Secrets From the Ultra-Wealthy to Protect Wealth Over Generations

Secrets From the Ultra-Wealthy to Protect Wealth Over Generations- From trusts and Roth conversions to tax-efficient investments, wealthy people know the importance of strategies to minimize taxes, shield assets and create lasting legacies, according to a recent article from Kiplinger, “8 Estate Planning Secrets You Can Borrow from the Ultra-Wealthy.”

The use of trusts. Ultra-wealthy people rarely have assets go through probate. Instead, most of their assets, including homes, investment accounts, and property, are placed in trusts. For regular folks, placing large assets in a revocable living trust avoids probate and offers a seamless transition to heirs. A living trust is flexible, but an irrevocable trust provides more protection. An estate planning attorney will help determine which trust is the best for your purposes.

The gift tax exclusion. Very wealthy people understand the power of making gifts by using the annual gift tax exclusion. In 2026, anyone can gift as much as $19,000 per person, completely tax-free. Regular folks may not use this in multiples, but it is a means of shielding assets from state estate and inheritance taxes by giving with “warm hands.”

Spousal Lifetime Access Trusts or SLATs are irrevocable trusts created by one spouse for the primary benefit of the other. These must be properly drafted to avoid scrutiny. Still, when prepared by an experienced estate planning attorney, they allow assets to be removed from the taxable estate while permitting a surviving spouse to receive income or even principal from the trust if needed.

Life insurance is a common estate planning strategy because death benefits paid to beneficiaries are generally received free of federal income tax. To make the most of this benefit, families avoid owning policies directly. Instead, policies are placed in an Irrevocable Life Insurance Trust (ILIT). When structured correctly, the ILIT keeps the death benefit out of the taxable estate, giving heirs tax-free cash.

Family LLCs are used to bundle assets such as real estate and family businesses into a Family Limited Liability Company to transfer non-controlling interests to heirs over time at a discounted valuation. This lowers the gift’s taxable value. Depending on the circumstances, an estate planning attorney can advise whether a Family LLC may be appropriate for holding and managing family assets.

Transfer on Death and Payable on Death designations for investment and bank accounts allow funds to be transferred directly to a beneficiary upon the account holder’s death. Be mindful when adopting this strategy—these instructions generally supersede conflicting instructions in a trust or will. As a best practice, a revocable trust can be named as the TOD or POD beneficiary.

Roth conversions may be particularly advantageous during low-income years, when taxable income is lower and the IRA or 401(k) may be converted at a lower tax rate. You’ll pay the income taxes when converting to a Roth IRA or 401(k), but the money will grow tax-free for the rest of your life and for your heirs.

Long-term capital gains are taxed at much lower rates than ordinary income. Holding investments for more than one year means owners pay less tax on profits. Keeping investments for at least a year before selling may help qualify for the lower long-term capital gains rates, which are typically 0%, 15%, or 20%, instead of regular income tax rates.

It may not be possible to copy all of these ultra-wealth strategies, but talk with your estate planning attorney about which ones could make a big difference for you and your heirs.

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Secrets From the Ultra-Wealthy to Protect Wealth Over Generations

Reference: Kiplinger (Aug. 26, 2026) “8 Estate Planning Secrets You Can Borrow from the Ultra-Wealthy”