The wire hit. The escrow is real. The earn-out is contingent. And your old estate plan, built around an illiquid LLC, just became obsolete in one signature.
You spent a decade making this company worth selling. The wire hits, the escrow funds, the earn-out kicks in over three years, and the entire structure of your wealth changes in one signature. Yesterday it was illiquid equity in a single LLC, hard to value, hard to gift, hard to plan around. Today it is cash, public stock, structured notes, and short-term Treasuries. The estate plan you built around the operating company does not contemplate any of it.
This is the most important 90 days of your post-sale life, and almost nobody schedules it. The federal estate tax exemption sits at $13.6M per person in 2026, with a scheduled sunset that may cut it roughly in half. Whatever planning you can do before the sale closes is dramatically more efficient than what you can do after. If the sale already closed, the window for the most powerful moves is shorter than people realize, but it is not gone. Here is the playbook.
The rule of thumb: every dollar of value you can move out of your estate before the sale closes uses your gift tax exemption against the lower pre-sale valuation. The same dollar after close uses exemption against the higher cash value. The difference, on a meaningful exit, can be eight figures of estate tax savings. If you are reading this before close, stop scrolling and call your attorney today.
Run the numbers cold. Add the after-tax sale proceeds, your existing investment accounts, real estate, retirement accounts, life insurance death benefit, and any remaining business interests. If you are married, the combined number against the combined exemption is what matters. The 2026 federal exemption is $13.6M per person, $27.2M per couple. Above that, the federal estate tax kicks in at 40%.
The bigger risk is the sunset. The 2017 Tax Cuts and Jobs Act doubled the exemption temporarily. Without congressional action, it reverts to roughly half its current level. Founders who use the elevated exemption now (through gifting and irrevocable trusts) lock in the benefit. Founders who wait may discover their post-sale balance sheet sits squarely above a much lower line, with no easy retreat.
Married couples have two exemptions. They are not automatically combined. If the first spouse dies and their executor does not file a Form 706 estate tax return electing portability, the unused portion of that exemption is gone forever. Your surviving spouse then has only their single exemption to work with on the entire combined estate.
This is one of the most common, least dramatic, most expensive mistakes in post-sale estate planning. The first-to-die spouse's exemption is worth roughly $5.4M of estate tax savings at current rates. Whether you use a credit shelter trust or rely on portability, decide deliberately, document the decision, and make sure your executor knows that the Form 706 must be filed even if no estate tax is due.
A SLAT is the post-sale founder's workhorse. You set up an irrevocable trust for the benefit of your spouse (and potentially your children), fund it with assets up to your gift tax exemption, and remove the assets and all future appreciation from your taxable estate. Your spouse can receive distributions, which means the family still has practical access to the money, while the assets sit outside your estate for tax purposes.
The SLAT is most powerful when both spouses do it for each other, but the IRS will not let you create mirror-image trusts that effectively give each spouse direct access to their own money. This is the reciprocal trust doctrine, and avoiding it requires the two trusts to have meaningfully different terms (different trustees, different distribution standards, different beneficiary classes, different timing). A competent trust attorney can draft around it. A template-driven approach cannot.
A Grantor Retained Annuity Trust is the right structure when you have an asset you expect to appreciate sharply, like rollover equity in the buyer's stock, a structured note that has not yet repriced, or earn-out payments tied to a public ticker. You contribute the asset to the GRAT, receive an annuity stream back for a fixed term (often two to five years), and any growth above the IRS hurdle rate (Section 7520 rate) passes to the remainder beneficiaries (your children or a trust for them) gift-tax-free.
If the asset goes flat, you simply get your money back and the GRAT was a no-cost experiment. If it appreciates sharply, you have moved millions out of your estate with zero use of your lifetime exemption. The downside is mortality risk: if you die during the GRAT term, the assets pull back into your estate. Short-term, rolling GRATs are often the right structure for younger founders. Longer-term GRATs make sense when the asset has predictable appreciation and the founder is in good health.
If part of your sale was for buyer's stock, and you are now sitting on a concentrated, low-basis position you would like to diversify, a Charitable Remainder Trust solves three problems at once. You contribute the appreciated stock to the CRT, the CRT sells it without immediate capital gains tax, you receive an income stream for life (or a term of years), and the remainder passes to charity at the end. You also receive a current charitable deduction for the present value of the remainder interest.
The math works best for highly appreciated, low-basis stock that you would otherwise have to sell with a large capital gains hit. It does not work for cash, and it does not work for assets you want to leave to your kids. Pair a CRT with a wealth-replacement life insurance policy held in an irrevocable life insurance trust, and you can effectively donate the asset to charity, take the deduction, get the income, and still leave the family the equivalent value, all outside your estate.
An IDGT is the workhorse for selling assets out of your estate without triggering income tax. The trust is "defective" only for income tax purposes, meaning you (the grantor) continue to pay income tax on the trust's earnings, which is itself a tax-free gift to the beneficiaries. You can sell appreciating assets to the IDGT in exchange for a promissory note, freezing the value in your estate at the note amount and shifting all future appreciation outside. Combined with a small upfront seed gift, the IDGT sale is one of the cleanest ways to move significant value out of an estate without burning gift exemption.
Qualified Small Business Stock under Section 1202 is the most underused planning tool in founder exits. If your shares qualify (C-corp, gross assets under $50M when issued, original issuance, held more than five years, qualified trade or business), you can exclude up to $10M of capital gains, or 10X your basis, whichever is greater, from federal tax.
The stack is what most founders miss. Each non-grantor trust you fund with QSBS shares (before the sale) can have its own $10M exclusion. Gift QSBS shares to a trust for each child, and each trust gets its own cap. Done correctly before the sale closes, this can multiply the QSBS exclusion several times over without any change to who ultimately benefits from the money. The mechanics require careful attention to grantor-trust rules and to the timing of gifts versus the sale, but the upside, on an exit with significant QSBS-eligible gain, is measured in millions of additional after-tax dollars.
Federal estate tax gets the attention. State estate tax kills more founders quietly. Twelve states and DC impose a state-level estate tax with exemptions far below the federal level (some as low as $1M). Massachusetts, New York, Oregon, Washington, Illinois, Minnesota, Maryland, and others can add 10% to 16% on top of the federal bill, and the state-level exemption is often non-portable between spouses.
Florida, Texas, Washington (income only, the state does have an estate tax), Nevada, Tennessee, Wyoming, and South Dakota have no state income tax and no state estate tax. The migration question is real, and the timing matters. To break domicile cleanly, you generally need to actually move (driver's license, voter registration, primary residence, doctor relationships, days of physical presence), and the move should ideally happen before the sale closes, not after. A late-cycle move triggers state-level scrutiny and often does not work to escape state tax on the gain itself, only on future income. For the structural side of moving assets into the right vehicles, our piece on how to fund a living trust walks through the mechanics.
Document the proceeds, the structure of any earn-out, and the after-tax cash position. Confirm your estate attorney, CPA, and wealth advisor are on the same email thread. Pull the existing estate plan, the operating agreement, and any pre-sale gifting paperwork.
Model the SLAT, GRAT, CRT, and IDGT options against the actual numbers. Decide which combination matches your liquidity, your charitable intent, and your spouse's comfort level. The right answer is almost always a combination, not a single tool.
Draft and sign the irrevocable trusts. Fund them with the right assets in the right order. File any required gift tax returns (Form 709) for the calendar year. Update beneficiary designations on every retirement account, life insurance policy, and transfer-on-death registration to reflect the new structure.
Rewrite the will, the financial POA, the healthcare proxy, and the revocable living trust to fit the post-sale picture. Have the family conversation. The most common cause of post-exit family conflict is not greed, it is information asymmetry. The structural choice between leaving things to a will or to a trust matters more after a sale than before; our breakdown of trust vs will walks through how to decide.
Estate planning after a business sale is a 90-day project that compounds for the rest of your life. Done well, it locks in the elevated 2026 exemption, captures multiple QSBS exclusions, moves appreciating assets out of your estate before they appreciate further, and puts the right structures in place before the next big life event. Done poorly, it leaves the IRS as the largest beneficiary of the company you spent a decade building.
This is also the moment to take the privacy of your estate plan seriously. Most platforms store your asset list, your beneficiaries, and your reasoning in plaintext on their servers, where one breach exposes everything: the size of the exit, the structure of the trusts, the names of the children, the dollar amounts of the gifts. DocSats was built for the post-exit founder: every document is encrypted in your browser before it is ever stored, so even DocSats cannot read your asset inventory or your trust funding instructions. The plan is anchored to the Bitcoin blockchain for tamper-evident proof of existence, and the digital assets clauses cover the rollover stock, the structured notes, the crypto, and the liquid Treasury portfolio that a sale typically produces. The wire hit. The plan should match the new reality, privately.
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