For High-Net-Worth Individuals (HNWIs), tax planning isn’t a once-a-year exercise around April. It’s an ongoing discipline that spans income management, investment structure, estate planning, and charitable strategy. Each working in concert to preserve and transfer wealth as efficiently as possible.
The One Big Beautiful Bill Act, signed into law in July 2025, permanently raised the federal estate tax exemption to $15 million per individual, $30 million for married couples, made effective this past January 1, 2026, with annual inflation indexing going forward. This is a major development, but it doesn’t eliminate the need for sophisticated planning. It merely changes the calculus.
Here are four strategies that warrant serious attention at the $10 million and above level.
1. Strategic Lifetime Gifting
Even with a $15 million exemption in place, strategic gifting remains one of the most powerful tools in a high-net-worth estate plan. The annual gift tax exclusion is $19,000 per recipient in 2026, $38,000 for married couples, and transfers made within that threshold don’t touch the lifetime exemption. For families with multiple children, grandchildren, and other beneficiaries, annual exclusion gifting can transfer millions over time without triggering any tax consequences.
Beyond annual exclusions, direct payments made to educational institutions or medical providers on behalf of another person are entirely exempt from gift tax, unlimited in amount and not counted against either the annual exclusion or lifetime exemption. This is an underutilized strategy that can dramatically accelerate tax-free wealth transfer.
2. Irrevocable Trust Structures
Irrevocable trusts serve a dual purpose at the high-net-worth level: they remove assets from the taxable estate while preserving control over how those assets benefit beneficiaries. There are two structures worth understanding in depth.
Grantor Retained Annuity Trusts (GRATs) allow you to transfer future appreciation out of your estate with minimal gift tax exposure. Assets placed in a GRAT grow, and any appreciation above the IRS hurdle rate passes to beneficiaries tax-free. Short-term GRATs, typically two years, work particularly well with volatile assets expected to rebound.
Intentionally Defective Grantor Trusts (IDGTs) take a different approach. The grantor pays income tax on trust earnings, which removes additional wealth from the estate without triggering a gift. The trust assets grow without being reduced by income tax, compounding the benefit over time.
3. Donor-Advised Funds and Charitable Planning
For individuals with philanthropic intent, a Donor-Advised Fund (DAF) offers a compelling combination of immediate tax benefit and long-term giving flexibility. You contribute assets, including appreciated securities, which avoids capital gains tax. Then take the deduction in the year of contribution. Now you can distribute to charities over time on your own schedule. Funding a DAF while income is highest maximizes the deduction, and the account can be structured to involve the next generation in philanthropic decision-making.
4. State Estate Tax Exposure
The federal exemption often dominates the conversation, but it’s only part of the picture. Twelve states plus Washington, D.C. impose their own estate taxes, frequently at exemption thresholds well below the federal level.
Connecticut, Massachusetts, and New York, among others, can create meaningful additional exposure even for estates that fall comfortably under the federal threshold. Domicile planning, trust structures, and asset location all factor into managing state-level tax exposure and are worth reviewing carefully with a qualified advisor.
The Conversation Worth Having
Tax efficiency at this level is about making deliberate, well-structured decisions that compound over time. Decisions that require coordinating legal, tax, and financial expertise in a way that reflects your full picture.
A qualified financial professional at Barnum Financial Group, working alongside your tax and legal counsel, can help you evaluate which of these strategies align with your goals, your family structure, and your timeline and ensure nothing is left on the table.
Neither MML Investors Services nor any of its subsidiaries, employees or agents are authorized to give legal or tax advice. Consult your own personal attorney, legal or tax counsel for advice on specific legal and tax matters.
