The amount that can be excluded is capped per taxpayer at the greater of 10 times the holder’s basis in the stock or a fixed dollar amount, which recent legislation raised to USD 15 million for stock acquired after 04 July 2025. The per-taxpayer ceiling is what makes advance planning so valuable.

With early planning, properly structured trusts can multiply the income tax benefits of QSBS while also producing substantial estate tax savings.

Planning with trusts

Early planning, especially with trusts, can increase the value of QSBS in two important ways.

First, it helps ensure the company qualifies for QSBS benefits by directing attention to the eligibility rules from the outset. Second, when QSBS is transferred to properly structured trusts that are non-grantor trusts at the time of sale, each trust may be treated as a separate taxpayer and may claim its own exclusion.

The gifted stock generally retains its QSBS attributes in the trust’s hands, including the donor’s holding period, which makes this planning especially powerful. Given recent attention to the technique, commonly referred to as “trust stacking”, the approach works best when trusts are carefully structured and grounded in genuine non-tax objectives.

Estate tax benefits

Planning in advance with trusts can also shift value out of the founder’s taxable estate before a sale occurs.

When QSBS is transferred while the company is worth comparatively little, more value leaves the estate at a lower transfer-tax cost. Because the stock then sits outside the estate, future appreciation may pass to family free of estate tax as well.

Timing is critical. The planning works best when completed well before a transaction is negotiated and when the trusts reflect genuine estate planning objectives rather than a last-minute strategy.

Cross-border relevance

QSBS planning may also be relevant in cross-border family and ownership structures. Multinational founders, foreign owners of US businesses, and cross-border families may encounter QSBS within broader trust or holding structures where US income and estate tax planning must be coordinated with non-US tax and business considerations. Early coordination among advisers is therefore essential.

Christopher Attar is a member attorney in Bodman’s High Net Worth Practice Group. He advises individuals, families, and business owners on income tax planning, trust and estate tax planning, M&A and transaction structuring, and QSBS planning. He previously served as tax counsel at a multinational automotive company, advising on cross-border M&A.

publications

Jennifer Miller Oertel appointed chair of the National Tax-Exempt Council’s State Regulatory Roundtable

Using trusts to maximise the benefits of qualified small business stock in the US