Julie, a successful executive in her early 60s, has spent decades building wealth through smart investing, disciplined saving, and equity compensation. Today, she and her husband have a $30 million estate, four adult children, and four young grandchildren. They’re proud of what they’ve built—but they’re also aware that without proper planning, a significant portion of that wealth could be lost to estate taxes.

As it stands, the current estate tax exemption allows each person to transfer up to $13.99 million tax-free. But unless Congress acts, that figure is scheduled to drop by roughly half at the end of 2025. For Julie and her husband, that means over $16 million of their estate could become taxable—at a 40% federal rate. That’s a potential $6.4 million wealth transfer problem unless they act soon.

The Planning Challenge:

How do you reduce your estate tax exposure without giving away more than you’re comfortable with?

The answer lies in using thoughtful structures that remove assets from the estate while preserving access, flexibility, and alignment with family goals.

Julie’s Estate Plan: Strategy in Action

Spousal Lifetime Access Trust (SLAT)

A SLAT allows one spouse to make a gift into an irrevocable trust for the benefit of the other spouse (and potentially children or grandchildren). Once funded, the assets—and any future appreciation—are removed from the estate. The non-donor spouse can receive distributions, which provides indirect access to the funds during their lifetime.

Why it works: It leverages the current estate exemption before it sunsets, while preserving optionality through the beneficiary spouse.

Grantor Retained Annuity Trusts (GRATs)

A GRAT is an irrevocable trust that allows the grantor to transfer appreciating assets (like stock or private business interests) to beneficiaries with minimal or no gift tax. The grantor retains an annuity stream for a fixed term, and any growth above the IRS’s assumed interest rate (the §7520 rate) passes to beneficiaries tax-free.

Why it works: It’s especially effective in low-interest rate environments or when assets are temporarily undervalued.

Annual Gifting Through Irrevocable Trusts

Julie and her husband use their annual gift tax exclusion ($19,000 x 2 = $38,000 per recipient, per year in 2025) to gift to irrevocable trusts for their children and grandchildren. These trusts can include provisions such as spendthrift clauses, staggered distributions, and trustee oversight.

Why it works: It’s a tax-efficient way to transfer wealth over time, compounding the impact without using up the lifetime exemption.

529 Plan Front-Loading

Using the IRS’s five-year election rule, Julie and her husband contributed $190,000 per grandchild ($19,000 x 5 = $95,000 per spouse) into 529 college savings plans. This removes significant capital from their estate immediately.

Why it works: These contributions grow tax-deferred and can be withdrawn tax-free for qualified education expenses. It’s a direct way to align family values with tax strategy.

Irrevocable Life Insurance Trust (ILIT)

An ILIT is an irrevocable trust that owns a life insurance policy. By transferring ownership of the policy to the trust, the death benefit is excluded from the taxable estate. The trust can be funded annually using gifts to pay the premiums.

Why it works: It creates liquidity for estate taxes or legacy planning without increasing the size of the taxable estate. ILITs are often used to avoid forced sales of illiquid assets.

The Role of Our In-House Estate Strategist

Behind every one of these strategies is a collaborative effort—not just with clients, but across our internal team. At Members’ Wealth, we’re fortunate to have Marie Feindt, JD, on our side.

Marie brings years of legal and planning experience to the table. She works directly with clients like Julie to develop and refine custom estate strategies, ensuring they reflect both the family's values and the realities of tax law. While third-party attorneys handle the final drafting, Marie helps bridge the gap between financial goals and legal implementation—making the entire process more cohesive and less intimidating.

Whether you're considering a SLAT, evaluating gifting strategies, or weighing trust options, Marie plays a central role in helping clients turn abstract legal tools into real-world solutions.

Final Thoughts

You don’t need to be ready to give everything away to take advantage of the current estate tax rules. But you do need to act while the window is open.

Julie didn’t make these decisions overnight—but with planning, modeling, and the right team around her, she’s reducing the future tax burden on her family while keeping full confidence that her own needs are covered.

That’s what estate planning should feel like—structured, strategic, and grounded in your life.

If your estate is approaching—or well over—$20 million, now is the time to explore your options. The 2026 estate tax cliff isn’t a headline. It’s a deadline.

Let’s talk before it’s too late.

The strategies described above are complex legal structures that must be tailored to each family’s circumstances. Always consult with your own estate planning attorney and tax advisor before implementing any trust, gifting, or insurance strategy. Members’ Wealth does not draft legal documents and works alongside your legal counsel to support and coordinate your estate planning efforts.

These examples are for illustrative purposes only and do not represent actual client experiences. Individual results will vary based on personal financial circumstances and tax laws.

About the Author – Stu Caplan

Stu Caplan is Senior Wealth Strategist at Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions.

The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of industry experience, Stu and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations.

Stu received his MBA from The Robert H. Smith School of Business at the University of Maryland and his bachelor’s degree from the Eller College of Management at the University of Arizona. Stu resides in Bucks County, PA with his wife and two sons. He’s an avid golfer and is thrilled that his boys have embraced the game. He also volunteers his time as a board member of the PKD Foundation and Abrams Hebrew Academy.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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