Matching Structures to Net Worth
Estate planning scales with the balance sheet. Layering on irrevocable trusts before you need them burns money and flexibility; ignoring them once you are over the exemption hands 40% to the IRS. Use net worth as the trigger.
| Net worth / situation | Priorities and structures |
|---|---|
| Any adult | Will, durable financial power of attorney, advance healthcare directive with HIPAA authorization, current beneficiary designations. Minor children: guardian nominations and term life sized to raise them. |
| Under ~$1M, owns a home or has minor children | Add a funded revocable living trust (probate avoidance plus a successor trustee for incapacity), a pour-over will, TOD/POD coordination, and a personal umbrella liability policy. |
| ~$1M–$15M (under the federal exemption) | Add entity segregation—an LLC per rental or operating business; an ILIT if heirs will need liquidity; watch for state estate tax (often $1M–$7M thresholds) and use a bypass trust to capture both spouses’ state exemptions; consider a DAPT for liquid wealth. |
| Over $15M, or trending there | Begin active estate-tax reduction now, while the asset is small: annual and lifetime gifting, SLATs, GRATs, sales to an IDGT, a QPRT for the residence, and a dynasty trust funded with allocated GST exemption. Decide deliberately between portability and a bypass trust. Use PPLI for tax-efficient insurance. |
| $50M+ / multi-generational | Add a family office, directed and situs trusts (South Dakota, Nevada, Delaware), possibly a private trust company, perpetual dynasty planning, and a structured philanthropy program (donor-advised fund, CRT, or private foundation). |
The tiers are cumulative: each level keeps everything below it. And the single highest-leverage move is timing—a $3 million company gifted into a dynasty trust today, before it becomes a $30 million company, transfers the entire $27 million of growth out of your estate for the cost of $3 million of exemption.