High Net Worth Estate Planning Strategies: Gifting, Trusts, and Estate Liquidity

High net worth estate planning strategies spent most of 2024 and 2025 organized around a single date. The federal estate tax exemption was scheduled to fall by roughly half at the end of 2025, and families with estates above the lower figure were told to act before the window closed.

Then the deadline moved. The One Big Beautiful Bill Act (OBBBA), signed in July 2025, removed the scheduled sunset and set the exemption at $15 million per individual for 2026, indexed for inflation after that. Many families relaxed. Some of them should not have.

The exemption changed, but the estate tax problem for a family whose wealth sits in a business or real estate did not: a 40% bill on everything above the exemption, due in cash, generally within nine months of death. A higher exemption shrinks the number of families who owe it. It does nothing for the family that still does, and it does nothing about the fact that a future Congress can change the figure again.

At BetterWealth, we have structured more than 2,000 whole life policies across all 50 states, and estate liquidity is one of the few places where life insurance does a job almost nothing else can. This guide covers what changed, the core strategies wealthy families use to move growth out of a taxable estate, where a policy belongs and where it does not, and how The And Asset treats a policy used during life differently from one built to settle a tax bill at death.

01 / The ProblemWhy Does Estate Planning Still Matter After the 2025 Law Change?

Estate planning still matters because the exemption only decides who owes the tax, not how painful it is to pay. For a family whose estate sits above the exemption, the rate is still 40% on the excess, and the bill is due in cash on a federal deadline.

The families we work with rarely hold their wealth in cash. It sits in an operating business, a portfolio of rental properties, or a stake in a partnership. Those assets do not sell cleanly in nine months. An estate that has to raise several million dollars on a deadline sells what it can, at the price a buyer knows it has to accept.

The second reason is political. "Permanent" in tax law means the provision has no built-in expiration date. It does not mean the next Congress cannot rewrite it. Estate tax policy has moved with elections for decades, and a plan built on one year's exemption is a plan built on a variable.

Illiquid wealth plus a cash deadline is the real problem.

02 / The StrategiesWhat Estate Planning Strategies Do High Net Worth Families Use?

High net worth families use three core moves: they give assets away while the exemption is high, they hold assets in trusts that sit outside the taxable estate, and they plan for liquidity so the tax that remains does not force a sale. Every specific technique an estate attorney drafts is a variation on one of those.

Lifetime Gifting While the Exemption Is High

Lifetime gifting uses the exemption now instead of at death. The appeal is simple: once an asset is gifted, its future growth happens outside your estate. A business interest worth $4 million today that grows to $11 million by the time you die has moved $7 million of growth out of the taxable estate on top of the $4 million you gifted.

One rule makes this safe. The IRS has issued regulations providing that gifts sheltered by the exemption in effect when they were made will not be clawed back if the exemption later drops. Use it while it is high, and the gift stays sheltered.

Gifting has a cost that often goes unmentioned. Gifted assets generally keep your original tax basis, while assets that pass at death usually receive a step-up in basis. A low-basis asset gifted during life can hand your heirs a capital gains bill that would not have existed if it had passed through the estate. This is a trade your CPA should price before you sign.

Every gift trades estate tax for basis.

Trusts That Sit Outside the Estate

Irrevocable trusts are the containers most advanced gifting strategies use. Your estate attorney may propose spousal lifetime access trusts, grantor retained annuity trusts, or dynasty trusts, each with its own rules on control, access, and income tax. We do not draft these, and this article is not legal advice. The principle they share is that assets you no longer own, and no longer control, are not taxed in your estate.

Portability Between Spouses

Portability lets a surviving spouse use whatever federal exemption the first spouse to die did not use. It is not automatic. It has to be elected on a timely filed federal estate tax return, Form 706, even if no tax is owed. Families skip that filing because nothing is due, and forfeit millions of exemption the survivor could have used.

03 / LiquidityWhere Does Life Insurance Fit in a High Net Worth Estate Plan?

Life insurance fits in an estate plan as the source of cash that arrives exactly when the tax comes due. A death benefit pays at the moment the estate tax clock starts, and it is generally received free of federal income tax under IRC Section 101. No other asset is built to deliver a known sum of cash at that moment.

Ownership is where most people get it wrong. If you own a policy on your own life, or hold any incidents of ownership at death, the death benefit is included in your taxable estate under IRC Section 2042. A $3 million policy owned by the insured on an estate already above the exemption can lose 40% of its value to the tax it was bought to pay.

The Irrevocable Life Insurance Trust

An irrevocable life insurance trust, or ILIT, solves the ownership problem. The trust applies for and owns the policy from the start, you gift the premium to the trust each year, and the trustee pays the carrier. When you die, the death benefit lands in the trust, outside your estate. The trustee can then buy assets from the estate or lend to it, giving the estate the cash to pay the tax while the family keeps the business.

Moving a policy you already own into a trust works, with a catch. Under IRC Section 2035, if you transfer an existing policy and die within three years, the death benefit is pulled back into your estate. New policies applied for by the trust avoid that lookback.

Many estate plans for married couples use a survivorship policy, which insures both spouses and pays at the second death. That is usually when the estate tax falls due, because assets passing to a surviving spouse generally qualify for the unlimited marital deduction.

Buy the policy inside the trust, not before it.

04 / The FrameworkHow Does The And Asset Differ From Infinite Banking in an Estate Plan?

The And Asset differs from infinite banking by treating a policy as a capital base with one hard rule attached, and in an estate plan that rule forces you to decide what each policy is for. Nelson Nash pioneered the idea of using whole life insurance as a personal banking system in Becoming Your Own Banker. His insight about the cost of paying interest to outside lenders, and the opportunity cost of idle capital, is the foundation we build on. The And Asset shares roots with IBC but operates on different principles.

IBC says you can use a whole life policy as a personal bank for any purchase. The And Asset says you only deploy capital from the policy when the borrowed dollars will out-earn the carrier's loan cost, because anything less is an expensive way to spend money. IBC content also tends to frame whole life as the destination. The And Asset frames the policy as the capital base; the value is created in what you deploy that capital into.

That distinction matters for estate planning in a specific way. A policy you borrow against during life has to be owned by you, which means its death benefit sits in your taxable estate. A policy built to pay estate tax belongs in a trust, which means you cannot borrow against it. Some marketers pitch one policy as doing both jobs for a family above the exemption. For that family, it usually cannot.

Many IBC marketers also say you are paying yourself interest when you borrow against a policy. You are not. The interest goes to the carrier. Your return is what the deployed capital earns elsewhere while the policy keeps compounding, net of mortality and expense charges.

05 / How It WorksHow to Review Your Estate Plan and Its Liquidity

A useful estate plan review runs in six steps, and the order matters because each step sizes the next. This is the sequence we walk through with families before any policy is discussed.

1. Measure the taxable estate. Add up business interests, real estate, brokerage accounts, retirement accounts, and any life insurance you own, then compare the total to the current federal exemption and any state estate tax threshold.
2. Estimate the tax and the deadline. Apply the 40% top federal rate to the amount above the exemption, and note that the federal return and payment are generally due nine months after death.
3. Decide what to move out of the estate. With your estate attorney, choose lifetime gifts and trusts that shift future growth to heirs, and confirm spouses have planned for portability of unused exemption.
4. Fund the liquidity gap. If the estate is illiquid, consider life insurance owned by an irrevocable trust, sized to the projected tax, so heirs are not forced to sell the business or property.
5. Separate capital from legacy. Keep any policy you plan to borrow against during life owned personally, and hold every deployment decision to The And Asset rule: borrow only when the return beats the loan cost.
6. Review on a schedule. Revisit the plan after any change in law, a liquidity event, a move to a new state, or a change in family, with your attorney and CPA.

Step five is where our work differs from a typical estate insurance sale. The trust-owned policy is sized to a tax number. The personally owned policy is designed for early cash value, with a small base premium and a heavy paid-up additions rider, and it is judged by what the capital does while you are alive.

06 / The MathDoes Borrowing Against a Personally Owned Policy Still Make Sense?

Borrowing against a personally owned policy makes sense only when the deployed capital earns more than the carrier's loan cost. That test does not change because you are wealthy or because the policy also carries a death benefit.

Policy loan rates vary by carrier and rate environment. At the time of writing, many carriers fall in the 5 to 6% range, but treat the number as a variable to verify, not a constant. Your policy keeps compounding on its full cash value while the loan is outstanding, subject to how the carrier treats borrowed funds. Your deployed capital earns its own return. If that return clears the loan cost, one dollar has done two jobs.

If it does not clear the loan cost, the math runs backward. You are paying the carrier to finance an activity that earns less than the financing, and the unpaid loan will reduce the death benefit your heirs receive. For a family planning around estate tax, that is a double cost.

If the deal does not clear the loan rate, do not borrow.

07 / The MistakesWhere Do Families Get Estate Planning Wrong?

Families get estate planning wrong in four predictable places, and each one is fixable if it is caught while the insured is alive.

First, they own the policy themselves. A policy bought to pay estate tax, owned by the insured, adds to the tax it was meant to cover. Second, they transfer an existing policy to a trust late in life and die inside the three-year window, which pulls the death benefit back in. Third, they skip the Form 706 filing at the first death because nothing is owed, and lose portability. Fourth, they let a plan drafted around the old 2025 sunset sit untouched, with gifts, trust terms, or formula clauses written for a number that no longer applies.

The fifth mistake comes from our own industry. Agents sell a single policy as the estate plan, the retirement plan, and a personal bank at once, without asking who should own it. The ownership question decides whether the death benefit is taxed, so it has to be answered before the application, not after.

08 / The TradeoffsBenefits and the Real Tradeoffs

Trust-owned life insurance gives an estate cash at the exact moment it needs it, generally free of income tax and outside the taxable estate. It lets heirs keep a business or a property portfolio instead of selling it on a deadline. For families whose wealth is illiquid, few tools solve the same problem as cleanly.

The costs are real. An ILIT is irrevocable: you give up control of the policy and the cash value. It needs a trustee, annual gifting, and, in many plans, notices to beneficiaries so the gifts qualify for the annual exclusion. Premiums on a large death benefit are a multi-decade commitment, and a policy that lapses because the gifts stopped provides nothing. A personally owned policy keeps your access to cash value but adds its death benefit to the estate. You cannot have both from one policy.

Lifetime gifting has its own price: loss of control and, often, loss of the step-up in basis. None of these strategies are free. Each one trades something for the estate tax it saves.

09 / Head to HeadFour Ways to Pay the Estate Tax, Compared

Compared with the alternatives a family actually has, a trust-owned policy trades control for a tax-efficient source of cash. The table uses the illustrative family from the case study below, whose estate faces roughly $3,456,000 of federal tax at the second death.

The Personally Owned Policy column is the same survivorship policy, owned by the couple instead of the trust. It is not the capital policy in the case study.

One alternative is not in the table. For an estate made up mostly of a closely held business, IRC Section 6166 can let the estate pay the tax on that business in installments over up to 14 years, with interest. It spreads the bill out but does not shrink it, and the estate has to qualify.

10 / The FitHow Estate Planning Fits Into a Broader Capital Strategy

Estate planning fits into a capital strategy as the final allocation decision: which assets you use, which you give away, and which you hold for the family. High net worth estate planning strategies work best when those three decisions are made together instead of by three advisors who never talk.

The capital you deploy during life, including anything you borrow against a personally owned policy, should be held to the same test as any other investment: does it beat its cost of capital? The assets you intend to pass on should be structured so the tax on them can be paid without selling them. Life insurance can serve both roles, but through separate policies, with separate owners, designed for separate jobs.

Review the plan with your estate attorney and CPA whenever the law changes. It changed in 2025. It can change again.

FAQHigh Net Worth Estate Planning Questions