Estate Freeze Strategy Calculator

Estate freeze strategies explained: GRAT (Grantor Retained Annuity Trust): transfer assets to trust; receive annuity for term (2-10 years); appreciation above IRS rate (4.6% 2026) passes tax-free; Risk: grantor must survive the term; IDGT (Intentionally Defective Grantor Trust): sell assets to trust for promissory note; trust pays income tax but not estate tax (the "defect"); assets grow outside estate; effective for business interests, real estate; QPRT (Qualified Personal Residence Trust): transfer home to trust at discounted value; continue living there for term; home passes at fraction of current value; works best for rapidly appreciating real estate; Spousal Lifetime Access Trust (SLAT): irrevocable trust for spouse; uses exemption now before possible sunset; spouse can access if needed; risk: divorce or spouse predeceasing.

TCJA estate tax exemption timeline: Current exemption (2026): $13.61M individual, $27.22M married couple; Scheduled sunset: December 31, 2025 (if not extended) — reverts to pre-TCJA levels of ~$7M individual, ~$14M couple (inflation adjusted); 2026 projections: if sunset occurs: ~$7.2M individual; estates above exemption pay 40% estate tax; married couple loses ~$26M exemption → $14M taxable at 40% = $5.6M additional estate tax; Urgency: use-it-or-lose-it — gifts made before sunset lock in today's high exemption; IRS anti-clawback regulations: gifts made under current exemption will not face clawback if exemption decreases; Action items: fund SLATs and IDGTs before year-end; complete GRAT funding; consider large outright gifts to irrevocable trusts now.

Family offices (single or multi) make sense at $50M+ in investable assets. Below that, private banking (JP Morgan Private Bank, Goldman Sachs PWM, UBS) offers similar services with lower minimums ($5-25M). Family offices provide consolidated reporting, direct deal access, and custom investment mandates unavailable at private banks. Multi-family offices (Bessemer Trust, Glenmede) offer a middle ground at $10M+ with family-office-level service at lower cost.

Most wealth advisors recommend 3-5% of liquid net worth in cash/cash equivalents for UHNW individuals — enough to cover 12-24 months of lifestyle expenses plus opportunistic investments. Excess cash above this benchmark costs 5-8% annually in opportunity cost vs. diversified portfolios. Treasury bills, money market funds, and short-duration bonds provide liquidity with yield while maintaining capital preservation objectives.