Time Is Running Out
In just over a year, a once-in-a-lifetime estate planning opportunity could vanish.
Thanks to the Trump Tax cuts in 2017 (Tax Cuts and Jobs Act), the estate tax exemption currently sits at $13.99 million per individual—or $27.98 million for married couples. But this generous exemption is temporary. Unless Congress acts, it will sunset at the end of 2025, cutting the exemption roughly in half.
That means estates worth more than ~$7 million (or $14 million for couples) could face a 40% federal estate tax on every dollar above the threshold.
That means you could lose millions to taxes—not because you made a mistake, but because you waited too long.
This is your heads-up. The window is closing. And the time to act is right now.
The Tax Sunset: What’s Changing and Why It Matters
Let’s break this down.
What’s the Estate Tax Exemption Now?
- 2025: $13.99 million per individual
- Married couple: $27.98 million combined
What Happens After 2025?
- Projected drop to ~$7 million per individual
- ~$14 million for married couples
- That’s a loss of $6M+ in tax-free wealth transfer per person
Now imagine this:
A $30 million estate protected today may owe $0 in estate taxes.
That same estate in 2026? Could owe more than $6 million in federal tax alone.
The IRS has confirmed there will be no clawback for gifts made before the exemption shrinks. Once you’ve used it, it’s locked in—even after the exemption drops.1
Who Needs to Pay Attention (Even If You Think You're “Below the Line”)
Most people assume estate taxes are a problem for billionaires. That’s a myth.
If any of these sound like you, it’s time to plan:
- You have net worth over $7M (individual) or $14M (couple)
- You own a business, rental real estate, or investment property
- You’ve built up large retirement accounts, brokerage assets, or have life insurance policies that add up fast
- You’re planning to pass assets to children, heirs, or charitable causes
A Common Oversight:
Many families misjudge their estate value because they forget about life insurance death benefits or appreciating business assets.
And even if you’re not over the line today… the market, a business exit, or a sudden inheritance could push you there.
5 Smart Estate Planning Moves to Make Before 2026
The good news? You still have time to act. Here’s how we’re helping clients get ahead of the sunset.
1. How Can You Use the Full Exemption Now Through Gifting?
Don’t wait until the end of 2025. Start reducing your estate today—intentionally.
- Gift up to $13.61M per individual
- Consider Spousal Lifetime Access Trusts (SLATs) to shift wealth while retaining spousal access
- Use annual exclusion gifts to move wealth efficiently ($18K per recipient in 2024)
Remember: Gifts made now lock in the higher exemption, even after it drops.
2. Should You Use Irrevocable Trusts to Protect Wealth Long-Term?
Trusts aren’t just for the ultra-wealthy. They’re for families who want control, privacy, and multigenerational impact.
- Dynasty Trusts: Keep assets out of taxable estates for generations
- IDGTs (Intentionally Defective Grantor Trusts): Shift appreciating assets while paying taxes from outside the trust
Properly structured trusts create legal firewalls between you and the taxman—while giving you a long runway to pass on your values, not just your wealth.
3. What Are GRATs—and When Should You Use Them?
Grantor Retained Annuity Trusts (GRATs) allow you to transfer asset growth out of your estate tax-free.
- Ideal for high-growth stock or closely held business interests
- You retain a stream of income, while excess growth moves to heirs
Think of a GRAT as a pressure valve: it freezes asset values now, so future growth doesn’t inflate your tax bill.
4. Why Gifting Business Interests Before a Sale Matters
Waiting until you’re ready to sell a business? That could backfire.
- Pre-exit shares often qualify for valuation discounts (lack of marketability or control)
- That means you can gift more—while it’s “worth” less on paper
- As the value rises, you’ve already moved the growth out of your estate
If you’re planning a liquidity event, act now—not once a buyer is at the table.
5. How Can Life Insurance Create Estate Liquidity?
Even with great planning, some estate taxes are unavoidable.
Solution: Own life insurance through an Irrevocable Life Insurance Trust (ILIT)
That way, when taxes are due, your heirs have liquidity—without having to sell property or take on debt.
Mistakes That Can Cost Millions
- Waiting too long to act (Planning takes time!)
- AssumingCongress will extend the law again
- Working in silos (tax, legal, and investment plans must align)
- Leaving heirs in the dark (communication is part of your legacy)
What Should You Do Now to Prepare for 2026
Time is your most valuable asset. Use it wisely.
- Run an estate projection: Know your exposure before and after the sunset
- Meet with your advisory team: Coordinate with your financial planner and estate attorney.
- Involve your heirs: Pass on clarity, not confusion.
Use It or Lose It
This isn't fear-mongering. It's fact. If you don't use the high exemption before 2026 you'll lose it.
The estate tax exemption is schedules to drop by over $6 million per person. If your don't use it, you'll lose it - and your heirs could face a tax bill that could've been avoided with a little foresight.
The window is closing. The opportunity is real.
Let's make sure your legacy goes where you intended - not the IRS.
Let's help you protect what you've build - and ensure it lasts beyond the sunset.
If you would like to discuss your current situation schedule a free 20-minute call with the link below.
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