Trusts for High Net Worth Families: Providing for Your Spouse, Kids, Charity, and Grandkids

September 02, 2026

If you have built significant wealth, you have probably heard someone tell you you need a trust. Maybe it was your attorney, maybe your CPA, maybe a friend at dinner. What they usually don't explain is which kind, and why.

Here's the reality. A trust is not one thing. It's a legal structure you can shape to do very different jobs. Some trusts exist to provide for a surviving spouse. Some protect kids from spending an inheritance too fast, or from losing it in a divorce. Some create a lasting charitable legacy. Some are built to benefit grandchildren and subsequent generations while limiting the tax bill. And a few, like GRATs and intentionally defective grantor trusts, are designed to move future growth out of your taxable estate entirely.

In this post, we'll walk through the main types of trusts high-net-worth families use and what each one is actually for. Our goal is to help you have a smarter conversation with your estate planning attorney and your advisor.

First, the 2026 tax backdrop

Trusts are about more than taxes, but taxes shape a lot of trust planning, so let's start there.

For 2026, the federal estate and gift tax exemption is $15 million per person, or $30 million for a married couple. The One Big Beautiful Bill Act made that amount permanent, and it will adjust for inflation going forward. Estates above the exemption face a top federal tax rate of 40%. You can also give up to $19,000 per recipient in 2026 ($38,000 for a married couple) without touching your lifetime exemption.

One thing to keep on your radar: some states levy their own estate or inheritance taxes, often with much lower thresholds than the federal exemption. Where you live, and where your beneficiaries live, can change the math, so state rules belong in any serious estate planning conversation.

We covered the exemption change in more detail in an earlier post, The Federal Estate Tax Exemption Just Hit $15 Million. Here's What That Means.

With a $15 million exemption, many families will never owe federal estate tax. So why do wealthy families still use trusts? Because trusts solve problems that have nothing to do with the IRS: control, protection, privacy, and making sure the right people get the right assets at the right time.

Trusts for your spouse

The federal tax code gives married couples a big advantage called the unlimited marital deduction. You can leave any amount to a U.S. citizen spouse free of federal estate tax. So why bother with a trust for your spouse? Control and protection.

A common tool here is the marital trust, often set up as a QTIP trust (short for Qualified Terminable Interest Property). Instead of leaving assets to your spouse outright, you transfer them into a trust. Your spouse receives the income from the trust for the rest of their life, and can also receive principal if the trust allows it. When your spouse passes away, the remaining assets go where you directed, often to your children.

This structure shows up a lot in second marriages and blended families. It lets you provide for your current spouse for life while guaranteeing your kids from a prior marriage eventually receive what's left. Without it, assets left outright to a spouse can end up going wherever that spouse's own estate plan sends them, which may not include your children.

Some couples also use a spousal lifetime access trust, or SLAT. This is an irrevocable trust you fund during your lifetime for your spouse's benefit. It uses part of your gift tax exemption now, moves future growth out of your taxable estate, and your spouse can still benefit from the assets. SLATs became popular when families worried the exemption would shrink. With the exemption now permanent at $15 million, they are less urgent for most people, but they can still make sense for very large estates or for creditor protection.

How married couples actually get to $30 million

Here's a detail that trips up a lot of families. The $30 million exemption for married couples is not automatic. It's really two $15 million exemptions, and using both takes some action.

When the first spouse dies, their unused exemption doesn't just flow to the survivor on its own. The surviving spouse gets it through something called portability, and they must elect it by filing a federal estate tax return (Form 706) after the first death, even when no tax is owed. The normal deadline is nine months after death, with a six-month extension available. For estates that aren't otherwise required to file, the IRS allows a portability-only return up to five years after death. Miss the window and the first spouse's unused exemption is gone.

We've seen families skip this filing because "the estate wasn't taxable." That can be an expensive shortcut. If the surviving spouse's assets grow, or the survivor remarries, or laws change, that ported exemption can be worth millions. Filing the return is cheap insurance.

One more wrinkle that connects back to trusts. A separate exemption applies to the generation-skipping transfer tax, or GST tax, an extra federal tax on wealth left to grandchildren and later generations. We cover it in detail later in this post. For now, the key point is that the GST exemption is not portable. Portability applies only to the estate and gift exemption. If a couple wants to use both spouses' $15 million GST exemptions for grandchildren and dynasty planning, the first spouse must use their GST exemption at death, typically by funding a trust. This is one of the main reasons larger estates still build trusts into their documents rather than relying on portability alone.

Trusts for your kids

Ask yourself an honest question. If something happened to you tomorrow, would you want your 18-year-old to receive their full inheritance in one lump sum?

Most parents say no, and that's why trusts for children exist. Without a trust, a minor child's inheritance is typically handled by a court-appointed guardian until age 18 (or 21 in some cases), and then it's theirs, all at once, no strings attached.

A trust for your kids lets you decide:

When they receive money, many families stagger distributions, for example a third at 25, a third at 30, and the rest at 35. Others keep assets in trust for the child's lifetime with a trustee making distributions for health, education, and support.
Who manages it. You name the trustee. That can be a family member, a professional, or a corporate trustee.
What it can be used for. Education, a first home, starting a business. You set the guardrails.

There's also a protection element. Assets held in a properly drafted trust with spendthrift provisions may be shielded from a child's creditors, lawsuits, and in many cases, a divorcing spouse. An inheritance received outright and mixed into a marriage can be much harder to protect. The rules vary by state, so this is a conversation for your attorney, but it's one of the most common reasons wealthy families keep inheritances in trust rather than handing them over outright.

Charitable trusts

For families with charitable goals, two trust structures come up again and again. They work in opposite directions.

A charitable remainder trust (CRT) pays you first, charity later. You transfer assets into the trust, and the trust pays you (or you and your spouse) an income stream for life or for a set term of up to 20 years. Whatever is left at the end goes to the charities you named. You receive a partial income tax deduction when you fund it. CRTs are especially popular for highly appreciated assets like concentrated stock or a business interest, because the trust can sell the asset without an immediate capital gains hit, then reinvest the full proceeds to fund your income stream. Taxes are spread out as you receive payments.

Charitable remainder trusts come in two flavors, and the difference matters.

A charitable remainder annuity trust (CRAT) pays you a fixed dollar amount every year, set when the trust is created. The payment never changes, no matter how the investments perform. That predictability appeals to people who want their income locked in, but it also means no inflation protection, and you cannot add assets to a CRAT once it's funded.

A charitable remainder unitrust (CRUT) pays you a fixed percentage of the trust's value, recalculated each year. If the trust grows, your payments grow with it. If it shrinks, payments shrink too. CRUTs also allow additional contributions over time, making them more flexible and more commonly used than CRUTs.

Under IRS rules, both must pay out at least 5% and no more than 50% of the trust's value annually, and the amount projected to remain for charity must be at least 10% of what you put in. In practice, most people choosing between them are weighing certainty (CRAT) against growth potential and flexibility (CRUT).

A charitable lead trust (CLT) flips the order. The charity gets paid first, receiving payments for a set number of years, and whatever remains passes to your children or other heirs, potentially at a reduced gift or estate tax cost. Lead trusts tend to work best for larger estates in lower-interest-rate environments and for families who want to support charity now while still moving assets to the next generation.

One honest note: for many families, a donor advised fund accomplishes their charitable goals with far less complexity and cost than a charitable trust. Trusts earn their keep at larger dollar amounts or when the income and tax mechanics matter. This is a place where good advice pays for itself.

Generation-skipping trusts

This is where planning gets interesting for larger estates.

Normally, wealth gets taxed as it moves down each generation. Your estate may be taxed when assets pass to your kids, then taxed again when your kids pass those assets to their kids. The generation-skipping transfer tax (GST tax) exists to stop families from avoiding that second layer by leaving assets directly to grandchildren. It's a flat 40% tax, on top of any estate or gift tax, on transfers to "skip persons," meaning grandchildren or anyone more than 37 and a half years younger than you.

The good news is that everyone gets a GST exemption of $15 million per person in 2026 ($30 million per couple). Here's why that matters: when you allocate your GST exemption to assets you place in trust, all future growth on those assets is sheltered from GST tax too. Put $10 million into a properly structured trust today, allocate your exemption to it. If it grows to $40 million over the next few decades, the entire amount can pass to grandchildren and beyond without GST tax.

That's the engine behind what's often called a dynasty trust: an irrevocable trust designed to benefit multiple generations. Children can receive distributions during their lives, then grandchildren, and so on, while the assets stay inside the trust, outside of each generation's taxable estate, and protected from each generation's creditors and divorces. How long a trust can last depends on state law. Some states allow trusts to run for hundreds of years or indefinitely.

Generation-skipping planning is technical, and mistakes with exemption allocation can be expensive. If your estate is large enough for this to matter, you want an experienced estate planning attorney driving the drafting, with your financial advisor and CPA at the table.

GRATs: moving growth out of your estate

Everything above deals with who gets your assets and when. The next two strategies deal with a different problem: how to get future growth out of your taxable estate in the first place. Planners call these "estate freeze" techniques, and they matter most for families whose estates are above, or on their way above, the $15 million exemption.

A grantor retained annuity trust, or GRAT, works like this. You transfer assets into an irrevocable trust for a set term, often just two or three years. During the term, the trust pays you back an annuity, returning your original contribution plus a rate of return the IRS assumes, called the Section 7520 rate. The IRS sets this hurdle rate monthly. It was 5.2% in August 2026.

Here's the key. If the assets grow faster than the hurdle rate, everything above it stays in the trust and passes to your beneficiaries at the end of the term with little or no gift tax. Most GRATs are "zeroed out," meaning the annuity is set so the taxable gift is at or near zero. You are essentially betting that your assets will beat the IRS's assumed rate, and if they do, the excess growth transfers out of your estate.

The downside risk is small, which is a big part of the appeal. If the assets underperform the hurdle rate, the trust simply pays everything back to you, and you are out a little more than the setup costs. The main real risk is dying during the term, which pulls the assets back into your estate. That's why short terms are common, and why some families run a series of back-to-back GRATs rather than one long one.

GRATs tend to work best with assets you expect to grow quickly: concentrated stock positions, pre-sale business interests, or a portfolio you believe is temporarily depressed.

Intentionally defective grantor trusts (IDGTs)

The name sounds like a mistake. It isn't. An intentionally defective grantor trust is an irrevocable trust that is deliberately drafted to be "defective" for income tax purposes only. The result is a trust that is outside your estate for estate tax purposes, but where you, the grantor, still pay the income tax on what the trust earns.

Why would you want to pay taxes on someone else's money? Because every tax dollar you pay is a dollar the trust doesn't have to pay. The trust assets compound without being reduced by taxes, and your payments aren't treated as additional gifts. It's one of the quieter ways to move extra wealth to your beneficiaries without using any exemption.

The more advanced move is a sale to an IDGT, instead of gifting an asset to the trust, you sell it, usually in exchange for a promissory note that pays you interest at the IRS's minimum required rate. Because the trust is treated as you for income tax purposes, the sale doesn't trigger capital gains tax. You've swapped a growing asset for a fixed note, freezing the value in your estate, while all the future growth happens inside the trust for your beneficiaries. Families often use this structure with business interests ahead of a sale or major growth phase.

Compared side by side: a GRAT is a lower-risk, shorter-term bet that usually uses little or no exemption, while a sale to an IDGT is more flexible and can be combined with generation-skipping planning, but requires more setup and a seed gift to the trust. Both are firmly in "work with an experienced estate planning attorney" territory. The drafting details determine whether they work.

So which trusts do you actually need?

It depends on what you're solving for:

Take care of my spouse, then guarantee my kids inherit: a marital or QTIP trust.
Keep my kids from inheriting too much, too young, and protect it from divorce or lawsuits: a trust for your children with staggered distributions and spendthrift provisions.
Support charity while keeping an income stream, or reduce tax on a highly appreciated asset: a charitable remainder trust (a CRAT for fixed payments, a CRUT for flexibility and growth).
Support charity now and pass what's left to my heirs: a charitable lead trust.
Build wealth that lasts for grandchildren and beyond: a generation-skipping or dynasty trust.
Move future growth out of a large estate: a GRAT or a sale to an intentionally defective grantor trust.

Most high-net-worth families end up using more than one of these, coordinated within a broader estate plan. And the tax numbers are only part of the picture. In our experience, the families who get this right start with what they want their wealth to do for the people and causes they care about, then pick the structures that fit.

If it's been a few years since you looked at your estate plan, or you've never mapped your accounts, beneficiary designations, and trusts against your actual goals, that's a worthwhile conversation. We regularly work alongside our clients' estate planning attorneys and CPAs to make sure the investment side and the planning side line up.

Dreyer Wealth Management does not provide legal or tax advice. Trust and estate planning strategies should be reviewed with a qualified estate planning attorney and tax professional based on your individual circumstances.