Tax Strategy
Estate Tax Planning
Proactive strategies to minimize estate, gift, and generation-skipping transfer taxes, preserving the maximum amount of your wealth for your family and philanthropic objectives.
The Cost of Leaving Tax Planning to Chance
The federal estate tax rate on taxable estates is 40%. For families with significant wealth, this means that without proactive planning, nearly half of the estate value exceeding the lifetime exemption could be consumed by taxes rather than passed to the next generation.
Estate tax planning is not about aggressive tax avoidance. It is about using the tools and strategies that the tax code provides to preserve wealth in a manner consistent with your family's values and objectives. Every dollar preserved through legitimate planning is a dollar that remains available for your family, your business, and your philanthropic goals.
Common Tax Planning Vehicles
Irrevocable Life Insurance Trusts (ILITs)
An ILIT owns your life insurance policy, removing the death benefit from your taxable estate. This is often the most cost-effective way to provide estate tax liquidity. The insurance proceeds are available to pay estate taxes without themselves being subject to the tax.
Grantor Retained Annuity Trusts (GRATs)
A GRAT allows you to transfer appreciation on assets to the next generation with minimal or zero gift tax cost. You transfer assets into the trust and receive annuity payments back over a fixed term. Any growth above the IRS-assumed rate passes to beneficiaries tax-free.
Qualified Personal Residence Trusts (QPRTs)
A QPRT allows you to transfer your home to beneficiaries at a significantly reduced gift tax value. You continue to live in the home for a specified term, and at the end of the term, the home passes to your beneficiaries outside of your estate.
Charitable Planning Vehicles
Charitable remainder trusts, charitable lead trusts, donor-advised funds, and private foundations can reduce estate and income taxes while advancing your philanthropic goals. These vehicles allow you to make a lasting impact while preserving more of your estate for your family.
Lifetime Gifting Strategies
Strategic use of the annual gift tax exclusion ($19,000 per person in 2026) and the lifetime gift tax exemption ($15 million per person in 2026) can transfer significant wealth during your lifetime. Gifting appreciating assets is particularly powerful because all future growth occurs outside of your taxable estate.
Family Limited Partnerships (FLPs)
FLPs can be used to transfer interests in family businesses or investment portfolios at discounted values, reducing the gift and estate tax cost of the transfer. Valuation discounts for lack of marketability and lack of control can be substantial when properly documented.
Common Questions
Frequently Asked Questions
The federal estate tax rate on amounts exceeding the lifetime exemption is 40%. This rate applies to the taxable estate, the value of all assets minus deductions, debts, and the applicable exemption amount. Proactive planning can significantly reduce or eliminate this exposure.
The annual gift tax exclusion allows you to give $19,000 per recipient per year (as of 2026) without using any of your lifetime exemption. Gifts exceeding the annual exclusion reduce your lifetime exemption dollar-for-dollar. The lifetime exemption is $15 million per person ($30 million per couple) in 2026. Both are powerful planning tools, and Christopher helps clients use them strategically in combination.
Yes. The lifetime exemption amount has changed significantly over the past two decades. Most recently, the One Big Beautiful Bill Act of 2025 permanently set the exemption at $15 million per person ($30 million per couple) starting in 2026, eliminating the previously scheduled sunset. A robust estate plan still accounts for potential future legislative changes by incorporating flexible structures that can adapt to different exemption levels and tax rates.
Portability allows a surviving spouse to use the deceased spouse's unused estate tax exemption, effectively doubling the amount that can pass tax-free. However, portability must be elected by filing an estate tax return within nine months of death. It is not automatic. And portability does not apply to the GST tax exemption, making trust-based planning essential for multi-generational wealth.
What Is Your Estate Tax Exposure?
Schedule a confidential consultation with Christopher to evaluate your current exposure and explore strategies to minimize the tax impact on your estate.
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