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Let’s spell out the problem right off the bat: The estate tax monster is going to get you. The question is not if, but for how much.

Go ahead. Throw your estimated estate tax liability on the table. Is it $3 million? Thirty million? More? In between? Let’s pick an estimate tax number — say $10 million — to work with for the rest of this article.

Write down your estimated estate tax number. Then, relax and enjoy playing the how-to-win-the-estate-tax game. Yes, you can and will win the game. Guaranteed! The trick is to not get caught in the tax trap of concentrating all your efforts on lowering the estate tax.

Start by changing your goal: Which usually is lowering your estimated estate tax (Note: In the year 2011 your estate tax liability would be $10 million — if you are married — on a $21 million net worth).

Sure, you are heading in the right direction by trying to lower your tax. Chances are, by using the tax strategies you read about in this column — stuff like, family limited partnerships, gifting concepts and various trusts — you can reduce that $10 million tax hit by 35 percent to 45 percent. Say down to $6.5 million. And when you properly implement the strategies, it’s not only easy to do, but you will have absolute control over all your assets — including your business — for life.

But now what? The $6.5 million is still a whopper estate tax bill. So let’s post a big sign, where you will see it daily, with your new goal: “Transfer all of my wealth (in this example, $21 million) to my family — intact, every dollar of it — all taxes paid in full.”

Now, logic tells you that you must create at least $6.5 million of tax-free wealth, or you can’t accomplish your new goal. The question is how. The answer is get into a tax-free environment — there are two in the law — now, while you are alive, and stay there until you die.

The two environments are charity and life insurance.

This article deals with the insurance aspect. Actually there is a new, unique and ingenious way to enjoy the wealth-building benefits of life insurance: you don’t pay premiums with cash. Instead, you borrow each premium as it comes due from a bank. Interest is paid (not in cash) but by adding it to the loan. The concept is called “premium financing.”

Of course, someday you will get hit by the final bus. Then, the bank will be paid (the loans used to pay premiums, plus interest) out of the insurance death benefits.

Following are some numbers from our files for a real life client that shows you how premium financing works.

The client — Joe, age 64 — and his wife — Mary, age 63 — would like to create $10 million of tax-free wealth ($6.5 million to pay their estimated estate tax liability and $3.5 million for their family.) Enter premium financing.

The actuaries rev up the computer, which spits out a small mountain of pages, most of the pages with many columns of numbers. The key numbers show that $14.5 million of second-to-die insurance is needed: $4.5 million to pay off the premium loans, plus interest, leaving a net of $10 million to Joe and Mary’s family. The entire $10 million is tax-free — no income, gift or estate taxes.

What is the out-of-pocket costs? About $360,000 for transaction costs, to be paid to the bank for various services over Joe and Mary’s lifetime (to age 100 according to the computer).

Before ending this article you should know the most popular uses for premium financing. Here they are for individuals: (1) to pay estate taxes whether you are single or married; (2) to create additional tax-free wealth for the family; (3) to fund a major gift to charity (often the family foundation); and (4) divide the death benefits between family and charity.

Your corporation (or other business entity) can join the premium-financing-wealth-transfer-fun. The concept can be used — usually for two or more lives — to fund: (1) a buy/sell agreement (great for your cash flow); (2) key employees retirement plans; and (3) large gifts to charity (insuring the lives of officers or members of the board of directors).

Is premium financing for you? Unfortunately, it’s not available to every individual who might crave it. First, you must qualify. Obviously, you must be insurable (But if you are married, then you can still get in the game with only one — either spouse — insurable life). Also, your net worth must be a strong minimum of $5 million (no fudging on the value of your assets). The greater your net worth, the larger the amount of tax-free wealth you can create for your family with a small cash outlay.

Corporations can join in the premium financing fun if profitable and adequately capitalized. Of course, if you qualify, you want more information. Here’s how you get it: Send me three items: (1) A personal financial statement; (2) your last year-end financial statement for your business (if you own all or part of a business) and (3) the names and birthdays of all those to be insured. Send to Irv Blackman Premium Financing Info., 3960 Deer Crossing Court, Unit 102, Naples, Fla., 34114. If you have a question, call me at 239-417-9732.

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Irv Blackman is a certified public accountant who lives part-time on Marco Island and specializes in estate planning, business succession and asset protection. E-mail him at wealthy@blackmankallick.com or call 417-9732. His Web site is http://www.taxsecretsofthewealthy.com.