Estate Planning
Help your clients preserve and transfer wealth more effectively and efficiently thereby creating a lasting legacy.
Structures that survive the next two generations.
Estate planning at the high-net-worth and ultra-high-net-worth tiers is rarely about a single trust document. It is about how a portfolio of trusts, business interests, real estate, and insurance contracts intersect and work together — and what happens when the death of a principal occurs.
TES partners with the client's attorneys and CPAs to stress-test existing structures, identify liabilities, and design alternatives that preserve the original intent while reducing the friction and the liability of transfer.
A 40% tax stands between your clients and their heirs.
Top federal estate-tax rate on every dollar above the exclusion.
Under the 2026 tax code, every dollar above these thresholds is subject to estate tax at rates that rapidly escalate to 40%. For high-net-worth individuals, a $15M exclusion ($30M for married couples) doesn't begin to preserve the substance of what they've worked so hard to accumulate.
Exemption amounts have always moved — and they will again.
Selected milestone years. The federal exclusion has ranged from $675,000 in 2001 to $15M in 2026 — a reminder that today's historically high exemption is a policy choice, not a permanent fixture, and is scheduled to change with future legislation.
It isn't only the IRS. Most states draw the line far lower.
The federal $15M exemption for individuals and $30M for married couples is only half the picture. Seventeen states and the District of Columbia levy their own estate or inheritance tax in 2026 — and several begin taxing at a fraction of the federal threshold. A family that owes nothing federally can be fully exposed in Oregon, Massachusetts, or Rhode Island.
Lowest exemption in the nation.
State limits vs. the federal line
Tax-free exemption per individual · 2026, in millions USD
Figures reflect 2026 law. Several state exemptions are indexed annually for inflation; values shown are rounded.
Every estate-tax state, side by side.
Washington's top rate was reduced from 35% to 20% effective July 1, 2026 under ESB 6347. Estates with deaths prior to July 1, 2026 remain subject to the prior 35% top rate.
Five states tax the inheritance, not the estate.
An inheritance tax is owed by the person who receives assets, with the rate set by their relationship to the deceased — spouses are exempt everywhere, and most states exempt children too. These apply regardless of estate size.
4.5% to children, 12% to siblings, 15% to others. Life insurance to a named beneficiary is exempt.
Repealed its estate tax in 2018 but kept inheritance tax. Children and spouses pay nothing.
Immediate family is fully exempt; rate rises with distance of the relationship.
County-administered. Highest rates fall on non-relatives; close family pays little.
The only state with both taxes — inheritance tax on top of its $5M estate tax. Close family exempt.
Leverage assets into the dollars that pay the tax.
Developing a life insurance strategy today will efficiently transfer guaranteed, tax-free cash to heirs in the future. When a federal or state tax liability occurs, life insurance should be viewed not only as an asset within the overall portfolio, but as an alternative that helps clients stay diversified.
"Life insurance is not an expense. Life insurance is a financial legacy."
Life insurance is the time-tested solution of leveraging assets into the dollars needed to pay future taxes — so your clients can pass on what they've worked so hard to accumulate. When placed inside an ILIT, policies help high-net-worth families hedge against risk, ensuring estate taxes can be paid without forcing a liquidation of business interests, real estate, or other illiquid invested assets at the wrong time or under a potentially stressed environment.
Understanding the Irrevocable Life Insurance Trust, step by step.
The grantor works with an estate planning attorney to draft and sign the irrevocable life insurance trust document. Once signed, the trust is permanent — hence "irrevocable." The grantor chooses a trustee, who is now in control of the trust. The grantor gives up control of the assets placed inside it, which is the trade-off that makes the tax benefits possible. Since the trust sits outside the estate, if designed correctly it is not includable in the gross estate of the grantor.
The grantor makes cash gifts into the trust, usually on a recurring basis (often annually). These gifts are typically structured to fall within the annual gift tax exclusion ($19,000 per grantor per trust beneficiary in 2026) to avoid triggering gift taxes, or up to and including the lifetime exclusion allowance. The trustee then uses those funds to pay the life insurance premiums.
This is the critical part. Because the grantor cannot take the assets back, direct the trust's investments, or change the beneficiaries freely, the IRS does not count the trust's assets as part of the grantor's taxable estate. That's what allows the death benefit to pass to heirs free of estate tax.
- —Name themselves as a beneficiary
- —Reclaim assets placed in the trust
- —Serve as trustee in most cases (doing so can pull assets back into the estate)
The grantor gifts cash into the trust, and the trustee uses those funds to pay premiums directly to the insurance company — keeping the policy active.
When the insured person dies, the insurance company pays the death benefit directly to the trust — not to the grantor's estate. This is the key move that keeps the payout outside the taxable estate.
The insurance company is what converts premium payments into a much larger lump-sum payout.
An estate planning attorney drafts the trust document, naming a trustee (usually a trusted individual or institution — not the grantor) and beneficiaries (typically the heirs). Once signed, it cannot be changed or undone.
The grantor transfers cash into the trust — either annually, structured within gift tax exclusion limits, or the lifetime exclusion allowance can be used. The trustee sends Crummey notices to beneficiaries, giving them a short window to withdraw the gift. Most don't, which allows the gift to qualify for the annual exclusion while the funds stay in the trust.
The trustee uses the gifted cash to pay premiums on a life insurance policy — typically either a permanent single life or second-to-die contract — owned entirely by the trust, not the grantor.
The insurance company pays the death benefit directly to the trust. Because the trust owns the policy, the proceeds are outside the taxable estate entirely. The trustee distributes the proceeds to the beneficiaries according to the trust document — free of estate tax and income tax. The trust asset can be used to pay the state tax liability, leaving all the other assets free and clear for use by the beneficiaries.
An estate planning attorney is essential for setting this up correctly, as small mistakes can unwind the tax benefits entirely.
The death benefit paid into the trust bypasses the grantor's taxable estate entirely. Without an ILIT, a life insurance policy owned personally could push the estate over the federal exemption threshold (~$15M in 2026), triggering a 40% estate tax.
Life insurance death benefits are generally not subject to federal income tax. Heirs receive the full payout without owing income tax on it — unlike inherited IRAs, 401(k)s, or other retirement accounts which are typically taxed as ordinary income when withdrawn.
If structured correctly, an ILIT can also shelter assets passed to grandchildren or later generations from the GST tax — which is also levied at 40% on transfers that skip a generation.
One underappreciated advantage: the trust can use the death benefit proceeds to loan money to the estate or purchase assets from it, giving the estate liquidity to pay taxes or debts — without those funds being pulled back into the taxable estate.
Because the grantor typically funds the trust with modest annual gifts that stay within the gift tax exclusion, heirs can receive a death benefit many multiples larger than what was gifted — all tax-free.
Three situations we see most often.
A four-step engagement, sized to the case.
Often used together.
Have a client who may benefit from advanced planning?
Whether you are working with a business owner, high-net-worth family, estate planning client, or existing policyholder, TES can help determine whether a tax-efficient strategy may add value.
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We focus on outcomes.