If you have spent years building a company in Westlake, your business is almost certainly your largest and most complex asset. It is also the one most likely to create problems for your family if you have not put a plan around it. Between the Solana office campus, Circle T Ranch, and the executives and founders who call Vaquero and Terra Bella home, the Westlake business community holds an unusual concentration of closely held wealth. That makes two questions worth answering now rather than later: who takes over the business when you step away, and how does your wealth pass to the next generation with the least friction and the smallest tax bill?

Estate planning answers the second question. Business succession answers the first. Treated separately they often work against each other. Treated together they protect both your family and the enterprise you built. Here is how the two fit, and what changed for 2026.

Why Estate and Succession Planning Belong Together

For most business owners, the company represents most of the taxable estate but produces little of the liquidity an estate needs. When an owner dies, the estate may owe federal estate tax within nine months, yet the value is locked inside an illiquid business that cannot easily be sold or borrowed against on a deadline. Heirs are sometimes forced to sell the company, or sell it quickly at a discount, simply to pay the tax.

A coordinated plan solves three problems at once: it names a successor and gives them the authority and capital to run the business, it moves future appreciation out of your taxable estate while values are lower, and it creates liquidity to cover any estate tax without dismantling the company. Each piece reinforces the others.

The 2026 Estate Tax Landscape

The rules changed meaningfully this year. The 2025 federal tax law (Public Law 119-21, signed July 4, 2025) permanently set the federal estate and gift tax exemption at $15 million per individual beginning January 1, 2026, indexed for inflation thereafter. A married couple can shield $30 million combined. This replaced the scheduled “sunset” that would have cut the exemption roughly in half, so the planning pressure many owners felt to act before the end of 2025 has eased — but the 40% top rate on amounts above the exemption has not gone away.

A few figures worth keeping in front of you for 2026:

• Federal estate and gift tax exemption: $15 million per person, $30 million per married couple.
• Top federal estate tax rate: 40% on the taxable estate above the exemption.
• Annual gift tax exclusion: $19,000 per recipient ($38,000 for a married couple splitting gifts), with no reduction to your lifetime exemption.
• Portability: a surviving spouse can inherit the deceased spouse’s unused exemption, but only if a timely estate tax return is filed to elect it.

The generation-skipping transfer (GST) tax, a separate 40% levy on transfers to grandchildren and beyond, has its own exemption that tracks the same $15 million figure and must be allocated deliberately when you use multi-generational trusts.

The Texas Advantage — and Its Limits

Texas imposes no state estate tax, no state inheritance tax, and no state income tax. A Westlake owner faces only the federal layer, which is a real advantage over peers in states like Washington, Oregon, or Illinois that levy their own estate tax at far lower thresholds. But Texas residency does not shield you from federal estate tax, and it does not protect out-of-state property — a ranch, a vacation home, or rental real estate in another state can pull that state’s rules back into your plan. The Texas advantage is a starting point, not a complete strategy.

Building the Succession Side

A Buy-Sell Agreement Is the Foundation

If you have co-owners, a funded buy-sell agreement is non-negotiable. It controls what happens to an owner’s interest on death, disability, retirement, or departure, and it fixes — or sets a formula for — the price. Properly structured and funded, it guarantees a market for the departing owner’s shares and keeps the business in the hands of those running it. The two common structures are a cross-purchase (remaining owners buy the interest) and an entity redemption (the company buys it back). Each carries different tax and basis consequences, and the right choice depends on the number of owners and your entity type.

Fund It Before You Need It

An unfunded buy-sell is a promise without a checkbook. Life insurance is the most common funding tool because it delivers tax-free liquidity at exactly the moment it is needed. Owners frequently hold this coverage in an irrevocable life insurance trust (ILIT) so the death benefit itself stays outside the taxable estate — a meaningful detail when policies on a successful owner can be large enough to create their own estate tax exposure.

Know What the Business Is Worth

Nearly every strategy below depends on a defensible valuation from a qualified appraiser. Valuation drives the estate tax calculation, the buy-sell price, and the discounts available when you transfer minority or non-controlling interests. Stale or informal valuations are one of the most common reasons plans fail under IRS scrutiny.

Advanced Tools for Transferring the Business

With a defensible valuation in hand, several techniques let you move the business — and especially its future growth — to the next generation at a reduced or zero transfer-tax cost:

• Annual and lifetime gifting: transferring shares using the $19,000 annual exclusion and your lifetime exemption shifts future appreciation out of your estate, often at valuation discounts for lack of control and marketability.
• Grantor retained annuity trusts (GRATs): you transfer business interests into a trust and receive an annuity back; appreciation above the IRS hurdle rate passes to heirs gift-tax-free. These work especially well for rapidly appreciating companies.
• Sales to intentionally defective grantor trusts (IDGTs): you sell the business to a grantor trust in exchange for a note, freezing the value in your estate while future growth accrues outside it — with no capital gain on the sale.
• Family limited partnerships (FLPs) / LLCs: consolidating business and investment assets into an entity lets you gift discounted, non-controlling interests while you retain management control.
• Spousal lifetime access trusts (SLATs): a way to use exemption now while preserving indirect access to the assets through your spouse.

None of these are do-it-yourself moves. They require coordination among your attorney, CPA, and financial advisor, and they must respect formalities the IRS examines closely. Done correctly, the leverage can be substantial; done casually, they invite challenge.

Coordinating the Two Plans

The succession and estate strategies must point in the same direction. A revocable living trust can keep the estate out of Texas probate and provide for management if you become incapacitated. Powers of attorney and an updated will fill the gaps. Beneficiary designations on retirement accounts and life insurance need to match the plan, since they pass outside the will. And the buy-sell agreement, the trusts, and the entity documents all must agree on who controls and who owns what — conflicting documents are where well-intentioned plans unravel.

Common Mistakes We See

• Treating the business like a liquid asset when it is not, leaving heirs without the cash needed to pay taxes.
• An outdated or unfunded buy-sell agreement that no longer reflects the company’s value or ownership.
• Naming a successor without training them or transferring real authority before the transition.
• Failing to file the estate tax return needed to elect portability after a spouse’s death.
• Letting valuations, beneficiary designations, and trust documents drift out of sync over time.

Taking Stock of Your Plan

Estate and succession planning sits at the intersection of tax, legal, and financial strategy, and the 2026 rules reward owners who plan deliberately rather than under deadline pressure. A strong first step is to take stock: estimate your potential estate tax exposure, confirm that your buy-sell agreement is funded and reflects current value, and make sure your trusts, beneficiary designations, and entity documents remain aligned. Those answers often clarify which strategies deserve a closer look now and which can wait.

Done well, this process becomes a coordinated effort among your attorney, CPA, and financial advisor to protect both the business you built and the legacy you intend to leave.