Trusts: Get to Know This Valuable Estate Planning Tool

A comprehensive estate plan is crucial for ultra-high-net-worth individuals and families with complex finances. A thoughtful plan can help shield substantial assets from unnecessary estate and income taxes, while also facilitating a smoother business succession (if applicable).  By clearly communicating your intentions for inheritance and philanthropy, a strong estate plan is designed to protect and extend generational wealth for your heirs.

Everyone needs a Will, but if your estate plan consists of a will and not much else, you're not alone — but you may be leaving real value on the table. A will instructs the court on how you'd like things to be divided. It doesn't avoid probate, it doesn't protect a beneficiary who isn't ready to manage a large sum of money and, once it's filed, it becomes a public record. Trusts can address all of these issues, and much more.

What a trust can do for you

Think of a trust as a set of instructions with a built-in manager. You place assets into the trust, and a trustee holds and manages them according to terms you set, for the benefit of the people (or causes) you choose. Because the trust technically owns those assets rather than you personally, it can do things a will can't, such as keep your affairs private, control exactly how and when beneficiaries receive money both during your lifetime and after your death, add a layer of protection from creditors and, for larger estates, reduce exposure to estate and gift taxes.

There are two broad categories worth understanding:

1. Revocable trusts (often called living trusts) stay under your control. You can change or dissolve one at any time, and the main appeal is practical in nature: assets held in the trust skip probate entirely. Also, if you become incapacitated, your successor trustee can step in immediately without a court proceeding.  Finally, revocable trusts can provide a bit of privacy because they do not become part of a public record like Wills.  Because you retain control, these assets still count as part of your taxable estate.  
2. Irrevocable trusts ask you to give up something in exchange for something stronger. Once established, they generally can't be changed, and you give up ownership and control of what you place inside. In return, when properly structured, assets transferred to many irrevocable trusts can be removed from the taxable estate of the grantor (i.e., the person who creates and funds the trust), gaining meaningfully stronger protection from creditors and lawsuits.

Neither type is "better" — they solve different problems, and many complete estate plans use both.

Why all of this matters more today

The federal estate and gift tax exemption, which is the amount you may transfer during your lifetime or at death without owing federal tax, has been a moving target for the past several years.

Under the One Big Beautiful Bill Act, which was signed into law in July 2025, the combined federal estate, gift and generation-skipping transfer tax exemption rose to $15 million per person as of January 1, 2026, with inflation adjustments starting in 2027. For a married couple, that's up to $30 million that can pass free of federal transfer tax. Just as important: this exemption has no scheduled expiration date, unlike the 2017 tax law. The current exemption is not subject to a scheduled sunset provision, although Congress could modify the rules through future legislation. The top rate on amounts above the exemption remains at 40%. The annual gift exclusion — what you may give any one person each year without touching your lifetime exemption — holds at $19,000 per recipient for 2026, or $38,000 for a married couple giving jointly.

For many families, this change in legislation is welcome news, as it takes federal estate tax off the table entirely. But if your trust documents were drafted years ago, especially around a much lower exemption amount, this is exactly the moment to have them reviewed. Older bypass or credit shelter trusts often contain formula clauses tied to the exemption amount, and at $15 million those formulas can now push far more into the trust than you had originally intended, unexpectedly limiting a surviving spouse's access to funds, and potentially causing an adverse tax consequence for later beneficiaries after the surviving spouse’s death. It's also worth remembering that many states impose their own estate or inheritance taxes at thresholds well below the federal number, so a plan that looks clean at the federal level may still need attention closer to home.

The trustee decision merits its own conversation

Every trust needs a trustee, and whom you choose matters as much as how the trust is drafted and structured. Many people default to naming a spouse, adult child or close friend, but that decision carries real weight and immense responsibility. A family member serving as trustee takes on binding legal duties, may face conflicts between family harmony and strict adherence to the trust's terms, and often lacks the time, investment expertise and/or tax knowledge that the role demands. This trustee’s role may also quietly strain a relationship for years.

Given the challenges inherent in being a trustee, you may wish to consider naming a corporate trustee like Corient Trust Company, LLC (CTC), either as the primary trustee or as a co-trustee alongside a family member. A corporate trustee brings continuity that an individual can't guarantee, plus it won't become incapacitated, move away or pass away itself. A corporate trustee is built to administer a trust for decades or across generations if that's what your plan calls for. It also brings professional, unbiased and highly experienced administration capabilities: distributions are made according to the trust's terms rather than family pressure, recordkeeping and tax filings are handled with institutional rigor, and investment management can be coordinated directly with your Corient Wealth Advisor.

For irrevocable trusts in particular — where control is intentionally being relinquished in exchange for certain tax and asset-protection benefits — having a truly independent trustee like CTC can also help ensure the trust is respected as a separate, independent entity. In turn, this may help reinforce the trust's administration as a separate fiduciary arrangement, consistent with the trust's intended design, if its tax treatment is ever questioned.

A quick reference: Common trusts and their intended uses

• Revocable Living Trust. This is the foundation of most estate plans, as it keeps assets out of probate and lets a successor trustee manage things immediately if you're unable to. Naming CTC as successor trustee means your affairs are handled by an experienced institution the moment they're needed, with no gap in continuity.
• Irrevocable Life Insurance Trust. This type of trust owns a life insurance policy so the death benefit stays outside your taxable estate while still providing liquidity for beneficiaries or estate costs. An independent trustee helps keep the trust's separateness intact.
• Spousal Lifetime Access Trust. One spouse creates this irrevocable trust for the other, allowing a couple to use up their gift and estate exemption while keeping indirect access to the funds through the beneficiary spouse. A corporate trustee provides the independent administration these arrangements are built around.
• Intentionally Defective Grantor Trust (IDGT). An IDGT moves assets, as well as their future growth, out of your taxable estate, while you continue paying the income tax on the trust's earnings — which itself acts as an additional tax-free gift to your beneficiaries.
• Dynasty Trust. This type of trust is built to hold and grow assets across multiple generations, minimizing repeated transfer taxes as wealth passes down. This is where institutional continuity matters most, as a corporate trustee like CTC can serve the trust's full, multi-generational lifespan.
• Testamentary Trust. These trusts are created through your will and only funded after death, often used to hold assets for minor children or other beneficiaries who need staged distributions to help manage and pace their access to funds, so they don’t squander a lump-sum inheritance.
• Special Needs Trust. This trust provides financial support to a beneficiary with a disability, without jeopardizing their eligibility for government benefits. Professional administration helps ensure distributions are handled correctly so benefits eligibility isn't put at risk.
• Charitable Remainder or Charitable Lead Trust. Use this type of trust to balance a philanthropic goal with an income stream, paying either a charity or individual beneficiaries first, with the remainder going to the other.
• Combined Trust Concepts. Note that the qualities and benefits of many of the trusts described above can be combined to create a trust that fits your needs.  For example, a trust for a spouse that holds insurance on the grantor, is taxed to the grantor for income tax purposes, and that lasts multiple generations would be a Spousal Lifeime Access Trust, an Irrevocable Life Insurance Trust, an IDGT, and a Dynasty Trust all at once.  A corporate trustee like CTC will understand and be able to keep track of the goals and complexity of such a trust arrangement.

Other non-tax-related benefits of trusts

Even if your estate is well under the current exemption limit, here are five more ways that trusts can still earn their place in a plan:

1. Skip probate. Assets in a properly funded trust pass directly to your beneficiaries, saving time, legal fees and the public disclosure that comes with a probate filing.
2. Keep it private. A probated will is a public record, while a trust generally isn't.
3. Control the timing. Stagger an inheritance by age or milestone, protect a beneficiary going through a divorce or facing creditor issues, or provide structure for someone who isn't ready to manage a lump sum.
4. Plan for incapacity. A funded revocable trust means your successor trustee can act right away — no court-supervised guardianship needed.
5. Add a layer of protection. A properly structured irrevocable trust can shield assets from future creditors, lawsuits or business liabilities.

Where to go from here

The right mix of trusts depends on the size of your estate, your family's needs, your state's rules and what you want your wealth to accomplish. If it's been a few years since your plan was reviewed — or if your trust was drafted before the 2026 exemption increase — now is a good time to sit down and make sure it still reflects both your goals and the current law. 

The choice of trustee deserves the same fresh look: as your family and assets grow more complex, naming CTC as trustee or co-trustee can bring the continuity, objectivity and professional administration that a trust of this importance deserves. If you don't have a trust in place yet, the higher exemption amount and more-settled tax landscape make it a genuinely good time to start. Contact a Corient Wealth Advisor today to learn more about how trusts can be highly useful for ultra-high-net-worth individuals and families.

This material is for general informational purposes and isn't intended as legal, tax or financial advice. Your specific situation may call for a different approach — let's talk through what makes sense for you and your unique objectives and circumstances.

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