When Congress debates tax policy, uncertainty ripples through families making key wealth transfer decisions. One major question is whether the historically high federal estate and gift tax exemption - currently $13.99 million per person in 2025 - will shrink or stay elevated after new legislation. Some recent bills, like the One Big Beautiful Bill Act (OBBBA), appear to extend and even increase the exemption - it’s now “permanent” at $15 million per person starting in 2026 - but Congress retains the power to amend these laws at any time.
That uncertainty has many families asking: What should we be doing now?
The good news is that there are advanced strategies available that can help preserve wealth for future generations - while taking advantage of today’s historically high exemption amounts.
Advanced Gifting Strategies to Consider
Grantor Retained Annuity Trusts (GRATs)
A GRAT allows you to transfer assets expected to appreciate - such as company stock or real estate - out of your estate with minimal gift tax cost. You retain an annuity stream for a set term, and if the assets outperform the IRS’s assumed growth rate (the “hurdle rate”), the excess growth passes to beneficiaries tax-free.
- Best used when interest rates are high (like now), making hurdle rates easier to beat with high-growth assets.
- Short-term GRATs (2–3 years) can be “rolled” to capture appreciation.
Spousal Lifetime Access Trusts (SLATs)
A SLAT lets one spouse gift assets into an irrevocable trust for the benefit of the other spouse, using today’s exemption before it’s reduced.
Keeps assets outside the taxable estate while still providing indirect access through the beneficiary spouse.
Requires careful drafting to avoid the “reciprocal trust doctrine” if both spouses create SLATs.
Dynasty Trusts
A dynasty trust is designed to last for multiple generations—sometimes in perpetuity, depending on state law. By leveraging today’s higher exemption, families can shelter substantial wealth from estate, gift, and generation-skipping transfer (GST) taxes.
Assets grow outside the taxable estate for children, grandchildren, and beyond.
Can provide creditor and divorce protection for beneficiaries.
Taking Action Now
If a household takes advantage of today's higher exemption for large gifts, the IRS has implemented “anti-clawback” regulations, so future exemption reductions won’t retroactively penalize these gifts.
It's important to note that one knows exactly how the 2026 and future exemption thresholds will change, but families can:
Act while the exemption is high: Waiting until 2026 could mean losing the opportunity to transfer millions tax-free.
Coordinate with your investment strategy: Funding trusts with appreciating assets maximizes long-term benefits.
Beware of complexity: These vehicles require expert drafting, administration, and ongoing tax reporting.
Uncertainty around estate taxes doesn’t mean you should wait - it means you should plan. The right approach depends on your assets, family dynamics, and long-term goals. A seasoned estate planning attorney and financial advisor can help you weigh options, stress-test scenarios, and ensure your plan is both flexible and resilient - no matter what happens in Washington.
If you’re concerned about how the 2025 sunset might affect your estate plan, now is the time to act. Reach out to our team to explore strategies tailored to your family’s needs and goals.