Should I use the IRS Single Life Expectancy table or a personalized mortality estimate when planning gifting horizons?

For CFA exam purposes, default to the IRS Single Life Expectancy table. For real-world practice with HNW clients, use a personalized table from a licensed underwriter or actuary. Here's the framework.

IRS Single Life Expectancy Table (Publication 590-B):

• Unisex (combines male and female)
• US population average
• Updated every 2-5 years based on Social Security data
• Used for required minimum distributions (RMDs) from retirement accounts
• Default for any IRS-related planning calculation

Customizations a wealth advisor might apply:

Typical adjustments:

These are rough heuristics. A real actuary uses much more nuanced models.

Where each is appropriate:

• Exam questions: IRS unisex table, unless the vignette gives you a specific number.
• Annuity contract underwriting: insurance company's proprietary mortality table.
• Estate planning illustrations: advisor can use IRS or a personalized estimate — disclose the assumption.
• GRAT design: IRS Section 7520 rate (which is published monthly) and IRS life expectancy. Other tables are not allowed for tax purposes.
• Long-term care insurance: insurer-specific underwriting; varies dramatically.

A real-world example:

A 65-year-old non-smoking female with great family genes (mother lived to 95) and concierge medicine. IRS unisex table: 22.9 years remaining. Personalized estimate: 22.9 + 4 (female) + 5 (non-smoker, but baseline assumed non-smoker, so +0) + 5 (family longevity) + 4 (concierge medicine) = roughly 30-31 years.

Planning around 30 years of gifting instead of 23 years could move 50% more wealth tax-free across a generation. That's real money.

Caveat — IRS rules force IRS tables for tax purposes:

You can use a personalized estimate in your planning model, but the IRS won't accept it for the gift-tax valuation of a non-charitable interest in a GRAT. Section 7520 mandates the IRS table. So:

• For "what should we plan to gift" → use personalized
• For "how does the IRS value the gift" → use IRS Section 7520

These two layers can diverge by years, and aligning them is part of strategic planning.

Joint-life expectancy:

For a married couple, the relevant N is the time until BOTH spouses have died (second-to-die). The IRS publishes a Joint Life and Last Survivor Expectancy Table for this. Joint-life is meaningfully longer than either individual's expectancy:

Married couples planning gifting strategies typically use joint-life expectancy, not individual.