for scenario testing. Editing exemptions and flat rates helps you compare outcomes under different assumptions without changing your underlying estate estimates.
3) Should I enable inflation for every item?
No. Inflate items whose purchasing power matters at settlement, such as final expenses or planned gifts. Leave items uninflated if values are already future-dated or contract-based.
4) What is a good buffer percentage?
Many planners start with 5%–15% to absorb uncertainty. Higher buffers can make sense for illiquid estates, volatile businesses, or when timelines and taxes are hard to predict.
5) How should business succession funding be used?
Enter cash needs tied to buy-sell agreements, partner payouts, or continuity plans. It helps highlight whether insurance is supporting operations or simply covering taxes and debts.
6) Is the output legal or tax advice?
No. It is an estimate for planning discussions. Confirm rates, exemptions, ownership structure, and beneficiary designations with qualified professionals before making decisions.