Preserving Generational Wealth: What to Know About Family Trusts

Families who have built meaningful wealth often share the same quiet concern: Have we done enough to protect what we’ve built—and will it actually work the way we intend when we’re no longer here?

For high‑net‑worth families, that goal usually involves more than a will and a few beneficiary designations. Why? Because the assets you’re transferring may include:

• Multiple investment accounts and entity structures
• A closely held business
• Blended-family considerations
• Philanthropic goals
• Heirs at very different life stages

 

For families in this position, the cost of misalignment is rarely just financial. It shows up as stress, uncertainty, and unintended outcomes between generations.

In that kind of complexity, a family trust is often a foundational tool, but rarely the only tool. The most effective plans treat trusts as part of a coordinated system that ties together estate planning, tax planning, investment strategy, liquidity planning, and family communication.

Short Answer: How Do High‑Net‑Worth Families Preserve Generational Wealth?

High‑net‑worth families typically preserve generational wealth by combining trusts with coordinated estate, tax, investment, and family governance planning.

Trusts can help control how assets move to heirs, provide privacy, reduce friction among beneficiaries, and (in some cases) reduce estate and generation‑skipping transfer taxes.

They’re most effective when integrated with lifetime gifting strategies, business succession planning, and an ongoing review process as laws and family dynamics change.

When Preserving Generational Wealth Becomes “Complex”

Estate planning becomes meaningfully more complex when families have one or more of the following:

• Net worth approaching federal estate tax thresholds

• A family business or private investments that aren’t easy to divide
• Real estate
• Multiple heirs with different levels of financial maturity
• Blended family dynamics, remarriage, or unequal inheritance goals
• Philanthropy goals
• Asset protection concerns (creditors, lawsuits, divorce risk)

In these situations, families often discover a key truth: The challenge isn’t just transferring wealth. It’s transferring wealth well.

That typically requires a plan that balances:

• Control
• Tax efficiency
• Liquidity
• Family harmony

A 2026 Update: Federal Estate Tax Law Changed in 2025

For several years, the estate and gift tax landscape was defined by a looming deadline: under the 2017 Tax Cuts and Jobs Act, the increased exemption amounts were scheduled to “sunset” at the end of 2025.

That sunset did not occur. In July 2025, Congress enacted the One Big Beautiful Bill Act / OBBBA), which extended the higher exemption framework and established a new baseline exemption of $15,000,000 per individual.

Even with a higher federal exemption, estate planning can still be essential because:

• Some states have their own estate/inheritance taxes at much lower thresholds (and federal law changes do not eliminate those).
• Many HNW families care as much about control, protection, governance, and simplicity as they do about taxes.
• Tax laws can change again in the future, even when legislation is described as “permanent” (meaning “no sunset” rather than “unchangeable”).

What Is a Family Trust?

A trust is a legal arrangement that holds and distributes assets according to rules you set. Trusts typically involve three key roles:

• Grantor: the person who creates and funds the trust
• Trustee: the person or institution responsible for managing the trust assets
• Beneficiaries: the individuals (or organizations) who receive benefit from the trust

At a high level, trusts can help families:

• Specify how and when assets are distributed

• Provide structure for multiple beneficiaries
• Add privacy and administrative order
• Create guardrails that support long‑term stewardship

Common Trust Structures—And the Problems They Solve

Below are several trust types frequently used in generational wealth planning. The “right” structure depends on your goals, the kinds of assets you own, and the trade‑offs you’re willing to make.

Rather than asking ‘Which trust is best?,’ the better question is ‘What problem are we trying to solve?’ Different trust structures exist to solve different planning challenges.

Revocable Trusts

Revocable trusts are a type of living trust (meaning they’re created during the grantor’s lifetime) that allow the grantor to change or cancel provisions in the original trust documents.

Income earned by assets within the trust is distributed to the grantor during their lifetime, and then those assets are transferred to the beneficiaries upon the grantor’s death.

Revocable trusts don’t provide the grantor with any immediate tax advantages, because assets are included as part of the grantor’s estate and are subject to estate taxes.

A revocable trust is frequently used to:

• Streamline how assets transfer at death

• Reduce administrative burden
• Avoid probate in many circumstances

Revocable trusts are commonly about organization and control rather than immediate tax reduction.

Irrevocable Trusts

The terms of an irrevocable trust generally can’t be changed once established, though state law may provide the ability to change trust terms in some circumstances.

When a grantor sets up an irrevocable trust, they effectively transfer all ownership of assets funding the trust and no longer have any legal right to them.

However, this arrangement comes with estate tax benefits: Properly structured irrevocable trusts may remove transferred assets (and future appreciation) from the grantor’s taxable estate, depending on the trust terms and applicable tax rules. 

Families may use irrevocable trusts to:

• Move assets (and future appreciation) outside the taxable estate

• Add creditor protection features
• Create multigenerational structures

For families with significant wealth and appreciating assets, this can be a powerful way to match long‑term goals with tax strategy, especially when paired with thoughtful investment management inside the trust.

Spousal Lifetime Access Trust (SLAT)

A SLAT is an irrevocable trust where one spouse, known as the donor spouse, gifts assets to the other spouse, known the beneficiary spouse.

The gift is generally not taxable because the grantor uses the federal gift and estate tax exclusion when making the gift. By naming a spouse as a beneficiary, the donor retains indirect access to the trust assets, which can provide a sense of flexibility for families who want to plan proactively without feeling over‑committed.

SLATs can be designed to benefit children and other future generations, too, and can be designed to be shielded from future estate taxes as well.

Any post-gift appreciation will take place inside the trust and will be excluded from the taxable estate of both spouses.

Families exploring SLATs are often trying to balance:

• Transfer planning and long‑term tax efficiency
• A desire to retain a “family safety net” through spousal access

The SLAT conversation is frequently relevant for families with high income, significant concentrated assets, or business liquidity events.

Marital Trust

A marital trust is an irrevocable trust that allows the grantor to transfer assets to a surviving spouse tax-free and control the ultimate distribution of the trust assets.

The surviving spouse can access the assets in the trust or simply receive income from them. At the surviving spouse’s death, the assets are includible in his or her gross estate for estate tax purposes but then pass to children or other beneficiaries according to the trust agreement.

Often used in a revocable trust, a marital trust can be instrumental in deferring estate taxes payable, ensuring that the married couple takes full advantage of the estate and generation-skipping transfer tax exemptions.

How to Set Up a Trust

To set up a trust, you’ll need to meet with an estate planning attorney. However, you might want to talk to your financial advisor before you engage an attorney, because advisors can help determine what type of trust is appropriate for your family’s circumstances. For example:

• Individuals with assets well below the estate tax exemptions might choose a simple revocable trust that helps them avoid probate.
• Individuals whose assets exceed the estate tax exemption might be better served by an irrevocable trust with provisions to avoid estate and generation-skipping transfer taxes.
• A family with a child who has special needs can set up a trust designed to give that child access to government benefits while providing additional financial support.

Financial advisors also have visibility into your overall financial situation, family makeup, and values. Those insights are important to help you make key decisions about naming a trustee, designating assets for inclusion in the trust, and establishing provisions that specify how beneficiaries will receive those assets.

Planning for those decisions ahead of time can help you cut down on legal expenses. You’ll approach the estate planning attorney already armed with the information they’ll need to help you set up your trust documents.

When preparing trust documents, be sure to allow for flexibility to account for potential changes in family situation or tax law.

What Preserving Generational Wealth Looks Like in Practice

For many high‑net‑worth families, preserving generational wealth involves decisions that extend well beyond selecting a trust type. The process often includes:

Coordinating investments and estate strategy

The way assets are invested and where they are held (taxable vs. trust vs. retirement) can affect long‑term outcomes.

Planning for liquidity

If wealth is concentrated in real estate, private investments, or a business, heirs may face pressure to sell assets quickly without a clear plan.

Integrating gifting and long‑term transfer strategy

Even with a high baseline exemption, thoughtful gifting can still help families shift future appreciation and clarify intent over time.

Business succession planning

Families with operating businesses typically need a plan for governance, valuation, and equitable treatment among heirs (especially when not all heirs will participate).

Family governance and communication

Many “generational wealth failures” aren’t tax problems: they’re communication and expectations problems. The strongest plans make room for family education and clarity.

Maintaining and Reviewing Your Trust Over Time

For families with meaningful wealth, a trust is not a “set it and forget it” tool.

A good review process typically includes:

• Periodic checks to confirm the trust still matches your family’s needs

• Updates when major life changes occur (marriage, divorce, births, deaths)
• Monitoring for tax law developments
• Trustee coordination to ensure distributions, reporting, and investment management are aligned

Even with the OBBBA extension, transfer tax rules remain subject to future change, and many families benefit from reviewing prior transfers and structures to ensure they still fit the intended purpose.

Bottom Line

Trusts can be a powerful tool for preserving generational wealth, but they work best when integrated into a broader strategy that considers taxes, investments, liquidity, family dynamics, and long-term governance.

The 2025 OBBBA legislation provided more certainty around federal exemption levels, but thoughtful planning remains essential, especially for families whose wealth is complex, illiquid, or intended to support multiple generations.

Preserving generational wealth is about more than documents. It’s about confidence in the plan. If you’d like guidance on how all the pieces fit together, a conversation with a Plancorp wealth advisor is a good place to start.