Estate tax planning in challenging environments

Inflation is the highest in decades. Interest rates are rising. Markets have struggled (to say the least) through the first half of 2022. In our previous income tax planning article, we reviewed several income tax planning techniques that may put you in a better position as things eventually get back to ‘normal.’

In this article, we will cover a few estate tax planning techniques that could do the same.

Qualified Personal Residence Trusts (QPRT)

For a person that has a residence they would like to pass down to the next generation (often a vacation home), the Internal Revenue Code conveniently provides an efficient trust technique that gives a ‘break’ on the usual gift tax consequences. With a QPRT, the person contributes the home to the trust for a term of years, and during that term, the person lives in the home as normal, paying all of the bills and expenses. At the end of the term, the home passes to the remainder beneficiaries, often the children or trusts for them. Normally, when a person contributes to a trust, the fair market value of the asset contributed counts against the lifetime gift tax exemption (currently $12.06 million per donor). However, with a QPRT, there is a discount applied depending on the length of the initial term that the owner is still occupying the home. In other words, assuming the initial term of the trust is 10 years, the gift amount to the children is not the current value of the home, but rather it is the current value of the home minus a discount for the fact that they (the children) don’t have any legal rights in the home for the next 10 years. The discount is dependent on two factors: the length of the term and interest rates. When interest rates are higher, the discount is higher, so as interest rates rise, QPRTs become more attractive.

Plain Old Gifting

While sales of assets to family members or trusts become less attractive when interest rates are higher (because you don’t want a lot of interest coming back into your estate if you have an estate tax issue), simply gifting assets before there are any dramatic changes in the law remains an easy way to control the size of a person’s estate. Gifting is especially attractive when the exemption is high (as it is today) and asset values are lower (as they have been moving). Volatility in the markets and the economy in general has a favorable effect, lowering the value of privately held assets like interests in closely held businesses. Often the largest benefit of removing an asset from the estate is removing the future appreciation from the estate. Of course, the lower the value of the asset today, the more room it may have to appreciate in the future.

For more information on how Income and Estate Tax Planning strategies may be able to help you, please contact your CI Private Wealth Advisor.


Steve Novak, JD

Steve Novak, JD

Partner, Wealth Advisor

Steve Novak serves as a Managing Director at RGT. He has spent the last twenty years advising wealthy individuals and family offices on estate, gift, and income tax planning matters. Most recently, Steve has been deeply involved in wealth education and family governance engagements.

Professionally, Steve has been recognized as one of the top attorneys in Dallas by *D Magazine from 2013 to 2018 and was also named a *Thompson Reuters “Super Lawyer” from 2014 to 2018. Steve was also named a *Texas Monthly “Rising Star” from 2006 to 2013.

Steve received his Juris Doctor degree and Bachelor of General Studies in Political Science from the University of Kansas. He has been involved in numerous professional and charitable organizations, including the Dallas Estate Planning Council, the Parkland Foundation Planned Giving Council, the SMU Planned Giving Board of Advisors, the Dallas Council on Charitable Gift Planners, and Campfire First Texas Council Board of Directors. Steve is also a frequent speaker on estate planning and charitable topics.


This information is for educational purposes and is not intended to provide, and should not be relied upon for, accounting, legal, tax, insurance, or investment advice. This does not constitute an offer to provide any services, nor a solicitation to purchase securities. The contents are not intended to be advice tailored to any particular person or situation. We believe the information provided is accurate and reliable, but do not warrant it as to completeness or accuracy. This information may include opinions or forecasts, including investment strategies and economic and market conditions; however, there is no guarantee that such opinions or forecasts will prove to be correct, and they also may change without notice. We encourage you to speak with a qualified professional regarding your scenario and the then-current applicable laws and rules.

Different types of investments involve degrees of risk. Future performance of any investment or wealth management strategy, including those recommended by us, may not be profitable, suitable, or prove successful. Past performance is not indicative of future results. One cannot invest directly in an index or benchmark, and those do not reflect the deduction of various fees which would diminish results. Any index or benchmark performance figures are for comparison purposes only, and client account holdings will not directly correspond to any such data.

Advisory services are offered through CI Private Wealth and its affiliates, each being a registered investment adviser (“RIA”) regulated by the US Securities and Exchange Commission (“SEC”). The advisory services are only offered in jurisdictions where the RIA is appropriately registered. The use of the term “registered” does not imply any particular level of skill or training and does not imply any approval by the SEC. For a complete discussion of the scope of advisory services offered, fees, and other disclosures, please review the RIA’s Disclosure Brochure (Form ADV Part 2A) and Form CRS, available upon request to the RIA and online at We also encourage you to review the RIA’s Privacy Policy and Code of Ethics, which are available upon request.

Our clients must, in writing, advise us of personal, financial, or investment objective changes and any restrictions desired on our services so that we may re-evaluate any previous recommendations and adjust our advisory services as needed. For current clients, please advise us immediately if you are not receiving monthly account statements from your custodian. We encourage you to compare your custodial statements to any information we provide to you.