Blog

For years, the Tax Cuts and Jobs Act (TCJA) of 2017 has been a quiet ally to affluent families, providing unprecedented relief through doubled estate tax exemptions. In 2024, the federal estate tax exemption sits at $13.61 million per individual—a boon for high-net-worth individuals seeking to shield their legacy from taxes. But come January 1, 2026, this window closes, slamming shut on opportunities many have taken for granted.

This isn’t a future issue; it’s a ticking clock.

The Calm Before the Fiscal Storm

The TCJA’s temporary boost in exemptions transformed estate planning for many, offering breathing room and creative solutions. This legislative change increased the exemption from $5.49 million in 2017 to over $11 million per individual, effectively doubling the ceiling for wealth transfer without estate taxes.

But the provisions that ushered in this era of relief are set to expire at the stroke of midnight on December 31, 2025. If you think these changes don’t affect you, think again. When the exemption drops to an estimated $7 million, tens of thousands of estates will suddenly find themselves under the scrutiny of federal taxation. Every dollar above this threshold is fair game, and that can lead to substantial tax liabilities.

Why Wealthy Individuals Should Care—Deeply

Consider a family with $15 million in combined assets. Under the current exemption, no federal estate taxes would be due upon their passing. Fast forward to 2026, and without a plan in place, they’re staring down a potential taxable estate of $1 million or more, which can translate to hundreds of thousands of dollars lost.

It’s more than a matter of dollars and cents—it’s about keeping control over your legacy, ensuring that wealth is passed down as you intend. Your financial fortress could see cracks unless proactive measures are taken.

How to Fortify Your Estate Before 2026

There is a path forward—but it demands action, not procrastination. High-net-worth families and individuals should explore every possible lever to pull in protecting their wealth. This is about more than “playing defense.” It’s about intelligent strategy, anticipating the terrain of tomorrow, and taking steps today that will echo for generations.

How Wealthy Individuals Can Prepare

• Lifetime Gifting Strategies: One of the most effective ways to minimize estate taxes is through strategic lifetime gifting. The current high exemption allows individuals to transfer significant assets without triggering tax liabilities. By gifting now, families can lock in today’s higher exemption rates and reduce the size of their taxable estates.

• Trust Structures for Advanced Planning: Trusts remain a cornerstone of effective wealth transfer planning. Depending on your unique needs, structures such as Grantor Retained Annuity Trusts (GRATs), Irrevocable Life Insurance Trusts (ILITs), and Spousal Lifetime Access Trusts (SLATs) can help shield assets from estate taxes while maintaining flexibility and control.

• Family Limited Partnerships (FLPs): FLPs allow you to transfer business or investment assets to family members at a discounted value, thereby reducing the taxable estate while retaining operational control. This approach is especially beneficial for wealthy individuals who hold substantial business interests.

• Charitable Giving: Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) enable you to achieve philanthropic goals while enjoying tax benefits. These structures can reduce taxable income and provide a lasting legacy aligned with your values.

• Qualified Personal Residence Trusts (QPRTs): For high-net-worth individuals who own valuable real estate, QPRTs can help transfer a primary or secondary residence to heirs at a reduced gift tax cost while allowing you to retain living rights for a specified period.

• Generation-Skipping Transfer (GST) Planning: By using GST trusts, you can transfer assets directly to grandchildren or more remote generations, taking advantage of the GST tax exemption and preserving family wealth for future generations.

Reassess. Rethink. Redefine Your Estate Plan.

The reality is clear: the TCJA’s expiration isn’t something that may happen; it will happen. Relying on hope that new legislation might extend the current exemptions is a risky bet, and wealthy families don’t thrive by taking unnecessary risks. The prudent move is to act now—reassess your estate plan, rethink your strategies, and redefine how your wealth will transition across generations.

For Wealth That Lasts Generations

The wealth you’ve built is more than numbers; it represents your life’s work, your family’s security, and a legacy worth protecting. The steps you take today will dictate whether your wealth is sheltered or exposed when the TCJA expires.

Don’t wait until the last moment to address the changes. By 2026, it could be too late to fully protect what matters most. This isn’t alarmism; it’s preparation. The time for complacency has passed, and the time for strategic action is now.