Advanced Estate Planning Strategies for Families with $10M+ Net Worth
- Anatoly Iofe
- May 2
- 5 min read
How to Reduce Estate Taxes and Preserve Wealth for Future Generations
When your family’s net worth exceeds $10 million, basic estate planning tools like a will or revocable trust are no longer enough. Instead, it’s important to consider more advanced strategies that can help minimize estate taxes, protect assets, and ensure a smooth, tax-efficient transfer of wealth to future generations.
With the federal estate tax exemption expected to drop significantly in 2026—from $13.99 million per person in 2025 to approximately $6.4 million in 2026 (adjusted for inflation, unless Congress extends it) — wealthy families need to act soon. If your estate exceeds that amount, anything above it could be taxed at up to 40%.
Below, we explore key estate planning strategies that can help high-net-worth families reduce taxes, structure their legacy, and keep wealth in the family. These include:
GRATs and GRUTs
ILITs
Dynasty Trusts
Charitable Trusts (including NIMCRUTs)
PPLI and PPVA
Grantor Retained Annuity Trusts (GRATs)
A GRAT lets you transfer appreciating assets to your heirs with minimal gift tax.
How it works: You move assets (like stock or a business interest) into a trust. The trust pays you a fixed annuity for a set number of years. If the assets grow faster than the IRS’s assumed rate (called the “7520 rate”), the excess value goes to your heirs tax-free at the end of the term.
Why it’s useful:
Reduces estate and gift tax exposure
Great for transferring rapidly appreciating assets
Can be “zeroed-out” to avoid triggering a taxable gift
Watch out for: If you die during the annuity period, the remaining value may return to your estate and become taxable.
Grantor Retained Unitrusts (GRUTs)
A GRUT is similar to a GRAT, but instead of a fixed annuity, the payments are a fixed percentage of the trust's value—recalculated annually.
Best use case: When the underlying asset is expected to fluctuate significantly in value over time. This structure lets the payment adapt to market performance.
Pros:
More flexible than GRATs
Ideal for volatile or high-growth investments
Considerations: Similar to GRATs, GRUTs carry the risk of estate inclusion if the grantor dies during the term.
Irrevocable Life Insurance Trusts (ILITs)
Life insurance is often used to provide liquidity to pay estate taxes—but if the policy is owned in your name, the death benefit is included in your estate.
An ILIT solves this by owning the policy for you.
How it works:
The trust buys the life insurance policy.
You gift money to the trust to pay premiums (usually using your annual gift exclusion).
When you die, the trust receives the death benefit outside your estate and distributes it tax-free to beneficiaries.
Benefits:
Removes insurance proceeds from taxable estate
Helps heirs pay estate taxes without selling assets
Provides equalization among children if you have a business or other illiquid holdings
Dynasty Trusts
Dynasty trusts are designed to pass wealth down through multiple generations while avoiding estate taxes at each level.
How it works:
You contribute assets to a trust.
The trust names multiple generations of beneficiaries (e.g., children, grandchildren, great-grandchildren).
The trust remains in effect in perpetuity (states like Nevada or South Dakota), or for hundreds of years (states like Florida or Wyoming).
Key advantages:
Avoids estate taxes with each generational transfer
Protects assets from divorce, creditors, and lawsuits
Encourages family values and long-term stewardship
Planning Tip: Combine with your Generation-Skipping Transfer (GST) exemption to maximize the benefit.
Charitable Trusts: NIMCRUTs and Beyond
Charitable trusts help you support causes you care about while reducing your taxable estate and potentially generating income.
A. Charitable Remainder Trusts (CRTs)
You donate an asset to the trust. It pays you income for life or a term of years, and the remainder goes to charity.
B. NIMCRUT (Net Income with Make-Up Charitable Remainder
Unitrust)
This is a more flexible version of a CRT. It pays the lesser of:
A fixed percentage of trust assets, or
The actual net income of the trust.
If the trust earns less than the fixed percentage in a year, it can “make up” the missed payments in future years when income is higher.
Best use case: When contributing assets that don’t immediately generate income—like raw land, private equity, or growth stocks.
Benefits:
Charitable income tax deduction
Defers capital gains on donated assets
Generates future retirement income
Leaves a legacy to a cause you care about
Private Placement Life Insurance (PPLI)
PPLI is a tax-advantaged structure for investing through a life insurance wrapper. It allows wealthy investors to grow wealth tax-deferred and pass it to heirs tax-free.
How it works:
The investments sit inside a life insurance policy.
Upon death, your heirs receive the policy’s value tax-free.
Key Features:
Access to institutional investment strategies, including hedge funds and private equity
No income or capital gains taxes inside the policy
No estate taxes on the death benefit
Why use PPLI:
For assets with high income or tax drag
For estate planning without triggering gift taxes
For privacy and creditor protection
Private Placement Variable Annuities (PPVA)
PPVAs are similar to PPLI but don’t have a death benefit. Instead, they focus on long-term, tax-deferred growth.
How it works:
Your investments grow tax-deferred inside the annuity.
You can access funds in retirement, typically taxed as ordinary income.
Useful for people who plan to relocate to a lower-tax jurisdiction in the future.
Why use PPVA:
No RMDs (unlike IRAs)
No contribution limits
Excellent for hedge funds or high-turnover strategies
Combine Strategies for Maximum Impact
Advanced estate planning isn’t about using one tool—it’s about using the right combination:
Use a GRAT to shift appreciating assets out of your estate without using your exemption.
Combine a Dynasty Trust with PPLI to pass tax-free growth to multiple generations.
Fund a NIMCRUT with appreciated stock to support your favorite charity and create future income.
Purchase life insurance through an ILIT to cover estate taxes without reducing your legacy.
Final Thoughts: Start Now, Before the Exemption Shrinks
The current estate tax exemption is historically high—but time is running out. After 2025, the exemption will likely drop by about 50%, exposing millions more to estate taxes. For families with $10M+ in wealth, that could mean millions in avoidable taxes.
By taking action now and working with experienced advisors—estate attorneys, CPAs, and fiduciary wealth planners—you can protect your legacy, reduce tax burdens, and give your heirs the gift of financial stability.
Have questions, schedule your no-obligation consultation here.
Top 5 Sources for Further Reading:
IRS – Estate and Gift Tax Overview
*These organizations are not affiliated with IFG. IFG does not endorse, support, or recommend any information that is not provided by its affiliates or representatives.
Disclaimer:
Information provided is for informational purposes only, and does not constitute a financial advise, an offer or solicitation to sell, a solicitation of an offer to buy, any security or any other product or service. Accordingly, this document does not constitute investment advice or counsel or solicitation for investment in any security. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
