October 3, 2025
We often say that the only certainties in life are death and taxes. While neither is easy to think about, one of them gives you a chance to prepare.
With the right estate tax planning, you can reduce the impact of estate taxes and protect more of what you’ve worked so hard to build. Estate tax planning is about more than numbers. It is about securing your loved ones’ future and preserving the legacy you want to leave behind.
Estate tax planning gives you a way to protect your legacy. By taking steps now, you can ease the burden on your heirs, create more certainty for the future, and make sure your wealth does more than cover the costs of transfer. The choices you make today shape the story your family will carry forward.
In this guide, we’ll explore estate tax planning strategies that help reduce estate tax obligations and preserve your wealth. We want to give you the tools to move forward confidently, knowing that your estate will support the people and causes that matter most to you.
Estate taxes are simply taxes on the transfer of wealth after death, but the rules can feel overwhelming. Not every family is affected. Many estates fall under the federal exemption, which means no tax is due. For higher-value estates, however, taxes can take a meaningful bite out of what’s passed on.
The federal estate tax exemption sets the limit for how much you can transfer tax-free. Anything above that amount may be taxed at rates that add up quickly. Some states also impose their own estate or inheritance taxes, often at much lower thresholds. Here in Oregon, for example, the exemption is just $1 million. That means even families who fall far below the federal limit may still face state estate taxes.
It’s a common misconception that estate taxes only apply to the ultra-wealthy. In reality, property values, retirement savings, and even real estate tax planning decisions can all add up faster than expected. That’s why even families who never considered themselves “wealthy” sometimes find themselves affected.
Understanding the basics is the first step in planning. Once you know where your estate stands in relation to the exemption, you can make informed choices about strategies that fit your situation.
One of the simplest estate tax planning strategies is to give during your lifetime. In 2025, the IRS lets you gift up to $19,000 tax-free without it counting against your lifetime exemption. For parents and grandparents, this can be a way to help with education costs or provide financial security while also lowering the overall value of your estate.
Related: Estate & Gift Taxes
The lifetime exemption we discussed covers both gifts you make while alive and the value of your estate you pass. For 2025, that exemption is $13.99 million. While generous, it is not unlimited. Once it’s used, any additional transfers may be taxed.
Using part of this exemption during your lifetime can be smart if you want to support family now or gradually transfer ownership of a business. It can also be a way to secure today’s higher exemption amounts before scheduled reductions in 2026. Acting early may preserve millions that would otherwise be lost to taxes.
Remember that this applies only at the federal level. State thresholds are often much lower, and ignoring them can leave families with unexpected tax obligations.
Irrevocable trusts are one of the best estate tax planning tools to reduce estate taxes while also keeping your long-term goals in mind. Irrevocable trusts let you reduce your estate taxes by moving assets out of your estate.
Some common irrevocable trusts used in estate planning include:
Spousal Lifetime Access Trust (SLAT): One spouse funds a trust for the other. The assets and future growth are outside the donor’s estate, but the beneficiary-spouse can still access funds if needed.
Grantor Retained Annuity Trust (GRAT): Lets you pass wealth to your heirs while avoiding most or all gift taxes.
Irrevocable Life Insurance Trust (ILIT):. An ILIT owns your life insurance policy, so the death benefit stays outside your estate. It can provide tax-free liquidity to pay expenses or estate tax without forcing the sale of a family business or real estate.
Charitable giving is a strategy that not only reduces estate taxes but also creates a lasting impact beyond your family. By designating part of your estate to a charity, you can lower the taxable value of your estate while supporting a cause that reflects your values.
There are different ways to approach this. Some people choose to make direct donations during their lifetime, which allows them to see the results of their generosity while also receiving potential income tax benefits. Others create structures like charitable trusts or donor-advised funds, which provide more flexibility in how and when the gifts are distributed.
For many families, charitable giving is a chance to create a legacy of service and contribution. When aligned with other planning tools, it can become a meaningful part of how your estate supports both your loved ones and the wider community.
Read more: Estate Planning and Charitable Giving: How to Leave a Legacy
If much of your wealth is tied up in a company, rental properties, or other large assets, you face a unique challenge: preserving value while also keeping control. Family Limited Partnerships (FLPs) and Limited Liability Companies (LLCs) can be powerful tools for meeting both goals.
Family Limited Partnership (FLP): A legal partnership between family members where parents or senior relatives typically serve as general partners and maintain management control, while children or other heirs hold limited partnership interests. Limited partners benefit financially but have little or no control. This structure not only centralizes management of family assets but also allows ownership interests to be transferred at a discounted value for gift and estate tax purposes.
Limited Liability Company (LLC): A business entity that combines the liability protection of a corporation with the flexibility of a partnership. Within an estate plan, LLCs allow the founding generation to act as managing members, retaining decision-making authority, while gradually transferring non-managing membership interests to heirs. Like FLPs, LLCs can qualify for valuation discounts, and they also offer strong liability protection for the family’s underlying business or investments.
Because minority interests in a business or partnership are less marketable and don’t carry control rights, they are often valued at a discount for tax purposes. That means you can transfer a larger slice of the underlying assets while using less of your exemption, lowering your potential estate tax bill.
Beyond the tax advantages, FLPs and LLCs also support succession planning. They create a framework for the next generation to share in ownership while the senior generation maintains oversight. This can smooth the transition of a family business or real estate holdings, protect assets from outside claims, and help preserve the continuity of something your family has worked hard to build.
Estate tax planning can be complex and is typically not something you should navigate on your own. Since the laws change often, it’s a good idea to work with trusted professionals who know the ins and outs of tax law and have your best interests in mind.
Ideally, you’ll want three professionals in your corner: a tax and estate planning attorney, a tax professional, and a financial planner.
An estate planning attorney can help you understand which tools fit your situation and draft the legal documents that make those strategies work. A tax advisor can evaluate how those choices affect your current and future tax obligations. Finally, a financial planner can bring everything together to ensure your estate plan aligns with your broader goals for retirement, investments, and family support.
Related: Advanced Estate Planning Strategies
Who actually has to pay estate taxes?
Only estates that exceed the federal exemption amount are subject to federal estate taxes. In 2025, that exemption is set at over $13 million per person. Remember, some states also impose their own estate or inheritance taxes, which may apply at lower thresholds.
Is estate tax the same as inheritance tax?
No. Estate taxes are paid by the estate before assets are distributed to heirs. Inheritance taxes, on the other hand, are paid by the person receiving the inheritance. A few states impose inheritance taxes, but there is no federal inheritance tax.
Can making gifts really reduce my estate taxes?
Yes. Gifting during your lifetime lowers the size of your taxable estate. You can give up to the annual exclusion amount each year to as many people as you wish without triggering gift taxes. Larger gifts may apply toward your lifetime exemption.
Do all trusts reduce estate taxes?
Not all trusts are designed for tax planning. Revocable trusts, for example, help avoid probate but do not reduce estate taxes because the assets are still considered part of your estate. Irrevocable trusts, when structured properly, can move assets outside of your taxable estate.
What happens if I do nothing?
Without an estate plan, your assets will be distributed according to state law, which may not align with your wishes. If your estate is large enough, taxes may significantly reduce what your heirs receive. Planning ahead allows you to protect your family and preserve more of your wealth.
Is estate planning tax deductible?
In most cases, the cost of creating an estate plan is considered a personal expense and is not tax deductible. However, certain elements tied to business or income-producing assets may qualify for deductions. It’s important to review your situation with a tax professional or an estate planning tax attorney.
Related: The Dangers of DIY Estate Planning & How to Avoid a Contested Will
Ultimately, estate tax planning is about protecting the people you care about. It’s a way to make sure the wealth you worked hard to build continues to serve its purpose. With the right estate tax planning strategies, you can ease the burden on your loved ones and preserve more of your estate.
Tax laws continually change, and no two families have the same needs. That’s why personalized planning with the right professionals is so important. At Gevurtz Menashe, we help families navigate the complexities of estate and tax law so you can safeguard the future of your loved ones.
