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Advanced Estate Planning Tax Strategies: A Guide for High-Net-Worth Individuals

  • Parkview Partners Capital Management
  • 13 minutes ago
  • 3 min read

For high-net-worth individuals and families, estate planning extends well beyond basic wills or trusts. It becomes a discipline centered on wealth preservation, legacy building, and tax efficiency. As wealth grows, so does the exposure to estate, gift, and generation-skipping transfer (GST) taxes—making proactive tax strategy a critical part of striving to preserve your legacy.


This guide explores several advanced estate-planning tools designed to help mitigate tax liabilities, preserve intergenerational wealth, and align long-term financial and philanthropic goals.


Grantor Retained Annuity Trusts (GRATs)


A Grantor Retained Annuity Trust (GRAT) allows the transfer of appreciating assets to beneficiaries with minimal or no gift-tax impact. The grantor contributes assets to the trust and receives fixed annual payments for a set term. When that term ends, any remaining appreciation passes to heirs, which may be free of estate and gift taxes.


If the trust’s assets outperform the IRS-mandated Section 7520 rate, that excess appreciation may transfer tax-free to beneficiaries—making GRATs especially valuable when interest rates are low.


Implementation Considerations


  • Asset Selection: Favor assets with high growth potential (e.g., private-company stock, real estate, or concentrated equity positions).

  • Term Length: Longer terms may increase growth potential but also the risk the grantor doesn’t outlive the term.

  • “Zeroed-Out” GRAT: Structure so the present value of annuity payments roughly equals the contributed assets’ value, mitigating taxable gifts.

  • Market Volatility: Returns are not guaranteed; underperforming assets may revert to the estate.


Spousal Lifetime Access Trusts (SLATs)


A Spousal Lifetime Access Trust (SLAT) lets one spouse establish an irrevocable trust for the other’s benefit. This structure removes assets (and future appreciation) from both taxable estates while still providing indirect family access to funds.


SLATs can be particularly effective for couples seeking to lock in today’s historically high federal gift- and estate-tax exemptions before they sunset. The beneficiary spouse may receive distributions for health, education, maintenance, or support, while remaining assets can pass to children free of estate tax.


Implementation Considerations


  • Reciprocal Trust Doctrine: If both spouses create SLATs, ensure they differ meaningfully to avoid IRS scrutiny.

  • Independent Trustee: Provides impartial oversight and professional administration.

  • Funding Decisions: Transfers are irrevocable—retain enough assets outside the trust for personal liquidity.

  • Divorce or Death Clauses: Address how the trust functions in these events to preserve flexibility.


Irrevocable Life Insurance Trusts (ILITs)


An Irrevocable Life Insurance Trust (ILIT) removes a life-insurance policy from the taxable estate so proceeds pass to heirs free of estate tax. The trust can provide immediate liquidity for estate-tax payments, debt settlement, or family needs.


When properly structured, the ILIT owns the policy, receives premium-funding gifts from the grantor, and distributes proceeds according to the trust terms—often leveraging Crummey withdrawal powers so gifts qualify for the annual gift-tax exclusion. Crummey withdrawal powers state that trust beneficiaries have a window of time to withdraw contributions made to a trust, while the grantor can qualify the gift in their annual gift tax exclusion.


Implementation Considerations


  • Proper Funding: The grantor must retain no “incidents of ownership” (e.g., changing beneficiaries or borrowing against the policy).

  • Three-Year Look-Back: If an existing policy is transferred into an ILIT, the grantor must live three years beyond the transfer for exclusion.

  • Trustee Selection: A professional or corporate trustee ensures impartial management and timely premium payments.

  • Crummey Notices: Required for annual-exclusion eligibility; beneficiaries must receive timely written notice of withdrawal rights.


Putting It All Together


Advanced estate planning is not about individual tactics—it’s about designing a cohesive, tax-efficient legacy strategy. Tools such as GRATs, SLATs, and ILITs can complement each other, helping families transfer wealth efficiently while preserving control and flexibility.


Because every family’s situation is unique, these strategies should be developed in coordination with qualified estate-planning attorneys, CPAs, and fiduciary advisors. Laws and exemption thresholds can change, and staying proactive is key to maintaining effectiveness.



Investment advice offered through Stratos Wealth Partners, Ltd., a registered investment advisor.  Stratos Wealth Partners, Ltd and Parkview Partners Capital Management are separate entities. Neither Stratos nor Parkview Partners Capital Management provides legal or tax advice. Please consult legal or tax professionals for specific information regarding your individual situation.


 
 
 

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Financial Advisor, Investment Advisor, High Net Worth, Wealth Management, Tax Planning, Risk Management, Financial Coordination, Retirement Planning, Charitable Giving, Columbus Ohio, Parkview Partners Capital Management

291 East Livingston Ave.
Columbus, OH 43215


Phone: (614) 427-2132

Fax: (614) 427-2132

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