Estate Planning for High-Net-Worth Individuals: A $5M–$50M Guide

The OBBBA permanently raised the federal estate exemption to $15M per person. For most of the $5M–$50M bracket, federal estate tax is no longer the primary planning driver. But state estate taxes, beneficiary coordination, and several trust structures still do real work at this level.

The federal picture after OBBBA

The One Big Beautiful Bill Act (OBBBA), signed July 2025, permanently raised the federal estate, gift, and generation-skipping transfer (GST) tax exemption to $15 million per person.¹ For married couples using portability, the combined exemption is $30M. This is not a sunset provision — it is permanent law under current statute.

For 2026, the annual gift exclusion is $19,000 per recipient ($38,000 for married couples with gift-splitting).¹ Gifts within this annual exclusion don't touch your lifetime exemption or require filing a gift tax return.

What this does not eliminate: state estate taxes, beneficiary designation failures, asset-titling problems, and the coordination work required to keep an estate plan functional as wealth and circumstances change.

State estate taxes: the real remaining risk at $5M–$50M

Seventeen states plus Washington D.C. impose their own estate or inheritance taxes — with exemptions far below the federal $15M threshold.² If you live in one of these states or own significant real estate there, you face substantial state estate tax even with zero federal liability.

2026 state estate tax exemptions (selected states):

• Oregon: $1M exemption, rates 10–16%. A $10M OR estate owes state tax on $9M — roughly $1.2M–$1.5M in state tax.
• Massachusetts: $2M exemption, rates up to 16%. A $10M MA estate owes on $8M — approximately $1M–$1.2M in state tax.
• Rhode Island: ~$1.77M exemption.
• Minnesota: ~$3M exemption, rates up to 16%.
• Washington: ~$3M exemption, top rate recently increased to 20%.
• Maryland: $5M exemption. Maryland also imposes a separate inheritance tax on non-lineal heirs at 10%.
• Hawaii: $5.49M exemption.
• Maine: $6.8M exemption.
• New York: $7.35M exemption for 2026 — but with a "cliff" provision: if your estate exceeds 105% of the exemption (~$7.72M), the full exclusion is eliminated. A $7.8M NY estate pays tax on the entire amount, not just the excess above the exemption.³

The right mitigation approach depends on your specific state and estate composition. Irrevocable trusts, spousal lifetime access trusts (SLATs), charitable vehicles, and lifetime gifting programs all have roles — but a local estate attorney who knows your state's specific rules is required.

Beneficiary designations and asset titling

The most common estate-planning failure at $5M–$50M isn't taxes — it's retirement accounts with stale beneficiary designations. Retirement accounts (401(k), IRA, Roth IRA) and life insurance policies pass outside your will. A $3M IRA with an ex-spouse listed as beneficiary from a 2009 form will pass to that ex-spouse regardless of your will, your trust, or your divorce decree.

• Name both primary and contingent beneficiaries on every retirement account and insurance policy. Review after every life event.
• For non-spouse beneficiaries: under SECURE 2.0 and T.D. 10001 (finalized July 2024), most non-spouse inheritors must fully empty the inherited IRA within 10 years and take annual RMDs in years 1–9 if the decedent had already begun required minimum distributions.⁴ A $3M IRA can generate significant taxable income for heirs; Roth conversion during your lifetime may be more efficient.
• Community property states (CA, TX, AZ, NV, WA, ID, NM, WI, AK): at the first spouse's death, community property receives a full stepped-up basis on the entire asset — a significant advantage over common-law states where only the decedent's half steps up. If you've moved between states or inherited property, confirm how your assets are titled.

The step-up in basis: your most powerful embedded tax benefit

Under IRC § 1014, assets held until death receive a stepped-up cost basis to fair market value at the date of death — effectively erasing embedded capital gains accumulated over a lifetime.

Example: You hold $4M of appreciated tech stock with a $300K original cost. Selling triggers gains tax on $3.7M — roughly $900K+ in federal and state capital gains tax. Holding until death steps the basis up to $4M. Heirs can sell immediately at zero gain. That $900K+ in tax disappears permanently.

Implications for planning:

• Highly appreciated positions you don't need to spend are often better held for the step-up than diversified — unless other planning tools (CRUT, exchange fund) offer a better outcome.
• Assets inside IRAs and 401(k)s do not receive a step-up. They distribute as ordinary income to heirs. This makes Roth conversions attractive for accounts you don't plan to fully spend down during your lifetime.
• Direct indexing and TLH are most valuable for positions you expect to sell during life. The step-up makes held positions increasingly hard to sell without a specific reason to do so.

Trust structures that earn their overhead at $5M–$50M

Irrevocable Life Insurance Trust (ILIT)

Life insurance death benefits are included in your taxable estate unless held by an ILIT. If you carry $5M in term life and your combined estate (investable assets + business + real estate) approaches $15M, the insurance could push your estate into federal or state taxable territory.

Structure: the ILIT owns the policy; you make annual gifts to fund the premiums using annual gift exclusion amounts ($19,000/year per beneficiary in 2026, via Crummey notice).⁵ The death benefit passes to the trust — outside your estate — and the trustee distributes per your terms.

With the $15M federal exemption, the ILIT math matters most for: (1) estates in high-exemption-gap states like Oregon and Massachusetts, and (2) high-income earners in their 40s–50s carrying large term life policies while accumulating significant wealth.

Spousal Lifetime Access Trust (SLAT)

A SLAT is an irrevocable trust funded with your assets, with your spouse as a discretionary beneficiary during their lifetime. You use some of your lifetime gift exemption to fund it — removing those assets and all future appreciation from your estate — while your spouse retains indirect access to the trust assets.

With the OBBBA exemption permanent, the urgency to "lock in" a SLAT before a sunset is gone. But SLATs still make sense for: (1) estates in states with low estate tax exemptions, (2) business owners with growing enterprise value that could approach $15M combined with other assets, and (3) asset protection from potential creditors.

Caution: the reciprocal trust doctrine voids dual SLATs (each spouse funding a trust for the other simultaneously). If both spouses want a SLAT, stagger the funding and differentiate the trust terms with help from an experienced estate attorney.

Charitable Remainder Unitrust (CRUT)

The CRUT is a highly effective vehicle for $5M–$50M investors with large concentrated positions. You contribute appreciated stock to the trust, the trust sells the stock without triggering immediate capital gains, reinvests in a diversified portfolio, and pays you an income stream (typically 5–8% of trust assets per year, chosen at funding). The remaining assets pass to charity at the end of the term.

Benefits: immediate diversification without a taxable sale, a partial charitable deduction in the year of contribution, and ongoing income. Tradeoff: irrevocable, and the remainder goes to charity — not your heirs. See our concentrated stock diversification guide for a side-by-side comparison with exchange funds and gradual sell-down.

Donor-Advised Fund (DAF)

For charitable giving, a DAF lets you contribute appreciated assets, claim an immediate charitable deduction (up to 30% of AGI for appreciated property, with a 5-year carryforward), and recommend grants over time. No capital gains tax on appreciated securities contributed. DAFs offer far lower setup cost and administrative burden than private foundations, making them the default for $250K–$5M of annual charitable giving at this wealth level.

529 Superfunding

You can contribute five years of annual gift exclusions at once to a 529 plan — $95,000 per beneficiary per donor ($190,000 for married couples) in 2026, with no gift tax and immediate estate removal. Under SECURE 2.0 § 126, unused 529 funds can roll to the beneficiary's Roth IRA (up to $35,000 lifetime, subject to 15-year account age requirement).⁶

What's no longer worth doing for most of this bracket

• Aggressive FLP/LLC discount structures: Family limited partnerships were used to apply minority-interest and illiquidity discounts to reduce estate valuation. With a $15M exemption, the audit risk and ongoing administrative cost rarely justify the tax savings for estates under $25M.
• GRAT stacking purely for estate-tax avoidance: GRATs transfer appreciation above the IRS §7520 hurdle rate to heirs tax-free. They're useful for specific high-growth assets but are less central when the lifetime exemption eliminates most federal estate tax exposure in this bracket.
• Dynasty trust structures for GST avoidance: GST exemption is also $15M per person. For estates below $30M combined, dynasty trust complexity rarely pays for itself.

The coordinator role of your fee-only advisor

Estate planning at $5M–$50M requires three professionals: an estate attorney (drafts documents and structures trusts), a CPA (tax implications and annual reporting), and a wealth advisor (investment integration and coordination). The failure mode at this wealth level isn't that any individual professional is bad — it's that no one owns the integration across all three.

Your attorney drafts a SLAT without knowing the cost basis on the assets you're thinking of funding it with. Your CPA sees the tax return but hasn't read the new trust. Your advisor manages the portfolio but didn't know the estate plan changed after your child was born. These coordination failures are common and expensive.

A fee-only wealth advisor in this bracket typically serves as the quarterback: making sure investment strategy, estate plan, and tax picture stay internally consistent as each evolves. That coordination role — not investment alpha alone — is where the compounding value lives at $5M–$50M.

Estate planning checklist for $5M–$50M

1. Do you know your state's estate tax exemption, and does your estate approach or exceed it?
2. Does every retirement account and life insurance policy have current primary and contingent beneficiaries — reviewed in the last 3 years?
3. Do you have a current will, durable POA, healthcare proxy, and advance directive?
4. If you carry large life insurance and your estate exceeds your state's exemption: is the insurance in an ILIT?
5. For concentrated stock positions: have you evaluated CRUT, exchange fund, and step-up scenarios against a taxable sale?
6. Have your advisor, CPA, and estate attorney met together — or at least exchanged notes — in the last 18 months?

1. IRS — 2026 Tax Inflation Adjustments including OBBBA amendments. Confirms $15M estate/gift/GST exemption permanent under OBBBA; $19,000 annual gift exclusion for 2026.
2. Tax Foundation — Estate and Inheritance Taxes by State. State-by-state estate and inheritance tax rates, exemptions, and recent changes.
3. New York State Department of Taxation — Estate Tax. New York cliff provision: estate exceeding 105% of exemption loses the full basic exclusion amount.
4. IRS T.D. 10001 (July 2024). Finalized inherited-IRA annual RMD rules for non-spouse beneficiaries when decedent was past the required beginning date.
5. IRC § 2503 — Taxable Gifts (Cornell LII). Annual gift exclusion and present-interest requirement; basis for Crummey power structure in ILITs.
6. IRS — SECURE 2.0 Changes: RMD and 529 Rules. § 126 — 529-to-Roth IRA rollovers, $35K lifetime cap, 15-year account age requirement.

Estate and gift tax values reflect 2026 rules including OBBBA (signed July 2025). State estate tax figures sourced from Tax Foundation and respective state taxing authorities as of early 2026. Consult a licensed estate attorney for advice specific to your state and circumstances.