Complete Estate Planning Guide for HNW Families

Estate planning at $5M+ net worth is a coordinated discipline: financial advisor, trust-and-estates attorney, CPA, sometimes insurance specialist. The attorney drafts the documents; the advisor makes sure the financial strategy aligns. This guide walks the playbook.

Foundation: what you need first

Before any trust strategy, every HNW family needs:

• Revocable living trust — funded with major assets. Avoids probate, keeps estate private, allows successor trustee to act without court.
• Pour-over will — catches assets not yet funded into the trust at death.
• Durable power of attorney (financial) — for incapacity.
• Healthcare power of attorney + advance directive — for medical decisions.
• Beneficiary designations updated on all retirement accounts, life insurance, and transfer-on-death accounts. These OVERRIDE the will.

Stage 1 — The $15M permanent exemption (post-OBBBA)

Federal estate and gift tax exemption for 2026 is $15,000,000 per individual / $30,000,000 per married couple with portability. The One Big Beautiful Bill Act (OBBBA, signed July 4, 2025) made this amount permanent — the previously-scheduled sunset to ~$7M that was baked into the TCJA is gone. The exemption will be indexed to inflation starting 2027.¹

What this means for planning: the "use it or lose it" urgency of 2024-2025 has eased, but the estate-planning toolkit (SLATs, GRATs, dynasty trusts) remains valuable — not to lock in exemption before sunset, but to move future appreciation outside your estate and start the generation-skipping-tax clock.

SLAT (Spousal Lifetime Access Trust)

Irrevocable trust funded by one spouse for the benefit of the other. Assets leave the donor's estate but remain indirectly accessible via spouse. Typical structure:

• Spouse A funds a SLAT for Spouse B, uses up to current exemption ($15M in 2026)
• Spouse B is a beneficiary (can draw income/principal under HEMS standard)
• Assets and all future appreciation are outside Spouse A's estate
• At Spouse A's death, Spouse B still has trust access; at Spouse B's death, trust continues for descendants

Risk: reciprocal trust doctrine. If both spouses set up identical SLATs for each other, IRS may unwind. Drafting needs differentiation — different trustees, different distribution terms, different funding dates.

GRAT (Grantor Retained Annuity Trust)

Most efficient for transferring expected appreciation. Grantor contributes assets, receives annuity payments back over trust term (typically 2-5 years). At end of term, remaining trust balance passes to heirs at near-zero gift-tax cost (if zeroed-out correctly).

Ideal for: pre-IPO stock, rental real estate, closely-held business shares expected to appreciate meaningfully.

Dynasty Trust

Generational wealth shelter. Assets pass from generation to generation without estate tax at each death. Require perpetual-trust-allowed states (SD, NV, DE, AK). Combined with GST (generation-skipping transfer) exemption use, can shelter tens of millions for multiple generations.

Stage 2 — Annual and ongoing

• Annual exclusion gifts. $19,000/donor/donee/year in 2026 (unchanged from 2025).³ A family of 4 children + spouses = 8 donees × $19K = $152K/year gifts per spouse = $304K/year combined. Over 20 years = $6.08M moved out of estate without touching lifetime exemption.
• Non-citizen spouse gifts. Separate annual exclusion of $194,000 in 2026 (up from $190,000 in 2025).³
• 529 superfunding. 5-year advance use of annual exclusion. $95,000/donor per grandchild at once in 2026. Grandparents commonly superfund multiple 529s.
• Medical/tuition exclusions. Direct payments to healthcare providers and educational institutions are unlimited — don't count against gift tax.
• Spousal access trusts + gifting trusts refreshed annually as exemption increases with inflation adjustments.

Stage 3 — Business and investment succession

• Buy-sell agreements between business partners, funded by life insurance. Clarifies what happens on death/disability.
• Intentionally Defective Grantor Trust (IDGT). Grantor pays income tax on trust income (treated as grantor's personally), but trust assets are outside estate. Effective additional gifting: the tax paid is itself a non-taxed benefit to the trust.
• Charitable Remainder Trust (CRT/CRUT). Appreciated assets → CRUT → lifetime income stream + charitable deduction + capital gains deferral + remainder to charity.
• Charitable Lead Trust (CLT). Mirror of CRT. Charity gets income stream first; remainder to heirs. Useful when philanthropic goals are concurrent with wealth transfer.

Step-up basis — the legacy you don't want to forget

Appreciated assets held until death receive a "stepped-up" cost basis equal to date-of-death fair market value. For assets you intend to leave to heirs, holding (rather than selling) until death eliminates capital gains tax. Planning implication: sell losers, hold winners. Business equity, appreciated stock, primary residence — the hold-until-death strategy can save heirs millions.

Common mistakes

• Treating 2025 as a deadline and rushing imperfect SLAT/GRAT structures — OBBBA removed the sunset urgency, but poorly-drafted irrevocable trusts create worse problems than a smaller exemption would have.
• Not updating beneficiary designations after major life events (divorce, remarriage, new children).
• Including specific assets in a revocable trust but not actually titling them in the trust's name.
• Buying whole life insurance as an "estate plan" without coordinating with actual trust structure.
• Gifting appreciated assets to low-income heirs (they receive carryover basis; would be better to inherit with step-up).
• Ignoring state estate tax in low-federal-exposure states.

Sources

1. IRS — Tax Inflation Adjustments 2026 (including OBBBA amendments). Also: Morgan Lewis, "IRS Announces Increased Gift and Estate Tax Exemption Amounts for 2026".
2. IRS T.D. 9884 — Final Anti-Clawback Regulations (November 2019), with 2022 proposed anti-abuse refinements.
3. Kiplinger — 2026 Annual Gift Tax Exclusion ($19,000; $194,000 non-citizen spouse).
4. IRC § 1014 — Basis of Property Acquired from a Decedent (step-up).
5. IRC § 2010 — Unified Credit Against Estate Tax; IRC § 2503(b) — Annual Gift Exclusion.

Tax values verified as of April 2026. Rules change — confirm current figures with your advisor before acting.