6 Tax Strategies HNW Families Use That Most People Never Hear About
Sam's List Editorial | 2026-06-23
Most high net worth tax strategies don't show up in a TurboTax flowchart. They live in the gap between a good tax preparer and a planner who thinks ten years out.
Here's the thing nobody tells you: the families who keep the most aren't doing anything illegal or even exotic. They're using rules that have been in the tax code for decades — they just have someone who knows the rules exist and starts early enough to use them.
The cost of not knowing isn't a line on a return. It's a number your kids find out about later. Below are six strategies the wealthy use routinely and most people never hear about — most of them estate tax strategies a family can put in place years before they're needed — plus the math that makes them worth the trouble.
1. The high net worth tax strategy hiding in grantor trusts: give away the growth, keep the tax bill
This one sounds backwards until you see it. With an intentionally defective grantor trust (IDGT), you move an asset out of your estate, but you — the grantor — keep paying the income tax on what that asset earns inside the trust.
Why would you want to pay tax on money that's no longer technically yours? Because every dollar of income tax you pay is a dollar that leaves your taxable estate without using any gift exemption. The trust's assets compound untouched. You're effectively making an extra tax-free gift every April 15.
Say you fund an IDGT with a $5M business interest growing 8% a year. Over a decade, roughly $5.8M of appreciation lands outside your estate. At a 40% federal estate tax rate, that's about $2.3M your heirs keep instead of the IRS. The grantor-trust rules live in IRC §§671–679 — this is a feature Congress wrote in, not a loophole.
2. Use your lifetime exemption early, before the growth happens
In 2026 the federal estate and gift tax exemption is $15 million per person — $30 million for a married couple — made permanent and indexed to inflation under the law passed in July 2025 (Public Law 119-21, amending IRC §2010(c)(3)).
Most people sit on that exemption until death. The families who win use it while they're alive, because gifting an asset early removes all of its future growth from the estate too.
The math: gift $5M of stock today, and if it triples to $15M over twenty years, that entire $15M sits outside your estate — but you only spent $5M of exemption to get it there. You're freezing the value at today's price. Wait until death and the IRS taxes the full $15M.
Layer the annual exclusion on top. In 2026 you can give $19,000 per recipient per year with zero exemption used. A couple with three kids and three kids-in-law can move $114,000 a year, every year, completely off the books.
3. Family limited partnerships can shrink the value the IRS gets to tax
A family limited partnership (FLP) holds the family's assets — real estate, a closely held business, an investment portfolio — and the parents gift limited partnership interests to the next generation.
Here's the quiet part. A minority, non-controlling LP interest can't be freely sold and gives the holder no control. So for gift and estate tax purposes, it's worth less than its pro-rata slice of the underlying assets. That gap is a valuation discount — often 20% to 40%, supported by a qualified appraisal.
Transfer a 30% LP interest tied to $3M of underlying assets, apply a 30% discount, and you've moved roughly $630K of value off your estate while only "spending" about $630K of exemption — for an asset actually worth $900K. The discount has to be defensible, the partnership has to have a real business purpose, and the documentation has to be airtight. This is exactly where a CPA who lives in this work earns their fee.
4. Charitable lead and remainder trusts solve three problems at once
If you want to give to charity, generate income, and reduce your estate — most people pick one. Split-interest trusts let you do all three on the same dollar.
A charitable remainder trust (CRT) pays you (or your family) income for a term of years or for life, then sends the remainder to charity. You get an upfront partial charitable deduction, and you can fund it with highly appreciated stock and sell it inside the trust without triggering immediate capital gains.
A charitable lead trust (CLT) flips it: the charity gets the income stream first, then the remainder passes to your heirs — often at a steeply reduced gift-tax value.
For a family sitting on a low-basis position they're afraid to sell because of the capital gains hit, a CRT can be the unlock. You diversify, you give, and you keep an income stream. One vehicle, three goals.
5. Opportunity zones can defer your capital gains and reduce them later
Sell an appreciated asset, roll the gain into a Qualified Opportunity Fund within 180 days, and you defer the capital gains tax while that money goes to work in a designated zone.
This program was set to sunset, but the 2025 law made it permanent and reset the clock. For investments made after the end of 2026, you defer the original gain for five years, and the investment earns a 10% basis step-up at the five-year mark (a richer 30% step-up for qualifying rural zones). Hold the new investment at least ten years and the appreciation on that investment can come out tax-free.
The math is the point: a $2M long-term gain might owe roughly $476,000 in federal tax at the top 23.8% rate. Defer it, and that's $476,000 working for you for years instead of sitting with the Treasury. New zone designations are being redesignated in 2026, and the reporting rules now carry penalties up to $10,000 per return — so this is not a DIY move.
6. The high net worth tax strategy nobody calls one: the U.S. bill on foreign assets
For families with money, property, or businesses abroad, the most expensive mistake isn't a strategy they missed — it's a filing they didn't know existed.
The U.S. taxes citizens on worldwide income, and the penalty regime for unreported foreign accounts (FBAR, Form 8938, Forms 5471 and 3520 for foreign entities and gifts) is brutal — civil penalties can reach the greater of $10,000 or 50% of the account balance per year for willful FBAR failures. Foreign trusts and inheritances trip up sophisticated families constantly.
Done right, foreign tax credits and treaty positions can prevent the same income from being taxed twice. Done wrong, the penalties dwarf the tax. Cross-border planning is its own specialty, and most generalist CPAs don't touch it.
Find a CPA who actually plays this game, not just files your return
Every strategy above has the same failure mode: it only works if someone sets it up correctly, early, with documentation that survives an audit. A great preparer files what already happened. A planner changes what happens.
OLarry is a Sam's List firm that works with high-net-worth and ultra-high-net-worth families, the kind of UHNW tax planning and international tax work most CPAs avoid. If your situation involves estate planning, appreciated assets, or assets across borders, that focus matters.
Read OLarry's verified reviews on Sam's List and book an intro call. Bring your most expensive question — the one your current accountant always promises to "look into." See what a planner says instead.