Wealth Transfer Strategies for High Net-Worth Families: The Role of a Trust

At Hancock Whitney, we understand that preserving and passing on wealth requires more than just investment savvy—it requires foresight, strategic planning, and tools that align with your family’s unique legacy. For high net-worth families, a trust can be a foundational component of a comprehensive wealth transfer strategy, helping ensure your hard-earned assets are protected and passed on according to your wishes.

Whether you're approaching retirement, running a business, or preparing the next generation to receive wealth, a trust may offer powerful advantages. Below, we explore the core elements of effective wealth transfer and how trusts can help achieve your goals.

Three Essential Elements of a Wealth Transfer Strategy

An effective wealth transfer strategy is built around more than just asset distribution—it’s about protecting what matters most. A successful wealth transfer strategy includes three essential elements:

1. Minimize Taxes: High net-worth estates may be subject to federal and, in some cases, state estate taxes. Trusts can help reduce the size of your taxable estate, potentially preserving family wealth. Various trust strategies are specifically designed to help reduce estate and gift tax exposure when properly implemented.
2. Avoid Probate: Probate is a public, often time-consuming court process that can delay asset distribution and increase administrative costs. Assets placed in a properly structured trust typically bypass probate, allowing for quicker, private, and potentially less costly transfers to beneficiaries.
3. Ensure Assets Are Distributed According to Your Wishes: A trust provides greater control over how and when your assets are distributed. This is particularly important for families with complex dynamics, young beneficiaries, or concerns about financial maturity. You can specify milestones, such as age or life events, before distributions occur—safeguarding the long-term impact of your legacy.

The Role of a Trust in Your Wealth Transfer Strategy

A trust is a legal arrangement that allows a third party, or trustee, to hold and manage assets on behalf of beneficiaries. It can be used to:

• Protect assets from creditors, lawsuits, or divorces
• Provide for multiple generations
• Offer guidance and oversight in the hands of a corporate trustee or trusted individual
• Seamlessly transfer business interests or illiquid assets

At Hancock Whitney, our Wealth Management advisors work with clients and their estate planning attorneys to integrate trusts into broader strategies that may also include charitable giving, business succession planning, and retirement income planning. Read more about Understanding the Cost of Maintaining a Trust.

Types of Trusts, and Their Pros and Cons

Choosing the right type of trust depends on your goals, family structure, and financial picture. Here’s a closer look at key trust types:

Revocable Trusts

Pros:

• Can be changed or revoked during your lifetime
• Provides privacy and avoids probate
• Enables centralized management of assets if you become incapacitated

Cons:

• Offers no tax benefits during your lifetime
• Assets remain part of your taxable estate

Best for: Individuals looking for flexibility and control while simplifying estate administration.

Irrevocable Trusts

Once established, these trusts cannot be altered without the consent of the beneficiaries. While this loss of control may seem limiting, irrevocable trusts can provide significant tax advantages and asset protection. The are a various type of irrevocable trusts including:

Grantor Retained Annuity Trust (GRAT)

Pros: Transfer appreciation of assets to heirs with minimal gift tax impact

Cons: Requires carefully structured terms to comply with IRS rules

Best for: Transferring high-growth assets while retaining income for a period

Intentionally Defective Grantor Trust (IDGT)

Pros: Allows income to be taxed to the grantor while assets grow outside the estate

Cons: Complex setup and ongoing management

Best for: Passing appreciating assets to heirs while reducing estate taxes

Spousal Lifetime Access Trust (SLAT)

Pros: Provides indirect access to trust assets through a spouse while removing them from your estate

Cons: Risk if spouse predeceases or in the event of divorce

Best for: Married couples seeking estate tax efficiency with some flexibility

Irrevocable Life Insurance Trust (ILIT)

Pros: Removes life insurance proceeds from your taxable estate

Cons: No access to the policy's cash value once transferred

Best for: Individuals with large life insurance policies who want to avoid estate tax on the death benefit

Qualified Personal Residence Trust (QPRT)

Pros: Transfers a primary or vacation home to heirs at a discounted gift tax value

Cons: You must outlive the trust term to achieve tax savings

Best for: Individuals with valuable real estate looking to pass it to the next generation tax-efficiently

Have a Family Meeting to Discuss the Trust

Establishing a trust is not just a legal or financial decision—it’s a deeply personal one. A well-planned family meeting, facilitated by your wealth advisor or estate attorney, can help set expectations, reduce conflict, and ensure transparency. These conversations are particularly important when trusts involve staggered distributions or include conditions that may affect heirs’ lifestyles or plans.

At Hancock Whitney, we encourage families to treat wealth transfer not as a transaction, but as a legacy moment. Open dialogue strengthens family unity and prepares the next generation to steward wealth responsibly. Read more about How to Hold a Family Wealth Management Meeting & Create a Family Mission Statement.

Discuss a Potential Trust with Hancock Whitney

As you plan the future of your wealth, consider how a trust could be a powerful instrument in your overall estate strategy. The right trust—customized to your needs—can reduce tax exposure, protect your privacy, and ensure your assets serve your values across generations.

Our Hancock Whitney Wealth Management team collaborates with you and your legal and tax advisors to develop solutions aligned with your life, your legacy, and your family’s future.

The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. 

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation. 

Hancock Whitney Bank offers investment products, which may include asset management accounts, as part of its Wealth Management Services. Hancock Whitney Bank is a wholly owned subsidiary of Hancock Whitney Corporation.

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