Estate planning conversations used to revolve around deadlines. Expiring exemptions, shifting laws, and “now or never” decisions created pressure for families and business owners alike.
That tone has changed. Today’s estate tax environment is far more predictable, and that stability allows for smarter, more intentional planning.
Federal estate and gift tax exemptions are now permanently set at historically high levels.
For individuals, the exemption is roughly $12.9 million, adjusted for inflation, and married couples can effectively protect close to $25 million with proper planning. Unlike prior tax provisions, these exemptions do not automatically sunset.
While Congress could always make changes down the road, the current framework provides a level of certainty that estate planners have not had in years.
That does not mean estate planning is no longer necessary. It simply means the focus has shifted.
For high-net-worth families and closely held business owners, the key question is no longer whether estate tax applies, but how to transfer future growth efficiently and flexibly.
Using GRATs to Move Appreciation, Not Control
Grantor Retained Annuity Trusts, commonly called GRATs, remain a valuable strategy in this environment.
A GRAT allows you to place assets into an irrevocable trust while retaining the right to receive fixed annuity payments for a set number of years. Those payments are based on an IRS interest rate known as the 7520 rate.
When assets in the trust fund grow faster than that rate, the excess appreciation is passed down to beneficiaries without using additional gift tax exemption. That makes GRATs especially appealing for assets that have a strong growth potential, like business and real estate interests or investment portfolios.
GRATs do require planning. The grantor needs enough cash flow to receive annuity payments, and certain assets may need formal valuations. They also generally work best as part of a broader strategy, often using multiple or rolling GRATs to spread risk and increase the chance of success over time.
SLATs and Built-In Flexibility
Spousal Limited Access Trusts, or SLATs, are another popular option, particularly for married couples. A SLAT is created by one spouse for the benefit of the other spouse and typically children or future descendants.
While the trust is irrevocable, the beneficiary spouse can still receive distributions, which provides a level of comfort many clients want.
Modern SLATs often include flexibility features, such as trust protectors or special trustees, that allow adjustments if family circumstances or tax laws change. This helps address the common concern of “what if we need those assets later,” while still achieving meaningful estate and gift tax benefits.
SLATs can be especially useful for business owners who want to move assets out of their taxable estate but are not ready to give up access entirely.
Planning Without Pressure
Permanent exemptions have changed estate planning from a race against the clock into a longer-term strategy conversation.
Tools like GRATs and SLATs still play an important role, especially for families who have already used much of their exemption and want to be thoughtful about next steps.
At CPMT, estate planning is about helping families and business owners make confident decisions that align with both financial goals and real-life needs.
If your plan has not been revisited in a while, now is a good time to take another look with clarity instead of urgency. Get in touch with our team today to take the next step.