The Impact of the Pending 2025 Expiration of the 2017 Tax Cuts and Jobs Act on Estate Planning
The Tax Cuts and Jobs Act (TCJA) of 2017 significantly increased the federal estate and gift tax exemptions. But all good things must end, and unless...
2 min read
MacLaren Law
Tue, Jul 1, 2025
The Tax Cuts and Jobs Act (TCJA) of 2017 significantly increased the federal estate and gift tax exemptions. But all good things must end, and unless Congress intervenes, these benefits will sunset on December 31, 2025, with substantial ramifications for estate planning.
Currently: $13.99 M per individual, $27.98 M per couple (indexed) through 2025.
After 2025: Reverts to $7 million per person ($14 million per couple).
The value of the exemption collapses by about 50%, exposing more estates to the 40% federal estate tax.
Accelerated Wealth Transfer
Waiting may cost you. Gift $13 M today, and it grows outside your estate, deferred, and the same asset above $7 M will be taxable post‑2025.
Trusts & Irrevocable Transfers
Grantor trusts, SLATs, ILITs, and GRATs can shift growth outside your estate while using the high exemption now .
Business Succession Planning
For owners of pass‑through entities: losing the QBI deduction makes planning vital now. Consider entity restructuring.
Retirement, SALT, and Itemized Deduction Changes
Retirement income planning, bunching deductions, and timing payments can help navigate changes beyond estate taxes.
Timing Is Now
December 31, 2025, is the firm deadline for using the inflated exemption.
Estate Scenario Modeling
Example: A $15 M estate now uses a $13.61 M exemption, leaving $1.39 M taxable, roughly $556K in taxes. However, after 2025, a full $3.2 million tax burden.
Trust Establishment and Funding
Roll out irrevocable trusts before year-end to take advantage of current exemptions and start shifting wealth now.
Strategy |
Purpose |
---|---|
Lifetime Gifting |
Utilize the current high exemption to gift assets that may appreciate in value. |
Irrevocable Trusts |
Benefit from GRATs, SLATs, IDGTs, ILITs to remove future growth and life insurance proceeds from estates. |
Entity Restructuring |
Consider an LLC, FLP, or business spinoff to maintain control while gifting an interest. |
Charitable & Direct Payments |
DAFs, CRTs, and direct tuition/medical payments reduce taxable estate without using exemptions. |
Income & Deduction Timing |
Maximize current year QBI, bunch deductions before 2026, and leverage prefunding tactics. |
Without planning, estates over $7 M will face crippling 40% tax burdens.
CFP professionals warn that 88% of clients’ goals are at risk, especially for legacy and retirement objectives.
Delays jeopardize your ability to secure tax savings.
Maclaren Law can help you act before the sunset of the provisions from the 2017 Tax Cuts and Jobs Act, ensuring your legacy, liquidity, and family plans are intact. We offer:
Personalized estate plan analysis/reviews
Custom trust drafting (SLATs, GRATS, ILITs, IDGTs)
Strategic lifetime gifting programs
Business succession and entity restructuring
Charitable giving & direct payment strategies
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