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Countdown to Gift and Estate Tax Exemptions: How to Navigate the Impending Sunset Thumbnail

Countdown to Gift and Estate Tax Exemptions: How to Navigate the Impending Sunset

By: Anthony Santoro

As the clock ticks closer to midnight on December 31, 2025, a significant change is lurking for estate and gift tax exemptions in the United States. The current lifetime exemption threshold, which stands at historic highs, is set to be cut in half, potentially leading to a substantial increase in the tax liability of certain estates. 

The sunset of the Tax Cuts and Jobs Act (TCJA) of 2017 raises critical questions about estate planning strategies and the urgency to take steps today to minimize your tax burdens in the future.

The Present Opportunity

The lifetime estate and gift tax exemption represents the amount of assets you can transfer to your descendants without incurring federal estate or gift taxes. TCJA presents a remarkable opportunity for tax-efficient wealth transfer to future generations. Currently, we find ourselves at the highest exemption levels in history, thanks to the TCJA, which doubled the exemption from $5 million to $10 million in 2017. 

As of 2024, the exclusion amount stands at $13.61 million per person or $27.22 million for married couples, indexed for inflation, offering a chance to transfer assets and seize this unprecedented opportunity.

The Impending Change

However, it's important to note that this increased gifting capacity is temporary and set to expire on December 31, 2025, reverting to between $5 million and $8 million (indexed for inflation) starting January 1, 2026. Fortunately, the IRS has provided assurance that any exemption utilized before the sunset takes place will be honored and grandfathered, offering a degree of certainty. 

Come January 1, 2026, the landscape of estate and gift tax planning will undergo a significant shift. While changes to tax laws typically require time and legislative action, it’s important to start acting now and to be ready for any changes by the sunset of the TCJA exemption. 

Key Considerations and Next Steps

Planning for this change should be strategic, ideally spanning multiple tax years to maximize your benefits and adhere to complex tax regulations. Establish a relationship with a knowledgeable attorney and review your existing trusts to ensure it aligns with your current objectives and protections (including items such as adequate creditor and marital protection). 

For those navigating the complexities of estate planning, you don’t have to do it alone. Seek guidance from a trusted advisor to leverage this exemption efficiently and take proactive measures to protect your assets and minimize tax liabilities. Every situation is unique, and tailored advice is important to develop a comprehensive estate plan that meets your needs and objectives.

A Broader Opportunity

The sunset of the TCJA act also allows for a broader opportunity to review and revise your current estate plan to ensure proper advanced directives (such as health care proxy and power of attorney) are in place and that your existing estate plan provides sufficient asset protection while mitigating not only estate tax, but also state and federal income tax. 

The sunsetting of the TCJA will also trigger significant income tax changes, which should be considered in conjunction with your estate plan to maximize the efficiency of your overall financial plan. 

Why Act Now?

With the approaching sunset, we believe the already heightened demand for a suitable estate planning attorney will continue to soar. It is paramount that you act now to review your existing plan and to partner with a team that has both the knowledge base and capacity to execute and implement a proper plan prior to sunset.

Simon Quick: Leading the Way in Estate Planning

At Simon Quick, we boast decades of extensive expertise in estate planning. Our team doesn't just understand planning methodologies; we specialize in leveraging exemptions and employing transfer strategies to maximize estate and income tax benefits. By overseeing hundreds of our client’s estate plans and leveraging our extensive expertise in this subject, our Advisors can provide valuable insight and guidance.

Collaborating closely with our clients and their attorneys, we help tailor bespoke estate plans that cater to their unique situations, offering clear insights into potential liabilities and steadfast guidance throughout the process. As the sunset date approaches, there's no better time to secure your financial legacy for generations ahead. 

Visit us online, call us at (973) 525-1000 or send an email to info@simonquickadvisors.com to discuss your specific situation.

About Anthony Santoro Esq.

Director / Client Advisor

Mr. Santoro joined Simon Quick in 2022 and currently serves as a Director and Client Advisor. His expertise includes tax, executive compensation, estate planning and wealth transfer. Prior to Simon Quick, Anthony worked as an attorney, where he concentrated his practice on trust and estate planning and administration, representing owners of closely held businesses and principals of private equity funds. At Simon Quick, Anthony provides clients with holistic oversight and counseling at the intersection of law and finance. Mr. Santoro also sits on the Financial Planning Committee which is responsible for identifying financial planning opportunities and disseminating guidance to advisors at the firm. 

Mr. Santoro began his financial services career with Ayco, a Goldman Sachs financial planning focused firm. At Ayco, he supported the growing needs of high-net-worth individuals and their family offices 


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