MacLaren Law Blog-Estate Planning, Wills and Trusts, Business Law

The Impact of the Pending 2025 Expiration of the 2017 Tax Cuts and Jobs Act on Estate Planning

Written by 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.

What’s Changing and When

 
Estate & Gift Tax Exemption

  • 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.

Qualified Business Income (QBI) Deduction
  • A 20% pass‑through deduction for S‑Corps and LLCs expires Dec 31, 2025.
Other TCJA Expirations
  • Return of the 39.6% top tax rate, removal of the cap on SALT deductions, restoration of miscellaneous itemized deductions, reset of mortgage interest limits, and reinstatement of ACA personal exemptions return.

Why It Matters for Estate Planning

  1. 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.

  2. Trusts & Irrevocable Transfers

    Grantor trusts, SLATs, ILITs, and GRATs can shift growth outside your estate while using the high exemption now  .

  3. Business Succession Planning

    For owners of pass‑through entities: losing the QBI deduction makes planning vital now. Consider entity restructuring.

  4. Retirement, SALT, and Itemized Deduction Changes

    Retirement income planning, bunching deductions, and timing payments can help navigate changes beyond estate taxes.

Start Planning 

  1. Timing Is Now

    December 31, 2025, is the firm deadline for using the inflated exemption.

  2. 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.

  3. Trust Establishment and Funding

    Roll out irrevocable trusts before year-end to take advantage of current exemptions and start shifting wealth now.

Key Strategies Before Year-End

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.

 

The Cost of Inaction

  • 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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