Estate Planning for High-Net-Worth Families

Start with the Big Picture

Before diving into acronyms and legalese, take a step back. Advanced estate planning is about more than transferring money. It’s about:

• Protecting family harmony
• Reducing estate, gift, and generation-skipping taxes
• Supporting philanthropic goals
• Preparing heirs for stewardship, not just inheritance



That means your strategy needs to reflect your values as much as your assets.

Grantor Retained Annuity Trusts (GRATs)

A GRAT can be a powerful way to transfer appreciation out of your estate while keeping the original principal working for you.

How it works: You contribute assets to a trust and retain the right to receive annuity payments over a fixed period. If the assets grow faster than the IRS’s assumed rate of return (known as the Section 7520 rate), the excess passes to beneficiaries free of gift tax.

Best for: Transferring appreciating assets (e.g., stocks, private business interests)

Pro tip: GRATs work best in low-interest rate environments or during market downturns. We had a client fund a GRAT with undervalued shares during a recession—the growth beat the IRS rate, and millions passed to heirs with zero gift tax.

Intentionally Defective Grantor Trusts (IDGTs)

Despite the awkward name, IDGTs are incredibly effective for wealth transfer.

How it works: You sell assets to the trust in exchange for a promissory note. The sale is disregarded for income tax purposes (so no capital gains on the transfer), but the trust is excluded from your estate.

Why it's valuable:

• Appreciation happens outside your estate
• Income tax on trust earnings is paid by you—further reducing your estate without additional gifts
• Common uses: Selling business interests, real estate, or family-limited partnership units



Think of it like this: you're moving the engine of wealth (the appreciation) to your heirs, but keeping the tax responsibility on your own shoulders—strategically.

Charitable Remainder Trusts (CRTs)

If giving back is part of your plan—but you also want lifetime income—a CRT could be the perfect fit.

What it does:

• You donate appreciated assets (e.g., stocks, real estate)
• Receive a charitable deduction upfront
• Collect income from the trust for life or a set number of years
• Whatever remains goes to a designated charity

This can reduce capital gains exposure, provide steady income, and support causes you care about.

A real-world example: One of our clients donated highly appreciated tech stock to a CRT. They avoided a big tax bill, created a steady retirement income stream, and funded a scholarship at their alma mater. A triple win.

Charitable Lead Trusts (CLTs)

CLTs flip the CRT model: the charity gets income now, and your heirs get the remainder later.

Why it matters:

• Great for clients with strong charitable intent
• Useful for reducing estate and gift taxes on large transfers

This structure is often used in conjunction with other trusts, and while it’s more complex, the payoff—both tax-wise and impact-wise—can be significant.

Dynasty Trusts

If multigenerational planning is on your mind, a dynasty trust can lock in your legacy for decades—or even centuries—depending on your state.



Key benefits:

• Assets grow outside of your estate and your heirs’ estates
• Protects from creditors, lawsuits, or divorces
• Leverages generation-skipping transfer tax (GSTT) exemptions

It’s like setting up a family vault with rules, protections, and purpose.

SLATs: Spousal Lifetime Access Trusts

SLATs offer a blend of flexibility and protection. You transfer assets to a trust for your spouse (and potentially children), removing them from your estate—while still retaining indirect access through your spouse.



When to use:

• Married couples concerned about estate taxes
• Want to keep assets accessible in a roundabout way

A client we worked with set up a SLAT just before a major liquidity event. They removed millions from their estate without compromising their lifestyle.

Don’t Forget the Basics

Even high-net-worth individuals sometimes skip the basics. Your plan should still include:

• A current will
• Durable powers of attorney
• Healthcare directives
• Beneficiary designations



And coordinate these with your trusts and business interests. Estate planning is like a symphony—each instrument has to play the right notes at the right time.

Timing and Tax Law Matter

Estate tax laws shift. Exemption amounts change. Political winds blow. A strategy that works today might not work tomorrow. That’s why estate planning for high-net-worth families is an ongoing process—not a one-time task.



Right now, the estate tax exemption is historically high—but scheduled to drop in 2026. That gives a narrow window for strategic gifting and trust funding.

Work with your advisor to:

• Monitor legislation
• Stress-test your plan under different scenarios
• Make proactive moves when the time is right
  

Final Thoughts

Your wealth isn’t just numbers on a balance sheet. It’s the product of years of work, risk, discipline, and vision. Advanced estate planning helps you protect that work—and pass it on with intention.



From GRATs to IDGTs to charitable trusts, these aren’t just alphabet soup. They’re tools that, when used strategically, can preserve your wealth for generations to come.

Aligned Wealth Advisors guides high-net-worth individuals through the nuances of legacy building. Let’s make sure your plan reflects not just your wealth—but your values, your family, and your future.

Andrea Ward, CPA

Andrea has worked in the finance industry for nearly all of her professional life. Taking over the family business she continues to combine her tax and investment knowledge to leverage the investment power of money while reducing gains taxes paid to the IRS. She lives in the Fort Worth, Texas area, (although is happy to work with virtual clients all over the United States!) Andrea loves to travel and dabble in home decorating.

Matt Ward

Matt began helping clients in the insurance industry. However, he struggled with big business’s emphasis on selling rather than helping, so he came to work with the family business focusing on investment advisory. In his free time, he shreds the gnar on his snowboard and jams on drums and guitar (but not at the same time).