Guide
Trust Structures for Estate Planning
Preserving wealth across generations is less a matter of investment return than of structure. The vehicles below are the ones ultra-high-net-worth families use most often to move capital efficiently, reduce transfer tax, and protect assets from creditors and dilution.
Spousal Lifetime Access Trust (SLAT)
A SLAT is an irrevocable trust that one spouse (the grantor) creates for the benefit of the other spouse. Assets contributed to the SLAT are removed from the grantor's taxable estate immediately, using a portion of the lifetime gift and estate tax exemption. Because the beneficiary spouse can receive distributions, the family retains indirect access.
SLATs are frequently used in pairs, before scheduled reductions in the federal exemption, to lock in today's higher exclusion. Careful drafting is essential to avoid the reciprocal trust doctrine.
Grantor Retained Annuity Trust (GRAT)
A GRAT is an irrevocable trust that pays the grantor a fixed annuity for a defined term. At the end of the term, whatever remains — the appreciation above the IRS Section 7520 hurdle rate — passes to beneficiaries free of additional gift tax.
GRATs are particularly effective for concentrated positions expected to appreciate rapidly: pre-IPO equity, closely held business interests, or recovery plays after a market dislocation.
Intentionally Defective Grantor Trust (IDGT)
An IDGT is an irrevocable trust that is treated as owned by the grantor for income tax purposes but not for estate tax purposes. The grantor pays income tax on trust earnings — effectively a tax-free gift to beneficiaries — while the assets themselves grow outside the estate.
Sales of appreciating assets to an IDGT in exchange for a promissory note can transfer significant value with minimal gift tax exposure.
Dynasty Trust
A dynasty trust is designed to hold family wealth across multiple generations — in many jurisdictions, in perpetuity. Properly structured with the generation-skipping transfer (GST) tax exemption allocated at funding, assets can pass to children, grandchildren, and beyond without being taxed at each generational level.
Dynasty trusts also provide durable creditor and divorce protection, and can be paired with a family LLC or private trust company to preserve family governance across decades.
Charitable Lead & Remainder Trusts
Charitable Lead Trusts (CLTs) pay income to charity for a term, then distribute the remainder to family. Charitable Remainder Trusts (CRTs) invert that structure — income to the grantor or family for a term, then the remainder to charity. Both provide meaningful transfer-tax leverage when the applicable interest rate environment cooperates.
Choosing the right structure
No single vehicle is the right answer. The correct architecture depends on the composition of the estate, the family's liquidity needs, the state of residence, the current exemption environment, and the trajectory of the underlying assets. Structures are rarely used in isolation — most enduring plans layer several of the above.
Planning at SlingStone
SlingStone works alongside estate counsel and CPAs to design and implement the trust architecture that fits each family's balance sheet and intent. Every recommendation is made under a fiduciary standard — with no product commissions and no revenue sharing.