What estate‑planning strategies remain relevant for ultra‑high‑net‑worth families above the $15M exemption?
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Executive summary
Ultra‑high‑net‑worth families with estates above the $15 million per‑person exemption still face meaningful exposure to a 40% federal tax on every dollar above that threshold, and must therefore rely on layered strategies — trusts, gifting, business‑succession techniques, philanthropic vehicles, life‑insurance and liquidity planning, and state‑level workarounds — rather than a single “silver bullet” [1] [2]. The recent federal changes that set a $15M exemption and left the top rate at 40% alter timing and tactics but do not eliminate the need for advanced, integrated planning or the debate over whether to “lock in” transfers now versus preserve flexibility for future law changes [3] [2].
1. Trusts remain the core defensive wall — but form and timing matter
Irrevocable trusts, including spousal‑limited access trusts (SLATs) and generation‑skipping trusts, are primary tools to remove appreciation from the taxable estate and shelter future growth, and careful sequencing (e.g., staggering reciprocal SLATs) can blunt IRS arguments that trusts are interrelated, a tactic highlighted by practitioners after the 2025 law changes [4] [2]. Trusts also preserve privacy and avoid probate — critical for families that wish to shield holdings and succession from public scrutiny — but their utility depends on drafting, state law nuances, and whether transfers occur before or after any future legislative shift [5] [2].
2. Gifting and “locking in” exemption value: powerful but contested
Lifetime gifting — annual exclusions plus using a portion of the lifetime exemption — remains a straightforward way to shift value out of the estate and lock in current exemption amounts, and many advisers urged clients to act during the recent statutory increase to $15M to “lock in” benefits [6] [7]. Yet prominent advisors warn that large lifetime transfers can be self‑defeating if law or economic circumstances change (for example, gifting appreciated assets removes future basis step‑up benefits), and the permanency of the $15M figure is politically contingent, making the decision as much strategic as tax‑technical [2] [1].
3. Philanthropy and charitable vehicles as dual mission strategies
Charitable trusts, private foundations, and donor‑advised funds offer tax relief while advancing philanthropic goals: they reduce taxable estates, can provide income streams, and create legacy control — a point repeatedly stressed by wealth managers positioning philanthropy as both altruism and tax planning [8] [9]. Families must weigh administrative complexity, public disclosure requirements (for some vehicles), and the tradeoff between charitable control and immediate family transfers when choosing among these options [8].
4. Business succession, life insurance and liquidity planning to prevent forced sales
Closely held business owners should integrate succession plans and liquidity strategies — for instance, life insurance held outside the estate or in an ILIT — so heirs are not forced to sell operating assets to pay a 40% tax on value exceeding the exemption [9] [10]. Advisors emphasize that tax planning without parallel succession and business governance risks destroying value; these techniques require coordinated legal, tax, and operational work [9].
5. State taxes, asset protection and offshore considerations complicate the picture
State estate or inheritance taxes and asset‑protection concerns push many UHNW families toward domicile planning, specialized partnerships, and (for very large estates) offshore structures — approaches counsel as potentially useful but legally complex and laden with reporting risk and reputational hazards [10] [11]. Public sources note the benefit but also warn that offshore strategies carry material compliance and political risk and should be pursued only with careful counsel [10].
6. The practical imperative: assemble specialists and revisit plans frequently
Every authoritative source converges on the same operational advice: assemble a team — estate attorneys, tax CPAs, wealth managers, and insurance specialists — and revisit plans continually because laws, family circumstances, and asset mixes change [12] [2]. Alternative viewpoints exist about timing (act now to lock in exemptions versus preserve flexibility for uncertain political shifts), and some advisers raise explicit concerns that aggressive lifetime transfers could be disadvantageous depending on future basis and law changes [7] [2]. Reporting does not fully resolve which path is optimal for any given family; that judgment requires bespoke analysis.