The plan that saves the most tax often costs you a family.

TL;DR: Founders grade an estate plan by how much of the 40% estate tax it avoids. Twelve years of practicing estate law taught me something different: the plan that saves the most tax is usually the one that hands the people you love a property interest, and a property interest is legal standing to sue. Below the current $30 million married exclusion, there's often no tax to save in the first place, and above it, the tax bill is a recoverable cost that a destroyed family relationship isn't.

I practiced estate law for about twelve years. Back then, I built the complex structures myself. I believed in them.

Then I watched them play out. There are so many recommendations from experts to set up these elaborate plans, and in the end, very often, they give someone other than you the ability to control your money, your life, and your decisions, by handing them a power of objection. Standing to sue is what we call it legally. My philosophy has been, and continues to be, that in most cases it isn't worth it.

Here's the trade, stated plainly: the destruction of a family relationship, which can't be recovered, usually isn't worth the savings of the 40% estate tax. And right now there's a $30 million combined exclusion on a married couple's estate, so a lot of what people are structuring around doesn't even apply to them. If you can leave $30 million to your family with no estate tax at all, why would you transfer money out of it to avoid a tax you don't owe?

Most founders grade an estate plan on how much of the 40% it dodges. That's the wrong scorecard. The right one is what the plan actually does to the people who inherit it.

Take the fight over Jimmy Buffett's roughly $275 million trust. The popular version of the story is widow against kids. It isn't. It's two separate lawsuits, one in Florida and one in California, between his widow and the trust's business manager, each petitioning to remove the other as trustee. She was told to expect about $2 million a year from the trust and alleges his trustee fees, roughly $1.7 million a year, were excessive. That fight is still headed to trial in January 2027, more than three years after his death.

Or take James Brown, whose estate spent roughly fifteen years in litigation before his heirs settled and his catalog sold to fund the scholarship trust he'd actually intended. His widow was locked out of his home after his death. More than a decade of lawyers stood between his intentions and the outcome he wanted.

The receipt closest to most of you reading this isn't a celebrity. It's a neighbor of mine, an entrepreneur who built and sold a company with his wife. Her share went into an irrevocable trust with their children as beneficiaries. After she passed, their daughter and son-in-law decided they didn't like how he was managing the investments. Maybe they were right, maybe they weren't. It didn't matter. A completely standard, competently drafted plan was enough to start a fight.

Here's the mechanism underneath all three. If you set up something that gives someone an entitlement, it's literally called an entitlement. It's a property interest. They have it. You did it. You got the benefit, you beat the tax people, and you destroyed your family in the process.

It doesn't take a large probability for this to matter. Even a low-probability outcome is unbounded once you've created the interest. Your child could die and their share of a right they were entitled to could pass to a spouse who hates you.

Contracts don't fix this. My own experience is that if somebody has a right to sue, they have a right to sue. My partner Ryan Deiss put the sharper version of it: protecting against it with a contract just means you might win the lawsuit. The word that matters there is lawsuit.

So the rule is simple: you're better off never creating an estate plan that gives the people you love standing to sue each other. Just don't do that, and you avoid nearly everything downstream of it. What that might mean is that your estate ends up owing some taxes.

For most of you reading this, none of it applies yet. You're under the $30 million line, and there's nothing to structure around in the first place. For the ones who are over it, the asset most likely to create standing is usually the closely held company, because it's illiquid, hard to value, and it's common for one child to run it while the others hold a passive interest in something they don't operate and can't easily leave.

Ryan's instinct here is right, and I'd extend it with the mechanics. Liquidate or convert the company before you die if you can, so what passes down is something divisible instead of a business one child has to run and the others have to trust them to run well. Where that's not realistic, the tools that actually work are structural, not conditional:

I'm not going to try to control my own kids from the grave either. I'm not going to create the potential for conflicting agendas, or property claims, that could poison our relationship after I'm gone. If it costs me 40% of everything over $30 million to avoid that, I'm fine with it. I've got two kids. Each of them gets $15 million first, and if there's a billion more than that, four hundred million of it goes to taxes. I don't care.

The question underneath all of this isn't really about tax efficiency. It's whether you're making a conscious decision that you value the planning more than the relationship it might cost you.

You don't want to create standing between you and someone you love. You don't want to create standing between the people you love. And you don't want to create standing between any third party and you or the people you love. It's easy to avoid once you're thinking about it. It's easy to miss when you're just following the standard advice, because the standard advice isn't built to think about the human side of it at all.

— Roland

Two shareholders, twenty million dollars in taxes you never pay.

Not a loophole. A structure.

And like most structures worth having, it has to be in place long before there's a number to protect.

That's the part people miss. By the time the money is real, the window for deciding how much of it you keep has usually closed.

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