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Wealth Preservation

Estate Planning &
Tax Optimization

It is not what you earn; it is what you keep. We engineer comprehensive frameworks to mitigate income, capital gains, and generational estate taxes.

Gideon Strategic Partners

Core Tax Architectures

1. Asset Location Strategy

While asset allocation dictates risk and return, asset location determines tax efficiency. We systematically locate highly taxed, ordinary income-generating assets inside tax-exempt PPLI wrappers, leaving public equities in taxable accounts to utilize step-up in basis provisions.

2. Step-Up vs. Estate Shield

A deliberate choice based on estate size: retaining assets in your name grants heirs a basis step-up, avoiding capital gains tax on deferred gains, while subjecting the total in excess of the lifetime exemption to 40% estate tax. Using an ILIT sacrifices the step-up but shields the entire death benefit from the 40% estate tax, generally more advantageous for UHNW estates.

3. Charitable Architectures

For philanthropically-minded families, Gideon integrates Charitable Remainder Trusts (CRTs) and Charitable Lead Annuity Trusts (CLATs) within a broader intergenerational wealth preservation plan architecture. Families bypass capital gains on appreciated assets, receive immediate deductions, and simultaneously replace the gifted wealth for heirs using a life insurance policy.

Advanced Trust Strategies

GRAT (Grantor Retained Annuity Trust)

Ideal for assets poised for rapid appreciation. The grantor places assets in trust and receives an annuity equal to the initial value plus an IRS-mandated interest rate. Any appreciation above that low hurdle rate passes to heirs entirely free of gift tax.

SLAT (Spousal Lifetime Access Trust)

One spouse gifts assets to an irrevocable trust for the benefit of the other spouse. The assets are shielded from estate taxes, yet the family retains indirect access to the funds.

IDGT (Intentionally Defective Grantor Trust)

The grantor sells an income-producing asset to the trust in exchange for a promissory note. The trust grows estate tax-free, and because it is "defective" for income tax purposes, the grantor pays the income tax, effectively making additional tax-free gifts.

The Ultimate: Dynasty Trust + PPLI

A multi-generational GST trust acts as the owner of a PPLI policy. Because the trust avoids the estate tax and the policy avoids the income tax, this structure creates a perpetual, tax-exempt compounding engine that scales exponentially decade over decade.

Tax Calendar & Planning Timeline

Q1
Fund new PPLI premiums; finalize prior-year tax data for K-1 alternatives.
Q2/Q3
Execute mid-year portfolio rebalancing and asset location audits. Establish new trusts.
Q4
Execute year-end tax loss harvesting, charitable gifting, and maximize annual gift tax exclusions.

IRC § 7702 compliance · tax law change risk · illustrative content notice · trust strategy complexity

Frequently Asked Questions

How much can I save in taxes with PPLI?
Savings depend on your state of residence, tax bracket, and underlying investments. For a California or New York resident investing in high-yield debt or hedge funds, PPLI can prevent over 50% of gross returns from being lost to federal and state taxes annually.
What is the 2026 federal gift, estate, and generation-skipping transfer tax exemption?
The federal exemption in 2026 is $15 million per donor (provided that the donor is a US citizen), less any prior-year utilization.
Green card holders can consult Gideon professionals for advanced planning considerations specific to their individual situation.
What is the difference between a GRAT and a SLAT?
A GRAT (Grantor Retained Annuity Trust) transfers the appreciation of assets above a hurdle rate to a trust for heirs tax-free, while the grantor receives an annuity based on the hurdle rate. A SLAT (Spousal Lifetime Access Trust) allows one spouse to gift assets out of their estate while the other spouse retains access to the trust, providing a safety net.
What is the difference between a GRAT and a CLAT?
A GRAT transfers the appreciation of assets above a hurdle rate to a trust for benefit of heirs with no gift tax, while the grantor receives an annuity from the trust. With a Charitable Lead Annuity Trust (CLAT), the grantor receives an income tax deduction based on the present value of annual distributions to charity (using the same hurdle rate that applies to a GRAT), after which any appreciation remaining in the CLAT is transferred to a trust for heirs with no gift tax.
Can I use both PPLI and a dynasty trust at the same time?
Yes, this is highly recommended. The ultimate wealth strategy involves a Dynasty Trust purchasing and owning the PPLI policy. This permanently removes the assets from the estate tax system while allowing the investments to grow income tax-free.
What is the step-up in basis and how does it affect PPLI planning?
Assets owned on the personal balance sheet receive a full step-up in cost basis at the death of the account owner. This basis step-up is particularly useful for highly-appreciated assets. However, there is no step-up in cost basis at the grantor's death for assets held in an irrevocable trust (Revenue Ruling 2023-2). Since insurance proceeds from a PPLI policy are paid out income tax free, there is always a de facto step-up in cost basis for that component of the insurance proceeds comprised of the policy's investment assets.
How does PPLI interact with the NIIT (Net Investment Income Tax)?
The 3.8% Net Investment Income Tax applies to passive investment income. Because assets inside a PPLI policy grow tax-free and policy loans are not classified as income, PPLI effectively avoids the NIIT entirely.
What happens to my PPLI policy if the insurance company fails?
Unlike a bank deposit or retail insurance cash value, PPLI assets are held in legally segregated 'separate accounts.' They are entirely protected from the general creditors of the life insurance company in the highly unlikely event of life insurance company insolvency.

Ready to Optimize Your Wealth Strategy?

Schedule a confidential consultation with Gideon's advisory team to discuss how PPLI and alternative investments can enhance your portfolio's tax efficiency.