Maximizing Estate Savings: Strategies for High-Net-Worth Clients

The countdown is on for high-net-worth (HNW) clients: the lifetime estate tax exemption is set to be halved on January 1, 2026. For individuals with estates exceeding $10 million or couples above $20 million, this represents a golden opportunity to significantly reduce death taxes.

But leveraging the current high exemption is just the beginning. By stacking advanced estate planning strategies, advisors can help clients save millions while retaining control and flexibility over their assets. Here’s a breakdown of key concepts to guide your conversations with HNW clients:

1. How Much Can Be Saved by Using the Full Exemption Now?

Using the full exemption before the 2026 deadline can generate substantial tax savings:

• A single taxpayer gifting under a 5% estate growth assumption could reduce taxes by over $6 million in 20 years.
• Married couples using both exemptions could save over $12 million over the same period.

Encouraging clients to act now can lock in these benefits before the opportunity diminishes.

2. What If Clients Are Hesitant to Use Both Exemptions?

For clients who aren’t ready to part with both exemptions, using at least one can still yield significant savings. Even one exemption utilized today can protect assets and reduce future tax liability, saving millions over time.

3. What Happens if Congress Doesn’t Reduce the Exemption?

Some clients worry about gifting assets unnecessarily. A Family Loan structure offers a flexible solution:

• Assets are transferred to an irrevocable trust and treated as a loan.
• If the exemption remains unchanged, the loan can be called, and the assets returned.
• If the exemption decreases, the loan can be forgiven before January 1, 2026, treating the assets as a gift retained in the trust.

This dual-purpose approach provides flexibility for changing legislative landscapes.

4. How Can Clients Retain Control Over Gifted Assets?

Control is a common concern, and a Family Limited Liability Company (FLLC) can address it:

• Transfer the bulk of assets as non-voting interests.
• Retain all voting rights for decision-making authority.

This setup preserves control while enabling significant tax savings through gifting.

5. Can Spouses Benefit from Transferred Assets?

Yes, through a Spousal Lifetime Access Trust (SLAT):

• Assets are placed in an irrevocable trust with the spouse as a lifetime beneficiary.
• The beneficiary spouse receives income and distributions for health, education, maintenance, and support.
• The gifting spouse indirectly retains access to the assets through the beneficiary spouse if needed.

Upon the beneficiary spouse’s death, assets in the trust are excluded from their estate, ensuring tax efficiency.

6. Can Both Spouses Use SLATs for Each Other’s Benefit?

Absolutely, but this requires careful planning:

• Each spouse sets up a separate SLAT for the other’s benefit.
• To comply with IRS guidelines and avoid complications, trusts must be meticulously drafted by experienced legal and tax advisors.

Final Thoughts

The impending reduction in the lifetime estate tax exemption presents a window of opportunity for HNW clients to protect their wealth and legacy. By combining gifting strategies with advanced planning tools like FLLCs, SLATs, and Family Loans, advisors can deliver tailored solutions that maximize savings while addressing clients’ concerns about control and flexibility.

Now is the time to act. Encourage your clients to consult their estate planning team and take advantage of these strategies before the January 2026 deadline. The sooner they act, the more they stand to save.