SALT and Strategy—What Wealthy Families Need to Know Now

Certainty and Planning

The permanence of the increased estate, gift and generation-skipping transfer (GST) exemptions has provided families with more predictability in their planning. Previously, the looming “use it or lose it” mentality under the 2017 Tax Cuts and Jobs Act (TCJA) created a rush to transfer wealth before the exemption was cut in half. Now, with the exemption set at $15 million per person ($30 million per married couple) starting in 2026, families can approach wealth transfer with more deliberate strategies instead of acting under artificial deadlines. However, death taxes may still be an issue for those residing in states with estate taxes, especially if the state exemption is lower than the federal exemption.

Who Needs to Plan? Estate Tax Exposure by Tier

Impact on Different Wealth Segments

• Over $30 million
  Families in this range must continue using sophisticated estate planning tools, such as GRATs, sales to grantor trusts, dynasty trusts and irrevocable life insurance trusts, to mitigate future estate tax burdens.


• $15 million - $30 million
  Married couples generally remain shielded from estate taxes but may still pursue opportunistic transfers, especially since over time their assets may exceed the available estate, gift and generation skipping tax exemption.


• Under $15 million (single) / $30 million (married)
  No estate tax exposure. Gifting is primarily about supporting lifestyle or philanthropy.

Shifts in Strategy

One of the most significant changes is the reduced reliance on valuation discounts, such as those used in family limited partnerships or qualified personal residence trusts. For families below the exemption, discounts may now backfire by lowering cost basis and inadvertently increasing capital gains tax exposure at death. For those above the threshold, discounting and other advanced structures remain critical.

Risks and Oversight

Even with higher exemptions, risks remain. The IRS can challenge valuations, potentially increasing tax liabilities. Defined value clauses have become common drafting tools to mitigate this uncertainty. In addition, new rulings, such as Connelly v. the United States (2023) on life insurance in entity buy-sell agreements, underscore the importance of regularly reviewing structures in light of evolving law.

The Role of Liquidity Tools

While the increased exemption makes life insurance less critical as a pure estate tax funding mechanism for many families, it remains valuable for business succession (funding buy-sell agreements) and income replacement. Structuring these arrangements correctly is key to avoiding unintended valuation increases at the corporate level.

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