The Fortune Didn’t Disappear
Most Americans will never owe the federal estate tax. They will leave behind a house, a retirement account, a few investments, maybe a family business, and whatever they managed to save after a lifetime of mortgages, medical bills, tuition payments, and ordinary expenses. If they are lucky, their children will inherit something that makes the next generation more secure.
That is not the problem. Americans should be able to build wealth, and parents should be able to help their children. A country that wants more people to own homes, start businesses, and accumulate savings should celebrate families that manage to pass something forward.
However, at the very top of the economic ladder, inheritance can work differently. A fortune can keep supporting children, grandchildren, and great-grandchildren. The investments can keep growing. The descendants can keep benefiting. The economic power created by the original wealth can remain inside the family long after the person who built it is gone.
Under the right legal structure, however, the moment when that fortune would ordinarily encounter another federal estate-tax event can disappear. The wealth did not vanish, and the family did not stop benefiting from it, but the obligation is gone.
How can enormous wealth keep benefiting generation after generation while the obligation Congress created for enormous intergenerational fortunes stops recurring? The answer begins with something more complicated-sounding than it is: a trust.
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The Family Vault
Imagine a wealthy parent places a large portfolio of investments into a legal container. The children can receive money from it; later, the grandchildren can benefit, and then their children. However, the underlying assets do not necessarily become the direct property of each generation. The federal estate tax generally applies to property included in a person’s taxable estate at death. If investments remain inside a trust rather than repeatedly becoming the direct property of each child and grandchild, the family can keep receiving economic benefits without necessarily creating another estate-tax event every time a beneficiary dies. Think of it as a family vault. The people who benefit can change, the rules governing distributions can change, and the generations can change, but the assets inside the vault can remain where they are.
The real name for that vault is a trust. When it is designed to continue benefiting descendants across multiple generations, it is commonly called a dynasty trust. The important issue is ownership. The assets are held in a legal structure that can outlast the people benefiting from them. People change, generations change, and the vault stays put.
State law can make that arrangement even more durable. Traditional trust law once imposed meaningful limits on how long many trusts could continue. Some states have loosened or eliminated those limits, allowing certain trusts to last for generations. The longer the vault can legally remain standing, the longer the fortune inside it can continue serving descendants.
Congress has confronted this basic problem before.
Congress Created a Tax for Exactly This Problem
Congress did not discover multigenerational tax planning yesterday. The federal estate tax applies to sufficiently large estates when taxable wealth transfers at death. Lawmakers also understood that very large fortunes could be arranged to skip over the next generation entirely.
If the tax applied when wealth moved from parent to child, what happened when the money was arranged to jump from grandparent to grandchild? Congress answered with the generation-skipping transfer tax. The mechanics are complicated, but the principle is not: changing the path the fortune takes should not automatically erase the obligation.
Congress was trying to prevent large fortunes from escaping transfer taxation simply by changing the route through which wealth moved. However, the modern trust system raises the same underlying question in a different form. If a fortune can remain inside a legal structure while generation after generation continues benefiting from it, the issue is whether the tax system still reaches the kind of multigenerational wealth Congress intended it to reach. As such, the stewardship question becomes is the system still accomplishing what Congress intended it to accomplish?
When a Rule Becomes a Planning Problem
Most Americans encounter government obligations as rules. Taxes are withheld from paychecks, and property-tax bills arrive. Filing deadlines come whether the month was convenient or not. When an obligation applies, the practical question is usually simple: How do I comply?
At very high levels of wealth, access to specialized lawyers, accountants, and financial planners can create a different question: How should ownership, timing, and legal structure be arranged so that the obligation does not arise in the first place? That does not automatically mean anyone is cheating. Tax evasion breaks the law; tax planning works inside it. If lawmakers create a legal path, people are entitled to use it.
The larger problem is what happens when a public obligation begins to work differently once someone has enough wealth and expertise to rearrange ownership and timing around the event that would otherwise trigger the tax. Federal tax law provides part of that framework, and state trust law can provide another.
Together, those rules can allow wealth to keep producing benefits while a taxable transfer does not necessarily recur in the same way. For one person, the rule is something to meet. For another, it can become something to design around. At this stage, that does not tell us whether the system is right or wrong, only what the system is doing.
Inheritance Is Good. Permanence Is a Different Question.
People should be able to build wealth. Families should own homes, save money, start businesses, and leave the next generation better off than the last. The Square New Deal should want more working families accumulating assets and passing something forward, not fewer.
However, leaving wealth to your children is not the same policy question as creating a legal structure that can hold enormous capital across generations while avoiding repeated taxes on very large transfers of inherited wealth. The issue is not whether inheritance is good or bad, but whether protecting inheritance should also mean protecting enormous fortunes from being taxed again as they continue benefiting generation after generation.
A republic should encourage families to build wealth, but it should be more cautious about writing rules that allow enormous concentrations of wealth to become effectively permanent institutions. That does not tell Congress what the tax rate should be, and it does not make large inheritances illegitimate.
It means the structure deserves scrutiny. Helping one generation pass something to the next is one thing. Allowing a fortune to remain inside a legal structure for generation after generation is another. Once enough wealth begins moving that way, the question stops being theoretical.
When the Exception Becomes Trillions
For 2026, the federal estate-and-gift-tax system provides a basic exclusion of $15 million per person. Above the applicable exclusions and deductions, the top federal estate-tax rate reaches 40%. Whatever someone thinks that tax should be, Congress has clearly aimed it at extraordinary wealth, not the ordinary inheritance most families hope to leave behind.
Researchers cited by the Congressional Research Service estimate that dynasty trusts may hold at least $4.5 trillion, and likely $6.1 trillion or more, in wealth that may never face the estate tax. Those are estimates, not an exact government inventory, and Congress does not have a perfect accounting of every dollar held inside these structures.
Still, trillions of dollars change the nature of the question. This is no longer an obscure corner of estate planning, but instead a question about whether enormous amounts of American wealth can remain inside structures that let descendants benefit while preventing estate taxation from recurring across generations.
At that scale, Congress has a duty to know what its own rules are producing. The concern is not that wealth itself is suspicious or that every dollar must eventually belong to Washington, but whether this treatment represents deliberate policy or a system that has drifted away from its purpose.
The Rule Has to Remain a Rule
A square government does not promise equal wealth, punish people for succeeding, or make inheritance illegitimate. It also does not require anyone to voluntarily pay a tax the law does not require.
However, government does have a responsibility to make the obligations it creates real, understandable, and consistently meaningful. The question is not how much more money Washington can collect or how high taxes on wealthy people should be. The first stewardship question is more basic. Did Congress create an obligation that it actually expects the affected people to encounter?
A public rule begins to lose legitimacy when its force depends less on the rule itself than on how much legal help and financial planning someone can afford to build around it. That is where the Square New Deal standard applies: Don’t punish wealth. Don’t privilege wealth. Write a square rule and make it apply.
A square government does not guarantee equal outcomes. It requires public obligations to remain genuine obligations, not increasingly optional exercises in legal planning. That does not mean every taxpayer must arrive at the same bill, but instead that Congress should be able to explain why the rule works differently when it does. If the difference is intentional, defend it. If it is accidental, fix it.
If government creates an obligation and then allows that obligation to become progressively less real as wealth becomes more sophisticated, the problem is no longer merely tax policy, but stewardship.
Congress Has to Decide What It Actually Means
Congress does not need to begin by choosing a new tax rate, outlawing dynasty trusts, or assuming the current system is wrong. It needs to begin by understanding what the system is actually doing.
How much wealth is held inside long-lived multigenerational trusts? How much of that wealth would otherwise face estate or generation-skipping taxes? How do federal tax rules and state trust laws interact? How much of today’s system reflects deliberate policy rather than decades of separate rules accumulating into something lawmakers never fully intended?
Then Congress has to choose. If Congress believes extraordinarily wealthy families should be able to place fortunes into structures that can remain largely outside repeated transfer taxation for generations, it should say so plainly. Explain the benefit, defend the policy, and own the result.
However, if Congress believes enormous fortunes should encounter estate and generation-skipping taxes as wealth continues benefiting one generation after another, then Congress has a stewardship obligation to write rules capable of accomplishing that purpose.
Government cannot plausibly claim both things at once. The wealth is still there. The descendants still benefit from it. The economic power still moves from one generation to the next. What disappeared was the moment when the law said an obligation was due.
That may be perfectly legal, but legality answers only the first question. Government stewardship requires answering the second: Was that the rule we meant to write?
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Sources:
Galle, Brian D., David Gamage, and Bob Lord. “Taxing Dynasties.” University of Pennsylvania Law Review 174 (2026).
Gravelle, Jane G. “Trusts: Income and Estate and Gift Tax Issues.” CRS Report R48879. Washington, DC: Congressional Research Service, March 10, 2026.
Gravelle, Jane G. “The Generation-Skipping Transfer Tax (GSTT).” CRS In Focus IF13053. Washington, DC: Congressional Research Service, July 2, 2025.
Internal Revenue Service. “Frequently Asked Questions on Estate Taxes.” U.S. Department of the Treasury. Accessed August 26, 2026.
Internal Revenue Service. “What’s New—Estate and Gift Tax.” U.S. Department of the Treasury. Accessed August 26, 2026.
Internal Revenue Service. “Instructions for Form 706: United States Estate (and Generation-Skipping Transfer) Tax Return.” Revised September 2025.