Estate‑Tax Planning: How to Protect Multi‑Million Dollar Legacies

Good estate-tax planning is essential for high-net-worth families who want to protect what they’ve built and pass it on to the next generation. Without a solid plan, large estates can lose millions to taxes. Ron McCoy recommends taking early, thoughtful steps so your wealth goes to your loved ones, not the IRS.

Understanding the Impact of Estate Taxes

Estate taxes are charged on the transfer of assets after someone passes away, but only if the estate is above a certain size. In 2024, the federal estate tax exemption is $12.92 million per person (or $25.84 million per couple). Anything above these amounts can be taxed up to 40%, which puts significant estates at risk of losing a large portion to taxes.

Real-World Example: Estate-Tax Consequences

Here’s a simple example with a $30 million estate:

• Estate Value: $30,000,000
• Federal Exemption (Couple): $25,840,000
• Taxable Estate: $4,160,000
• Estate Tax Due (at 40%): $1,664,000

This shows how much heirs could lose to taxes if no plan is in place.

Source: IRS Estate Tax Guidelines 2024

Key Strategies for Minimizing Estate Taxes

Ron suggests several proven ways to help keep estate taxes in check and protect family wealth:

1. Gifting Assets Strategically

You can give up to $17,000 per recipient in 2024 without any tax consequences. Married couples can gift up to $34,000 to each person every year, slowly reducing the size of their estate over time without tapping into their lifetime exemption.

2. Establishing Trusts

Irrevocable trusts remove assets from your taxable estate, helping reduce estate taxes. Two common choices are:

• Grantor Retained Annuity Trust (GRAT): Passes asset growth to heirs tax-free.
• Intentionally Defective Grantor Trust (IDGT): Moves assets out of your estate, while you cover the taxes, which further reduces your taxable estate.

3. Utilizing Life Insurance Trusts

Setting up an Irrevocable Life Insurance Trust (ILIT) can provide cash to pay estate taxes, without increasing the taxable estate. Life insurance in an ILIT stays outside your estate and can go straight to heirs, tax-free.

4. Charitable Giving

Donating assets to charity, through options like charitable remainder trusts or donor-advised funds, can lower your taxable estate, give you a current tax deduction, and let you leave a legacy for causes you care about.

Actionable Tips for Effective Estate Planning

Ron recommends these practical steps:

• Conduct Annual Reviews: Check your estate plan every year to keep up with law changes and life changes.
• Coordinate with Professionals: Work with a financial advisor, estate attorney, and tax pro for the best results.
• Communication with Heirs: Talk openly with your beneficiaries so everyone is on the same page and there are no surprises.

Ron McCoy’s Approach

Ron takes a careful, forward-thinking approach to estate-tax planning. With nearly 40 years in the financial industry, his strategies focus on smart tax planning, the right trust setups, and hands-on management—all with the goal of helping clients keep more of what they’ve earned and pass it on to the next generation.