Disclaimer: This article is for educational purposes only and does not constitute official legal or financial advice. Estate tax laws are complex and subject to change, and individuals should consult with a licensed estate planning attorney and tax professional to determine the best strategies for their unique financial situation.
In January 2025, President Donald J. Trump commenced his second term, bringing renewed focus to tax policies, particularly those affecting estate taxes. As potential legislative changes take shape, high-net-worth individuals must stay informed and take proactive steps to ensure their wealth transfer strategies align with the latest tax laws.
Estate taxation impacts everything from generational wealth planning to business succession and charitable giving. Understanding how estate tax policy is evolving under the Trump administration is essential for protecting your financial legacy.
Current Estate Tax Framework
As of 2025, the federal estate tax exemption remains at approximately $13.99 million per individual (or $27.98 million per married couple), a historically high threshold set by the Tax Cuts and Jobs Act (TCJA) of 2017.
However, this exemption is scheduled to expire on January 1, 2026, at which point the exemption level will revert to pre-2018 amounts, estimated to be around $7 million per individual, unless new legislation intervenes.
The federal estate tax rate remains 40% on the portion of estates exceeding the exemption threshold. With a potential reduction in the exemption looming, millions of estates could become newly subject to estate taxes if legislative action is not taken. The uncertainty surrounding these policies underscores the need for careful estate planning.
What to Expect Under the Trump Administration
President Trump has long expressed opposition to the estate tax, often referring to it as the “death tax.” Now, with a Republican-led administration and potential Congressional support, there are several policy directions that could emerge:
1. Permanent Extension of the TCJA Exemptions –
Many expect the Trump administration to push for maintaining the current high exemption levels, preventing the reversion to lower thresholds in 2026. A permanent extension would allow individuals to continue taking advantage of the increased exemption for wealth transfers.
2. Potential Full Repeal of the Estate Tax –
While politically challenging, outright repeal of the estate tax remains a possibility. Trump previously advocated for eliminating the estate tax entirely, arguing that it unfairly penalizes families with accumulated wealth. If passed, this could drastically alter estate planning strategies and shift the focus toward capital gains tax planning.
3. Reform of Gift and Generation-Skipping Transfer (GST) Taxes –
Adjustments to annual gift tax exclusions and GST tax rules may be introduced to provide more options for transferring wealth to heirs while minimizing taxation.
Key Considerations for Estate Planning in 2025
Regardless of whether major changes occur, high-net-worth individuals should take a proactive approach to estate planning.
The uncertainty in tax law should not delay crucial decisions that could impact the future of family wealth. Here are some key considerations:
1. Maximize the Current Exemption While Available –
With the exemption at an all-time high, those with significant estates may want to make large gifts before 2026. Transferring assets now can help shield them from future estate tax burdens should the exemption drop. (Vorys)
2. Trust Planning for Wealth Protection –
Establishing irrevocable trusts, dynasty trusts, or spousal lifetime access trusts (SLATs) can ensure structured wealth transfers while minimizing potential estate tax exposure. Trusts are particularly valuable for long-term wealth preservation and succession planning.
3. Monitor Legislative Developments –
Estate tax laws are subject to change based on Congressional action. Regularly reviewing estate planning documents and consulting professionals will help ensure strategies remain aligned with the latest legal landscape.
4. Evaluate State Estate Taxes –
Even if federal estate tax laws change, state-level estate or inheritance taxes may still apply. Some states, such as New York, Massachusetts, and Oregon, impose additional taxes on large estates. Individuals considering relocation may explore tax-friendly states such as Florida or Texas.
5. Charitable Giving as a Tax Strategy –
Charitable contributions can provide tax advantages while supporting meaningful causes. Options like charitable remainder trusts (CRTs) and charitable lead trusts (CLTs) allow individuals to reduce taxable estate values while ensuring long-term philanthropic impact.
What You Should Do Now
As tax policies continue to evolve, individuals with substantial estates should take action to protect their assets.
Here are three important steps:
1. Consult with an Estate Planning Attorney –
The best way to ensure compliance with the latest tax laws and maximize estate tax efficiency is by working with a licensed professional. Estate laws are complex, and a tailored strategy can help avoid costly mistakes.
2. Stay Informed on Tax Law Developments –
Legislative changes can happen quickly. Following updates from reputable sources, such as the IRS or trusted financial advisors, will help individuals make informed decisions about their wealth transfer plans.
3. Act Before the Potential 2026 Exemption Reduction –
The current high exemption levels present a rare opportunity for tax-efficient gifting. Those who wait until the deadline approaches may face rushed decisions or higher estate taxes if laws change unexpectedly.
Estate planning is not just about financial efficiency—it is about ensuring your legacy is preserved and that your assets are distributed according to your wishes. Whether tax laws shift toward higher exemptions or move toward stricter taxation, a well-prepared estate plan will offer the best protection for your wealth.
By conducting your own research and seeking guidance from a licensed estate planning attorney, you can ensure that your estate plan is tailored to your needs and structured in a way that accounts for the changing tax landscape. Taking a proactive approach today will provide peace of mind and financial security for future generations.
Additional Resources:
- Trump tax cuts, if made permanent, stand to benefit highest income earners, Treasury analysis shows
- Your Money in a Second Trump Term: Taxes, Credit Cards, and Student Loans
- Advisors Say Wealthy Americans Need a Plan as Election Set to Affect Estate Tax Policy
Taking action today will help ensure that your estate plan is optimized for potential policy shifts in the coming years.