Top 3 Key Takeaways
- The expanded estate tax exemption doesn’t eliminate risk for UHNW families.
Even with a $15M exemption, estates with appreciating, illiquid assets remain exposed to significant federal estate taxes and forced asset sales. - Waiting increases estate tax exposure and family conflict.
Delaying advanced planning allows asset growth to inflate taxable estates and increases the likelihood of liquidity crises and governance disputes among heirs. - Sophisticated estate planning requires multiple coordinated strategies.
Dynasty trusts, irrevocable trusts, charitable structures, and liquidity planning must work together to protect wealth, reduce taxes, and preserve legacy.
Definition: UHNW stands for Ultra High Net Worth Individual
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In the first half of 2025, uncertainty about the future of the expanded federal estate and gift tax drove a renewed urgency in estate planning, as those expecting to be impacted raced to find strategies to reduce their anticipated tax bill under a steeply reduced exemption. Now that the exemption has been permanently expanded, but that does not mean the pressure is off. Conversely, for ultra-high-net-worth (UHNW) families with estates that will still greatly exceed the new exemption, failing to act swiftly and strategically risks excessive estate taxation, avoidable financial losses from forced asset sales, and conflict among heirs that destroys the value of family businesses and investments.
Basic estate planning strategies, such as revocable trusts, are not enough to prevent these consequences for large estates made up of complex and often illiquid assets such as extensive real estate holdings, closely held family businesses, or volatile investments. To maximize tax savings and secure their legacy as intended for future generations, UHNW families in California need advanced estate and tax planning strategies individualized for their unique needs.
What to Know About Changes in Federal and California Law
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, settled a number of outstanding questions affecting estate planning, including:
| Provision | What Changed | What It Means for UHNW Families |
|---|---|---|
| Estate & Gift Tax Exemption | Permanently increased to $15 million per individual ($30 million per married couple) starting in 2026; indexed for inflation | Larger estates still face exposure, but more assets can be transferred tax-free with proper planning |
| Generation-Skipping Transfer (GST) Exemption | Increased to match the estate and gift tax exemption; indexed for inflation | Enables more efficient multigenerational wealth transfers without triggering GST taxes |
| Trust Income Tax Brackets | TCJA trust tax brackets remain in place with annual inflation adjustments | Trust income can still reach the highest tax bracket quickly, making income-shifting strategies critical |
| State & Local Tax (SALT) Deduction | $10,000 cap remains unchanged for high-net-worth taxpayers | California UHNW families continue to face limited SALT relief despite high income and property taxes |
| California Estate Tax Outlook | No current state-level estate tax, but recurring legislative proposals targeting UHNW individuals | Ongoing monitoring is essential to ensure estate plans remain resilient to future state tax changes |
What Waiting Does to Your Wealth
One of the most powerful reasons to create an effective estate plan as soon as possible is because you never know when you will need it. For UHNW families, however, that imperative is joined by another—the best time to move appreciating assets out of your estate, and thus maximize the value of the estate and gift tax exemption, is before they have the chance to grow further. Delaying action means assets and growth that could have been protected will be exposed to estate taxation, decreasing the amount your family will ultimately inherit.
Further, failing to establish business succession plans or a clear governance structure for trust holdings risks disruptions in operation and family disagreements. Even if these conflicts don’t end up in litigation, there is often a measurable negative impact on income that erodes the value of what you leave behind.
Finally, failing to plan for liquidity to cover anticipated tax liabilities can be a disaster for estates where wealth is primarily concentrated in assets such as businesses or real estate. Federal estate tax is due within nine months of death, which can force heirs to sell investments at a loss or to divest from income-generating properties they would have preferred to keep to cover the obligation.
Advanced Estate Planning Moves for UNHW Families
For a UHNW individual’s estate plan to be effective in minimizing taxation and passing on wealth to future generations, it must integrate estate planning goals, tax planning, and charitable goals to make full use of the legal tools available. Irrevocable trusts remove assets from an individual’s personal estate and provide asset protection from creditors and lawsuits. Those structured as Dynasty Trusts can also help avoid estate taxes for multiple generations, often a consideration for UHNW families wishing to provide for grandchildren as well as children. Charitable trusts can be used strategically to gain tax advantages as well as to create a charitable legacy. In addition, strategies such as Private Placement Life Insurance (PPLI) placed within an Irrevocable Life Insurance Trust (ILIT) can help meet investment, tax minimization, and liquidity goals for estate planning with the proper structuring, especially if it is.
Most notably, for extremely large estates, reducing estate taxation and preserving wealth is not accomplished with one tool, but through the synergy of multiple approaches designed to work together. Expert estate planning and tax advisory legal services are essential to devise a plan that is legally compliant, aligned with your goals, and kept current with changing regulations.
Meeting the Estate Planning Needs of UHNWI in California
Estate planning that fails to consider the complex challenges that can erode the value of a UHNW family’s estate risks losing wealth to avoidable taxation, liability, and interpersonal conflict among beneficiaries. The Trusts & Estates team at Bridge Law LLP understands the issues at stake. We provide customized, sophisticated solutions for your domestic and international estate planning needs, with ongoing support to ensure that your estate plan evolves with the times and your changing circumstances.
Don’t wait until it is too late to prevent losses. Schedule your private consultation to review your legacy structure by contacting us here.
UHNW estates typically exceed $30 million and often include complex or illiquid assets such as closely held businesses, real estate portfolios, or private investments.
Yes. UHNW families often exceed the exemption even after expansion. Without advanced planning, estate taxes, liquidity shortfalls, and family disputes can significantly erode wealth.
Revocable trusts do not remove assets from taxable estates or protect against estate taxes, creditor claims, or forced asset sales. UHNW families need irrevocable and tax-optimized structures.
Without liquidity planning, heirs may be forced to sell businesses or real estate quickly to pay estate taxes due within nine months—often at unfavorable prices.
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