Over $10M Equity: Wealth Coordination, Exchange Funds, and Estate Planning

At $10M+ in equity, you need a coordinated team including a CPA, estate attorney, and wealth advisor to manage federal and state income taxes, Net Investment Income Tax, estate tax exposure, and concentration risk. Explore advanced strategies like exchange funds, charitable trusts, and GRATs.

Comprehensive wealth planning is non-negotiable. At $10M+, you face the top federal rates on income and capital gains, the 3.8% Net Investment Income Tax, state taxes, and potentially estate tax exposure if your total estate approaches the federal exemption ($13.61 million in 2024, scheduled to revert to roughly $7 million after 2025 absent legislation). A CPA is one member of a team that includes an estate attorney and a wealth advisor.

Exchange funds for diversification. An exchange fund pools your concentrated stock with other investors' holdings, allowing you to diversify without triggering an immediate taxable event. After seven years, you receive a diversified basket of securities with a carryover basis. This strategy only makes economic sense at this equity level.

Charitable trusts and donor-advised funds. A Charitable Remainder Trust (CRT) allows you to contribute appreciated stock, receive an income stream, avoid immediate capital gains, and take a partial charitable deduction. Donor-advised funds offer a simpler route for bunching large charitable deductions.

Estate planning integration. Grantor Retained Annuity Trusts (GRATs), Intentionally Defective Grantor Trusts (IDGTs), and family limited partnerships can transfer equity appreciation to heirs outside your taxable estate.

The tradeoff: The strategies are powerful but require coordination among your CPA, estate attorney, and financial advisor. Implementing them piecemeal or without professional guidance can create conflicts -- for example, a CRT funded with QSBS-eligible stock may waste the Section 1202 exclusion.