Estate Tax Liquidity and Business Owner Life Insurance in Chattanooga

Who This Is For in Hamilton County and East Tennessee

This page is for two groups: families in Hamilton County and across East Tennessee whose estates are large enough that federal estate tax could matter, and owners of closely held businesses who need a funded plan for the day ownership changes hands.

For families, the question is usually liquidity. Much of a large estate in this region sits in an operating business, land, or rental property that is hard to sell quickly or fairly. Life insurance owned outside the taxable estate can supply cash on the day it is needed.

For business owners, the questions are about continuity: who buys the company if an owner dies or leaves, how the buyer pays, what happens to a key person's role, and how to keep the people a buyer or successor will want. Our business owners hub covers each of these in detail.

• ✓Families with estates that may approach or exceed the federal exclusion, especially when most of the value is in a business or real estate.
• ✓Owners of closely held companies with partners, family successors, or a planned exit.
• ✓Families whose existing life insurance is owned personally and may be included in the taxable estate.
• ✓Households considering a larger policy and wondering whether financing the premium makes sense.

Tennessee Context: No State Estate or Inheritance Tax, but Federal Estate Tax Still Applies

Tennessee does not tax estates at the state level. According to the Tennessee Department of Revenue, there is no Tennessee inheritance tax for deaths after December 31, 2015, and Tennessee has no state estate tax. For most Tennessee families, that removes one layer of tax from the planning discussion.

Federal estate tax is a separate matter. For 2026 the federal estate and gift basic exclusion amount is $15,000,000 per person, or $30,000,000 for a married couple using portability, as published by the IRS. The higher exclusion was made permanent by the July 2025 tax law and is indexed for inflation after 2026. The top federal estate tax rate is 40% on the value above the exclusion.

Two cautions apply. First, many families below the exclusion today may not stay below it if a business grows or property values rise, and a plan built only around today's number can age badly. Second, an exclusion that is permanent in the statute is still a law Congress can change. Planning is usually built to work under more than one outcome. Confirm how these rules apply to your estate with your estate attorney and CPA.

Working With Your Estate Attorney and CPA

A sound plan has three roles, and they should not be blurred. Your estate attorney drafts the trust, the buy-sell agreement, and the ownership and beneficiary documents. Your CPA models the tax effect, including the gift tax and any income tax questions. We are the insurance agency: we design the policy, shop it across many insurers, handle underwriting, and monitor it after it is in force.

We do not give legal or tax advice. What we do is bring the insurance questions to your attorney and CPA early: how the policy should be owned, who should be the beneficiary, how premiums will be funded, and what happens if the plan changes. If you do not have an attorney or CPA for this work, we can describe the credentials to look for, and you choose.

Services for Chattanooga Families and Business Owners

Each service below has its own page with the mechanics, risks, and sources.

• ✓Estate planning with life insurance. Irrevocable life insurance trusts, survivorship coverage, and liquidity for estate tax and settlement costs.
• ✓Premium finance. When a trust borrows to pay premiums on a large policy, and the interest rate, collateral, and exit risks to weigh before doing it.
• ✓Business owners. Buy-sell agreements, key person coverage, executive bonus plans, split-dollar, and exit and succession planning.
• ✓Business protection. The service page for funding a buy-sell and protecting a company from the loss of an owner or key person.

How We Work With Local Clients

Brandt Hudson is a licensed insurance professional based in Chattanooga. The first conversation is a fifteen-minute discovery call. We look at who owns what, what the estate or business needs to accomplish, and whether life insurance is even the right tool. Sometimes it is not, and we say so.

If it is, we design the coverage, compare insurers, and coordinate with your attorney and CPA. After the policy is in force we review it on a regular schedule, because a policy that is not monitored can drift away from the plan it was bought for.

Why Chattanooga Families and Owners Work With The Infinite Wealth Group

• ✓Independent agency with access to many insurers, so the policy is chosen for the plan, not the other way around.
• ✓Insurance-only: we do not manage investments or hold client assets.
• ✓Premium finance explained with its risks first: interest rate, collateral calls, and exit.
• ✓Coordination with your estate attorney and CPA, who keep their own roles.
• ✓Based in Chattanooga, serving Hamilton County and East Tennessee.

Frequently Asked Questions

Sources and further reading

• Tennessee Department of Revenue: Inheritance Tax
• IRS: 2026 inflation adjustments, including amendments from the One, Big, Beautiful Bill
• 26 U.S.C. §2042: Proceeds of life insurance (Cornell LII)
• 26 U.S.C. §2035: Adjustments for gifts made within 3 years of death (Cornell LII)

Reviewed by Brandt Hudson, licensed insurance professional. Last verified October 20, 2026. This page is educational and describes insurance products and general tax rules; it is not tax, legal, or investment advice. Confirm your situation with your CPA or attorney.