Estate Planning for High Net Worth Individuals

It depends on the size of your estate. New York taxes estates above $7,350,000 for deaths in 2026, and the federal government taxes estates above $15,000,000 for deaths in 2026. nyirs

The two taxes are separate, and an estate can owe New York tax and no federal tax. The federal exclusion is set to rise with inflation for deaths after 2026. New York’s exclusion also adjusts each year, but it is much lower. That gap is why many New York families who will never owe federal estate tax still need New York planning. Taxable gifts count too. New York adds back taxable gifts made in the three years before death, for people who die before January 1, 2032. customsmobilenysenate

Illustration: A Manhattan widow dies in 2026 with a $12,000,000 estate. She owes no federal estate tax, because she is under $15,000,000. Because she is far above New York’s limit, her estate owes New York tax on the full amount.

Knowing which tax applies to you is the first step to reducing it.

The cliff is a New York rule that removes the exclusion completely once an estate is slightly too large. In 2026, an estate above $7,717,500 is taxed on every dollar, not only the excess.

Under New York law, no exclusion credit is allowed when the New York taxable estate is more than 105 percent of the basic exclusion amount. Between $7,350,000 and $7,717,500, the credit shrinks quickly, and above that point it is gone. Estates near the line can lower their taxable value through lifetime gifts, charitable gifts at death, and trusts that shift growth to the next generation. Lifetime gifts help only if you survive three years after making them, because of New York’s add-back rule. New York does not have a separate gift tax; it was repealed for gifts made on or after January 1, 2000. nysenateny

Illustration: A Westchester widower dies in 2026 with a $7,800,000 taxable estate. Because that is over $7,717,500, New York taxes the entire $7,800,000. A plan that left $100,000 to charity would have brought him below the cliff.

Small adjustments made early can prevent a large and avoidable tax.

New York does not allow portability. Each spouse’s New York exclusion must be used at that spouse’s death, or it is lost.

Federal law is different. A surviving spouse can use the deceased spouse’s unused federal exclusion if the executor files a complete federal estate tax return to elect it. New York has no such rule. If one spouse leaves everything outright to the other, the first spouse’s New York exclusion is wasted, and the survivor’s estate may be pushed over the cliff. The common solution is a credit shelter trust, also called a bypass trust. At the first death, an amount up to the New York exclusion goes into a trust for the surviving spouse instead of passing outright. That amount is not taxed at either death. taxnotes

Illustration: A Long Island couple owns $15,000,000. If the husband leaves everything outright to his wife in 2026, his New York exclusion goes unused. A credit shelter trust holding $7,350,000 could keep that amount out of her New York taxable estate.

Planning between spouses is often the single largest New York tax saving available.

Assets left at death generally receive a new tax basis equal to their value at death. Assets given during life keep the giver’s original basis, which can mean a large income tax bill for your children if they later sell.

Under federal law, inherited property takes a basis equal to its fair market value at the date of death. By contrast, a gift recipient generally takes the donor’s basis. The IRS has also ruled that assets in certain irrevocable trusts left out of the grantor’s estate do not receive a new basis at death; that ruling addresses assets held in a grantor trust that are outside the gross estate. The right choice weighs estate tax savings against future income tax for your heirs. Assets expected to grow quickly are often good gifts, while assets with very low basis are often better held until death. Quick search by citation: +2

Illustration: A Brooklyn couple bought a building for $500,000 that is now worth $6,000,000. If they give it to their son, his basis is about $500,000. If he inherits it, his basis is about $6,000,000.

The best plan looks at estate tax and income tax together, not one at a time.

In 2026, you can give up to $19,000 per person without filing a gift tax return. Beyond that, gifts use your lifetime exemption of $15,000,000, which is shared with your estate tax exemption.

The IRS requires a gift tax return when present-interest gifts to anyone other than your spouse exceed $19,000 in 2026. Annual gifts to children, grandchildren, and trusts for them can move significant wealth over time at no tax cost. Larger gifts reduce the lifetime exemption available at death, but they remove all future growth from your estate. New York has no gift tax. However, taxable gifts made within three years of death are added back for New York estate tax, for deaths before 2032. irs

Illustration: A Scarsdale couple with three children and six grandchildren gives each of the nine the 2026 annual amount from each spouse. That moves $342,000 out of their estate this year without using any lifetime exemption.

A steady gifting program is one of the simplest and most effective tools available.

A grantor retained annuity trust (GRAT) lets you pass future growth on an asset to your family while using little or none of your gift exemption. It works best for assets expected to rise quickly in value.

You place an asset in the trust and receive fixed annual payments for a set number of years. Whatever growth remains at the end passes to your beneficiaries. Under federal rules, a qualified annuity interest you keep is valued using IRS interest rates, while an interest that does not qualify is valued at zero. That lets the gift be structured to be very small. The main risk is timing. If you die during the trust term, the property can be pulled back into your estate. For that reason, GRAT terms are often kept short, sometimes two years, and repeated. irsapache

Illustration: A Manhattan founder puts $5,000,000 of company stock into a two-year GRAT. If the stock grows to $8,000,000 by the end of the term, most of that growth can pass to his children free of gift tax.

A GRAT offers upside with limited cost if the asset does not perform.

A SLAT is an irrevocable trust one spouse creates for the other. It moves assets and their growth out of both estates while your spouse can still receive distributions. Its main risks are divorce and the early death of the beneficiary spouse.

Because your spouse is a beneficiary, the family keeps indirect access to the funds, which makes a large gift easier to accept. But the trust is irrevocable. New York’s automatic revocation rule on divorce applies to revocable dispositions to a former spouse, so a SLAT’s own terms must address what happens if you divorce. If your spouse dies first, your indirect access ends. When both spouses create SLATs for each other, the two trusts must be meaningfully different, or the IRS can treat each spouse as having created a trust for themselves. nysenate

Illustration: A couple splits time between Greenwich and Manhattan. The wife funds a $10,000,000 SLAT for her husband. The trust says that if they divorce, he stops being a beneficiary and the trust continues for their children.

A SLAT works well when both spouses understand and accept its tradeoffs.

Yes. A dynasty trust can hold wealth for several generations without a new estate tax at each death. How long it can last depends on the state law that governs it.

Gifts that skip a generation are subject to the generation-skipping transfer (GST) tax. The GST exemption is equal to the basic exclusion amount for that year, so it is $15,000,000 in 2026. A trust that uses this exemption can grow outside the estate tax system for generations. In New York, the rule against perpetuities limits how long a trust can last: an interest must vest within 21 years after the death of people alive when the trust is created. Some states have removed that limit. South Dakota law, for example, provides that the rule against perpetuities is not in force there. New York residents can create trusts governed by another state’s law, with a trustee located there. 

Illustration: A Bronxville couple funds a $15,000,000 dynasty trust in South Dakota. Their children, grandchildren, and great-grandchildren can benefit from it without a new estate tax at each generation’s death.

A dynasty trust turns one generation’s success into lasting security for many.

Common approaches include gifting or selling non-controlling interests over time, often through a family partnership or LLC, and using trusts that freeze value at today’s level. Each requires careful setup and an independent appraisal.

A non-controlling interest in a private business or real estate entity is often worth less than its share of the underlying assets, because a buyer cannot control it or easily sell it. Appraisers may apply valuation discounts for this, and those discounts are closely examined. Under federal law, property transferred to a family limited partnership is pulled back into the estate if the owner kept the possession, enjoyment, or income of the property. The entity must have a real purpose and be run as a real business, not as a personal account. Selling interests to a grantor trust in exchange for a note is another way to freeze value. justice

Illustration: A Queens family owns $20,000,000 of apartment buildings. The parents put them into an LLC and give their children non-voting interests over several years, each supported by a qualified appraisal.

The best results come from planning years ahead, not in the months before a sale or a death.

Often, yes. If you own a policy on your own life, the death benefit is generally counted in your taxable estate. An irrevocable life insurance trust (ILIT) can keep it out.

Federal law includes in your estate life insurance proceeds on your life payable to other beneficiaries when you held incidents of ownership in the policy. Ownership rights include the right to change beneficiaries or borrow against the policy. When an ILIT buys a new policy from the start, the proceeds are generally outside your estate. Transferring an existing policy is different: property transferred within three years of death that would otherwise have been in the estate is pulled back in. Insurance held this way can give your family cash to pay estate tax without selling a business or real estate. irscornell

Illustration: A Staten Island business owner’s $7,000,000 estate includes a $3,000,000 policy he owns. Counting the policy, he is far over the New York cliff. If an ILIT had bought a new policy instead, it would have stayed outside his estate.

Who owns your policy matters as much as how much coverage you have.

Charitable gifts at death are deductible for estate tax purposes. Charitable trusts let you combine giving with an income stream for you or your family.

The federal estate tax allows a deduction for charitable gifts, and the present value of a qualifying charitable remainder interest can be deducted. A charitable remainder trust pays you or your family an income for life or a term of years, with the rest going to charity. A charitable lead trust works in reverse: charity receives payments first, and your family receives what remains. Donor-advised funds and private foundations let you give over time and involve your children in the family’s philanthropy. Each tool has different tax and control features. irs

Illustration: A Tribeca couple places $4,000,000 of highly appreciated stock in a charitable remainder trust. They receive annual payments for life, and the remainder later goes to their alma mater.

Thoughtful giving can lower taxes, support causes you care about, and teach family values at the same time.

Assets left to a non-citizen spouse do not qualify for the usual unlimited marital deduction unless they pass through a special trust called a qualified domestic trust (QDOT).

Normally, spouses can leave unlimited assets to each other free of federal estate tax. When the surviving spouse is not a U.S. citizen, no marital deduction is allowed, except for property passing in a QDOT. A QDOT defers the tax rather than eliminating it. Estate tax applies to principal paid out during the spouse’s life and to what remains at the spouse’s death. A QDOT generally needs at least one trustee who is a U.S. citizen. If the surviving spouse later becomes a citizen, the trust can stop being subject to the special QDOT tax once certain requirements are met. 

Illustration: A U.S. citizen in Manhattan with a $20,000,000 estate is married to a French citizen with a green card. His plan leaves the marital share to a QDOT so his estate can defer tax at his death.

Mixed-citizenship families need a plan designed for their situation, not a standard template.

Not without limits. In 2026, the special annual amount for gifts to a non-citizen spouse is $194,000. Larger gifts require a gift tax return and use your lifetime exemption.

Gifts between U.S. citizen spouses are generally unlimited. For a non-citizen spouse, the IRS requires a return when outright gifts to a spouse who is not a U.S. citizen exceed $194,000 in 2026. Gifts over that amount reduce your $15,000,000 lifetime exemption. Retitling a home into joint names or adding a spouse to a large account can count as a gift. Spreading gifts across several years can help balance assets between spouses over time. irs

Illustration: A Brooklyn executive wants to move $600,000 into his Canadian wife’s name. Spreading the transfers across 2026, 2027, and 2028 keeps each year closer to the annual limit.

Balancing assets between spouses works best as a steady plan, not one large transfer.

Possibly, and the remedy is straightforward. Real estate is generally governed by the law of the place where it sits, so your family may face a separate court case there, and that place may have its own tax. We recommend holding out-of-state real estate in a funded revocable trust to avoid a second probate.

On the New York side, a resident’s New York gross estate is reduced by the value of real or tangible personal property located outside New York. The other state, however, may impose its own estate or inheritance tax, and its courts may require a separate case, called ancillary probate. When the property is titled in your revocable trust, your successor trustee can manage and transfer it without opening a court case there. The trust must actually hold the deed; signing a trust alone is not enough. Property abroad raises further questions under that country’s law, which should be reviewed with local counsel. nysenate

Illustration: A Westchester couple owns a vacation home in Vermont and an apartment in Florida. By deeding both into their revocable trust, they spare their children from court cases in two additional states.

Mapping where your property sits, and titling it correctly, is an essential part of a high net worth plan.

You can reduce or eliminate New York estate tax by truly changing your domicile, but only if the move is real and well documented. Any real estate you keep in New York can still be subject to New York estate tax.

Florida has no estate tax; no Florida estate tax is due for people who died on or after January 1, 2005. Your domicile is your true permanent home, and New York closely reviews claimed moves. Separately, for income tax, a non-domiciliary who keeps a permanent home in New York for substantially all of the year and spends more than 183 days here is taxed as a resident. If you keep a New York home, a nonresident’s estate must file a New York return if it includes New York real or tangible property and exceeds the exclusion threshold. Florida Estate Tax +2

Illustration: A couple moves from Manhattan to Palm Beach in 2026. They keep their Hamptons house and spend summers there. Placing that house in an entity, tracking their days carefully, and moving their doctors, clubs, and important belongings to Florida all help support the change.

A successful move takes planning, records, and consistency over many years.

It can. New York taxes nonresidents on New York real estate and tangible property when their estate is large enough.

New York requires a return from a nonresident’s estate that includes real or tangible property located in New York, when the federal gross estate plus includible gifts is more than the basic exclusion amount. The cliff can apply as well. Your family may also need a New York court proceeding to transfer the property, unless it is held in a funded trust. How the property is owned can affect both issues. Nonresidents who are not U.S. citizens face additional federal rules that should be reviewed separately. ny

Illustration: A Florida resident with a $12,000,000 estate owns a $3,000,000 Manhattan apartment. Her estate may owe New York estate tax on the apartment and need a New York court proceeding to transfer it.

Owning New York property from out of state calls for its own plan.

Partly. New York does not protect trusts you create for yourself from your creditors, but other tools can help. These include trusts for your heirs, proper business structures, insurance, and in some cases trusts formed under other states’ laws.

Under New York law, a trust created for the creator’s own use is void against the creator’s current or future creditors. Some states allow these self-funded trusts. Delaware enacted a Qualified Dispositions in Trust Act, applicable to transfers made on or after July 1, 1997, and South Dakota passed a law authorizing qualified dispositions in trust. A New York resident using one should understand it may be tested in New York courts. Planning must happen before any claim exists, because transfers made to avoid known creditors can be undone. Illustration: A Manhattan surgeon with $15,000,000 in assets places part of her savings in a Delaware trust years before any claim. She also carries umbrella insurance and holds her real estate in separate LLCs.

Asset protection works best when it is quiet, early, and layered.

Start talking with them early, involve them gradually, and build structures that match their maturity. Legal documents alone cannot prepare an heir.

Families that keep wealth across generations usually combine good structure with open communication. Common practices include regular family meetings, explaining the plan and the values behind it, and letting adult children serve on a family foundation or watch how investments are managed. Trusts can release money in stages and include an independent trustee who can guide younger beneficiaries. Prenuptial agreements for heirs and clear rules for family businesses can prevent painful disputes later. These conversations matter as much as the tax plan, because a plan that preserves money but divides the family has failed.

Illustration: A Riverdale family holds an annual meeting with their three adult children and their advisors. Each child joins the family foundation board at 25 and learns how the trust works before receiving anything.

Preparing heirs is the part of the plan that protects everything else.

At least once a year, and right away after major life, business, or law changes. At this level, small changes can have large effects.

Estate tax figures change every year. The New York exclusion has risen each year, and the federal exclusion is indexed for inflation for deaths after 2026. Gift add-back rules, trust terms, and business values all shift over time. An annual review should check asset titles, trust funding, beneficiary designations, insurance ownership, and whether gifts and trusts are working as intended. Births, deaths, marriages, divorces, a business sale, or a move to another state all call for an immediate update.

Illustration: A family’s company doubles in value after a new contract. At their annual review, they decide to start a GRAT before the next growth phase instead of waiting.

Regular reviews keep a plan current with your life, not with the year it was signed.