How the rich pass on their wealth. And how you can too

Death and taxes may be inevitable, but a big bill for your heirs doesn’t have to be NewsHow the rich pass on their wealth. And how you can tooDeath and taxes may be inevitable, but a big bill for your heirs doesn’t have to beMatt Sedensky Monday 16 February 2026 15:02 GMTBookmarkBookmark popoverRemoved from bookmarksClose popoverYour support helps us to tell the storyRead moreSupport NowFrom reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.Your support makes all the difference.Read more Death and taxes may be inevitable. A big bill for your heirs is not.The rich have made an art of avoiding taxes and making sure their wealth passes down effortlessly to the next generation. But the tricks they use – to expedite payouts to heirs and avoid handing money to the government – can also work for people with far more modest estates.“It’s a strategic game of chess played over decades,” says Mark Bosler, an estate planning attorney in Troy, Michigan, and legal adviser to Real Estate Bees. “While the average person relies on a simple will, the well-to-do utilize a different playbook.” Consider a trust First, consider the facts: Despite widespread misconceptions, only estates of the very richest Americans are generally subject to taxes. At the federal level, estates of over $15 million typically trigger taxes. At the state level, 16 states and the District of Columbia do collect estate or inheritance taxes, according to the Tax Foundation, sometimes with lower exemptions than the IRS, but still at thresholds targeting millionaires.While most people can pass on what they have without worrying about their heirs being caught in a web of taxes, it can require planning to escape a messy process that can hold up estates for years and cost families significantly in court fees and lawyer bills.The solution at the center of many estate planners’ designs is a trust.Though trusts conjure images of complex arrangements utilized by the uber-rich, they are relatively simple tools that can make sense for many people. They come with expense, often costing thousands of dollars in lawyer fees to set them up. But for a retired couple with a paid-off house, 401(k)s and a portfolio of investments, they can ease the passing of assets to heirs.Among the reasons: Even if you aren’t leaving enough behind to trigger taxes, your estate can get tied up in probate court, which typically assesses fees based on an estate's total value.“You are leaving what might have gone to your children or other loved ones to attorneys and the courts,” says Renee Fry, CEO of Gentreo, an online estate planner based in Quincy, Massachusetts. “Anywhere from 3 to 8% of an estate might be lost.”Trusts can allow an estate to sidestep court altogether and to shield it from public view by keeping details out of public records. Some people also use them to protect their savings if they someday need nursing home care and would prefer to qualify for a government-paid stay under Medicaid instead of paying themselves. Pass on stocks virtually tax-free Imagine being an investor in a stock like Nvidia that has soared in recent years. Now imagine being able to reap the profit of selling your shares without paying tax.It’s possible with one caveat: You have to die.That scenario, known in estate lingo as “step-up,” allows many rich families to grow their wealth while ensuring their heirs won’t be saddled with the bill.It works like this: Say your savvy uncle bought 100 shares of Nvidia when it began trading in 1999 at $12 a share. Between splits and a soaring price, that $1,200 investment would be worth more than $9 million today. If he left it all to you, you could sell the shares owing little or no tax because gains are calculated from the day he died, not the day he bought it.Benjamin Trujillo, a partner with the wealth advisory firm Moneta, based in St. Louis, Missouri, says it all seems “like a magic trick.” And it’s completely legal.“Wealth transfer looks like smoke and mirrors,” Trujillo says. “Assets like stocks can quietly grow for decades and, when they’re inherited, the tax bill often disappears.”Lawmakers have sometimes proposed limits on the “step-up” rule but at least for now, it remains, making it one of the biggest not-so-secret weapons in the arsenals of those looki