The $15 Million Exemption Is a Launchpad, Not a Parking Space
The question is not how to give $15 million away. It is how to move wealth into a structure that keeps working for the family for generations, and the structure matters more than the number.
The federal gift, estate and generation skipping transfer tax exemption is $15 million per person for 2026, indexed for inflation after that, and it is now permanent law rather than a temporary figure scheduled to fall.1 That creates a major planning opportunity, and most of the conversation around it asks the wrong question. The question is not "How do I give it away?" It is "How do I move wealth into a structure that can keep working for my family for generations?"
The exemption is valuable. The structure matters more.
Give the right asset, not cash
A gift of cash uses exemption dollar for dollar and then sits in the recipient's own estate. A gift of nonvoting interests in a family LLC or operating company uses exemption at an appraised value that reflects lack of control and lack of marketability, so more of the underlying wealth moves per dollar of exemption used.2 The same is true of appreciating assets generally: the exemption is consumed at today's value, and all future growth belongs to the trust.
Pair the gift with a sale
Where the facts support additional leverage, a meaningful gift can seed a sale of further assets to the trust in exchange for an installment note. Because the trust is a grantor trust, the sale is disregarded for income tax purposes and the note carries the modest applicable federal rate.3 Appreciation above the note rate accrues outside the estate without using additional exemption.
Let the settlor pay the trust's income tax
Grantor trust status does one more thing. The settlor pays the income tax on the trust's income, which lets the trust compound tax free while the payments reduce the settlor's taxable estate, and the Service has ruled that those payments are not gifts.4
Build for the long term
South Dakota has no rule against perpetuities, so the trust can last as long as the family does.5 Allocating GST exemption to the trust at funding means that the trust's assets, and everything they grow into, pass to grandchildren and later generations without another transfer tax.6 The trust can be a discretionary trust under South Dakota's asset protection statute, and new business opportunities, reinvested appreciation and life insurance can be kept inside the structure rather than allowed to accumulate back into a taxable estate.
Life insurance as a multiplier
For a married couple, the exemption can fund a second to die life insurance policy held by the trust. Death benefit paid to a properly structured irrevocable trust is excluded from both spouses' estates and received income tax free.7 Depending on age, health, carrier pricing and policy design, a large single premium funded with exemption can produce a death benefit several times its size, all of it protected and estate tax free. The numbers are specific to each couple, and the structure has to be right, but the leverage is real.
Consider a nongrantor trust where state income tax is the priority
When state income tax efficiency is a core objective, a South Dakota nongrantor trust, properly structured and administered in South Dakota, pays no state income tax on retained income. That is a different design from the grantor trust described above, and the choice between them turns on the family's state of residence, the trust's beneficiaries and the mix of income the trust will hold.
The point
Sophisticated planning is not a document. It is plan design, advisor coordination, drafting, local counsel review, trustee acceptance, onboarding and decades of administration. The exemption gives a family the fuel. What it does with it depends on the structure it builds.
Notes
- I.R.C. section 2010(c)(3), as amended by Pub. L. 119-21, section 70106 (July 4, 2025); I.R.C. section 2631(c). The 2026 figure is $15,000,000; Rev. Proc. 2025-32. ↩
- Rev. Rul. 93-12, 1993-1 C.B. 202, holding that minority interests transferred among family members are valued without attributing family control. ↩
- Rev. Rul. 85-13, 1985-1 C.B. 184; I.R.C. section 1274(d). ↩
- Rev. Rul. 2004-64, 2004-2 C.B. 7. ↩
- SDCL 43-5-8. ↩
- I.R.C. sections 2631 and 2632. ↩
- I.R.C. sections 2042 and 101(a)(1). ↩
Terry L. (T. L.) Turnipseed, J.D., LL.M., CTFA, is a tax, trust and estate attorney in Fort Lauderdale, Florida, and Head of Estate and Tax Planning at Alta Trust Company. He is a former tenured professor of law at Syracuse University. Reach him at tl@turnipseed.law or on LinkedIn. This article is general information, not legal advice.