Estate
Estate planning for equity-heavy net worth: GRATs, IDGTs, QSBS stacking, valuation discounts on pre-IPO shares, state-level estate tax triggers.
If most of your net worth is one stock, the standard will template isn’t the plan. Estate planning for equity holders leans almost entirely on gift-tax mechanics, valuation discounts, and timing relative to liquidity events. The generic will-and-revocable-trust setup is fine for protecting your family’s access to the assets, but it does nothing for the estate-tax bill your heirs will face, and nothing to shift future appreciation out of your taxable estate before an IPO crystallizes the valuation. The work here is about doing the right things 12-36 months before the liquidity event, not cleaning up after it.
The 2026 sunset is the single most urgent planning context
The federal estate and gift tax exemption sits at $13.99M per person in 2025 (so $27.98M per married couple). Under current law, that exemption is scheduled to sunset at the end of 2025, reverting to roughly $7M per person. The 2026 sunset article covers the mechanics, but the planning implication is simple: if you have a pre-IPO position you expect to appreciate significantly, transferring it now — at today’s valuation, using today’s exemption — locks in a much larger exemption than you’ll have available later. Once the sunset is in effect, the same transfer may hit gift tax.
The core structures
For founders and pre-IPO holders with appreciation ahead, the vehicles that matter are GRATs (Grantor Retained Annuity Trusts, where future appreciation passes estate-tax-free), SLATs (Spousal Lifetime Access Trusts, for married couples who want to use the exemption without losing access to the assets), and IDGTs with installment sales for even more aggressive appreciation transfer. Each has trade-offs: GRATs require the grantor outlive the annuity period to work; SLATs require the spouse remain married and alive; IDGTs require the grantor be willing to carry a promissory note and pay income tax on trust earnings as a feature, not a bug.
Valuation discounts — particularly DLOM (discount for lack of marketability) and DLOC (discount for lack of control) on pre-IPO shares — are what make these structures powerful. A $10M transfer into a GRAT might be valued at $6-7M for gift-tax purposes after discounts, which means a larger effective transfer for the same exemption use.
QSBS stacking: where estate and tax planning merge
Gifting QSBS to family members or non-grantor trusts before a sale can multiply the Section 1202 exclusion. Each trust or taxpayer has their own $10M-or-10× cap, so a concentrated position can be split across multiple vehicles and exclusion buckets. The QSBS stacking article walks through the mechanics. This is where estate planning and federal income tax planning are doing the same work, which is why you want coordinated counsel on both sides of the transaction.
Death, basis, and the decision to hold
The other side of estate planning is step-up in basis: held-to-death equity gets a basis reset at death, eliminating all prior appreciation from income tax. For holders with very low basis (founders who paid $0.0001/share at incorporation) and no immediate liquidity need, holding until death can save more than any structured gifting strategy would. The trade-off is you die without having enjoyed the money. The step-up article frames the decision for concentrated holders.
State-level estate tax
Fifteen states and DC levy their own estate tax, with Oregon’s $1M threshold and Washington’s $2.193M being notably low. Massachusetts just raised its exemption to $2M. The state guides cover per-state specifics. Moving states before death is a legitimate estate-tax planning move with the same residency-audit risks as income-tax moves.
Next step
If you have a liquidity event visible in the next 24 months and haven’t engaged a T&E attorney, that’s the highest-leverage missing piece. GRAT setup and funding take 3-6 months; SLATs take longer. Match with an advisor — the initial T&E consultation is usually the highest-ROI hour of financial planning most founders ever spend.
A CLT gives charity an annual stream for a term, with remainder to heirs. Funded with pre-IPO stock, it moves appreciation to heirs outside estate while supporting charitable goals.
Dynasty trusts hold appreciating assets across generations, avoiding estate tax at each generation's death. GST exemption allocation is the critical setup.
The 2017 TCJA exemption increase sunsets on December 31, 2025, cutting the lifetime gift and estate exemption from 13.99M to roughly 7M per person. Anti-clawback regs protect pre-sunset gifts.
A secondary tender offer window gives pre-IPO holders a rare liquidity event and a documented share price. Estate planning funded around a tender has specific timing and valuation advantages.
- Charitable Lead Trusts for Pre-IPO Wealth
A CLT gives charity an annual stream for a term, with remainder to heirs. Funded with pre-IPO stock, it moves appreciation to heirs outside estate while supporting charitable goals.
- Dynasty Trusts and GST Tax for Tech Wealth: The Multi-Generational View
Dynasty trusts hold appreciating assets across generations, avoiding estate tax at each generation's death. GST exemption allocation is the critical setup.
- The Estate-Tax Exemption Sunset: Why 2026 Matters for Gifting Timing
The 2017 TCJA exemption increase sunsets on December 31, 2025, cutting the lifetime gift and estate exemption from 13.99M to roughly 7M per person. Anti-clawback regs protect pre-sunset gifts.
- Estate Planning During a Tender-Offer Window: Timing and Valuation
A secondary tender offer window gives pre-IPO holders a rare liquidity event and a documented share price. Estate planning funded around a tender has specific timing and valuation advantages.
- Gifting Vested RSUs: The Annual Exclusion Question
Annual gift tax exclusion of $18,000 per donee lets post-vest RSU holders transfer limited amounts without using lifetime exemption. For larger transfers, other structures apply.
- GRATs (Grantor Retained Annuity Trusts) for Equity: Zeroed-Out Math
A GRAT transfers appreciation above the IRS 7520 rate to heirs free of gift and estate tax. Zeroed-out GRATs are the standard tool for high-volatility equity positions.
- IDGT + Installment Sale: The Intentionally Defective Grantor Trust Strategy
An installment sale of appreciating assets to an IDGT lets founders transfer large blocks outside their estate while paying minimal gift tax. The grantor pays income tax; the trust grows tax-free.
- SLATs (Spousal Lifetime Access Trusts) for Founders and Tech Executives
A SLAT lets founders use their lifetime gift exemption to transfer appreciating stock to an irrevocable trust while the spouse retains distribution access. The reciprocal-trust doctrine limits dual SLATs.
- Step-Up in Basis at Death for Concentrated Positions: Planning Around It
The basis step-up at death under IRC 1014 eliminates embedded gain on concentrated stock. For older holders with low basis, 'hold to step-up' can beat any diversification strategy.
- Valuation Discounts on Pre-IPO Shares in an Estate: DLOC and DLOM
Pre-IPO shares in an estate or gift are valued below their pro-rata share of company value due to discounts for lack of control and lack of marketability. The discounts typically total 20-40%.
- Estate Planning When Most of Your Net Worth Is One Stock
How to structure trusts, gifts, and transfers when 70% of your estate is employer stock you don't want to sell but can't afford to hold forever.