As we enter the summer season, many of us find ourselves in the garden — planting seeds, watering, pulling weeds, and tending to something we hope will grow over time. Wealth can be viewed in much the same way.
For many families, the first generation acts as the gardener: planting the seeds, nurturing growth, and creating an environment where something meaningful can take root. Over time, that garden may be passed to the next generation. But simply handing over the keys to the gate is not enough. Without guidance, preparation, and shared understanding, even the strongest garden can become overgrown or neglected.
That is why conversations about inheritance are so important — and often so difficult. Families with significant wealth frequently wrestle with when and how to discuss what may be passed down. Will the knowledge affect motivation? Will it change family dynamics? Will it alter a child’s sense of responsibility? These are valid concerns, but avoiding the conversation can create its own risks.
Recent changes under the One Big Beautiful Bill Act add another layer to this planning conversation. With the federal estate, gift, and generation-skipping transfer tax exemption increased to $15 million per person, many families may face less immediate estate tax pressure. As a result, some may feel less urgency to pursue estate planning strategies.
But a higher exemption should not be mistaken for a reason to delay planning. Instead, it creates an opportunity to step back and think more intentionally about the broader purpose of wealth transfer. Estate planning is not only about minimizing taxes; it is about preparing the next generation, preserving family values, and creating a thoughtful framework for stewardship.
By evaluating potential estate tax exposure, modeling future scenarios, and encouraging open family conversations, families can better understand the long-term impact of today’s decisions.
Before implementing an estate strategy, compile a clear picture of assets, liabilities, cash flow needs, ownership structure, cost basis, and projected estate value. This helps determine whether the estate may exceed the future estate tax exemption and what planning may be needed.
This analysis is important because keeping appreciated assets until death can provide a valuable “step-up” in basis, allowing heirs to potentially avoid capital gains tax on appreciation that occurred during the original owner’s lifetime if they later sell.
From there, the most important question becomes what to transfer, when to transfer it, and who — or what entity — should receive it. The right assets and recipient may differ depending on tax impact, liquidity needs, family dynamics, asset protection goals, and control considerations. In some cases, outright gifts may make sense; in others, a trust, family entity, or other structure may provide better long-term flexibility and protection.
Below are several estate planning techniques that may be useful in different family circumstances.
Strategy: Irrevocable Trust
A family has accumulated meaningful wealth and wants to begin transferring assets to the next generation, but they are not comfortable making outright gifts. Their concerns may include a beneficiary’s age, spending habits, divorce exposure, creditor exposure, or simply the desire to provide guidance around how the assets should be used.
In this case, an irrevocable trust may be appropriate. The family can transfer assets into the trust, helping remove future appreciation from the taxable estate while still creating rules around distributions. The trust can be designed to support education, health care, housing, business opportunities, or general family needs.
This strategy is especially useful when the goal is not just tax reduction, but long-term stewardship. The trust creates a framework that helps protect assets while preparing beneficiaries to manage wealth responsibly over time.
Strategy: Irrevocable Life Insurance Trust, or ILIT
A family owns a closely held business, real estate, or other illiquid assets that may be difficult to sell quickly. While the estate may have significant value, much of that value is not held in cash or marketable securities. If estate taxes, debts, or equalization payments are due at death, the family may be forced to sell assets at the wrong time.
In this case, an Irrevocable Life Insurance Trust, or ILIT, may be useful. The ILIT owns the life insurance policy outside of the taxable estate, and the death benefit can provide liquidity when the family needs it most.
This can help pay estate taxes, provide cash to heirs, or equalize inheritances among children — for example, when one child inherits the family business and another does not. The key benefit is that the ILIT can create liquidity without disrupting the broader estate plan.
Strategy: Grantor Retained Annuity Trust, or GRAT
A family owns an asset they believe has strong appreciation potential, such as a closely held business interest, private investment, concentrated stock position, or marketable securities following a decline in value. They want to transfer future upside to the next generation but minimize the use of their lifetime gift exemption.
In this case, a Grantor Retained Annuity Trust, or GRAT, may be appropriate. The family transfers the asset into the GRAT and receives annuity payments back over a set term. If the asset grows faster than the IRS assumed rate, the excess appreciation can pass to beneficiaries with little or no additional gift tax.
This strategy is most useful when the family wants to transfer growth, not necessarily current value. It can be a powerful tool when asset values are temporarily depressed or when there is a strong expectation of future appreciation.
Strategy: Generation-Skipping Transfer Planning and Charitable Giving
A family wants its wealth to benefit not only children, but also grandchildren and future generations. At the same time, they have charitable goals and want to be intentional about passing down both assets and values.
In this case, generation-skipping transfer planning can be used to create long-term trusts that benefit multiple generations. By allocating generation-skipping transfer exemption to a properly structured trust, the family may reduce the risk of estate tax being applied at each generation. The trust can provide flexibility, asset protection, and centralized oversight while supporting children, grandchildren, and future descendants.
Charitable strategies can also be layered into the plan. A donor-advised fund, or DAF, can help organize family giving and involve the next generation in charitable decisions. A qualified charitable distribution, or QCD, may be useful for individuals over age 70½ who want to give directly from an IRA to a qualified charity and reduce taxable income. QCDs cannot be made to donor-advised funds, but a donor-advised fund may generally be named as a beneficiary of an IRA. For retirement assets, naming a charity or DAF as a beneficiary may also be tax-efficient, since charities do not pay income tax on inherited retirement accounts.
Together, generation-skipping transfer and charitable planning can help answer a broader question: How can this wealth support family, community, and future generations in a thoughtful way?
Strategy: Spousal Lifetime Access Trust, or SLAT
A married couple wants to use part of their lifetime gift exemption and move appreciating assets outside of their taxable estate, but they are not comfortable giving up all access to the wealth. They may still want flexibility in case cash flow needs change, markets decline, or future family circumstances are different than expected.
In this case, a Spousal Lifetime Access Trust, or SLAT, may be appropriate. One spouse creates and funds an irrevocable trust for the benefit of the other spouse, and often children or future descendants as well. If structured properly, the assets — and future appreciation — can be removed from the taxable estate while the beneficiary spouse may still receive distributions during life.
This strategy can be especially useful when a family wants to balance estate tax planning with flexibility. The SLAT allows the family to transfer wealth and potentially preserve indirect access through the beneficiary spouse.
The trade-off is that access is not guaranteed. If the beneficiary spouse dies, the couple divorces, or the trust is not structured properly, that indirect access may be lost. For that reason, SLATs should be carefully coordinated with cash flow needs, trustee selection, and the overall estate plan.
These scenarios are only a starting point. Estate planning decisions are highly personal and often involve complex tax, legal, and family considerations. Working closely with your advisory team — including estate planning attorneys, tax professionals, and wealth advisors — can help identify the strategies best suited to your goals, family dynamics, and long-term legacy. To learn more, or for help designing a personalized estate plan tailored to your unique circumstances, schedule a meeting with a GatePass wealth advisor today.
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