On January 20, 2025, Donald Trump was inaugurated as the 47th President of the United States, marking the beginning of his second term in office. As with most all incoming presidents, the first day included a flurry of executive orders and announcements. The author of this article selfishly was hoping for some sort of guidance or commentary on the forthcoming sunset of the Tax Cuts & Jobs Act (TCJA) on January 1, 2026, knowing darn well that addressing such issue will need the assistance of Congress, but unfortunately there was no such luck. However, President Trump’s first day in office in 2025 did include a few executive orders and memorandums that may ultimately impact the areas of tax and estate planning, which will be discussed herein.
Ending of Remote Work
One of Trump’s first memorandums issued pertained to the “Return to In-Person Work,” which ultimately stated that the heads of “departments and agencies in the executive branch of Government shall, as soon as practicable, take all necessary steps to terminate remote work arrangements and require employees to return to work in-person at their respective duty stations on a full-time basis, provided that the department and agency heads shall make exemptions they deem necessary.” While this is simply a memorandum and did not get into the specifics, this presumably will apply to the Internal Revenue Service (IRS) as well. This memorandum is tied to the belief that having Federal employees back in the office will lead to greater productivity, which if true, would be of great importance to the IRS and the relentless and perpetual workload this department faces every single day.
Hiring Freeze
While the ending of remote work may ultimately increase productivity for the IRS, the issuance of a “Hiring Freeze” may potentially hinder their productivity. In this memorandum, Trump specifically references the IRS in regard to the freeze of hiring certain civilian employees: “Within 90 days of the date of this memorandum, the Director of the Office of Management and Budget (OMB), in consultation with the Director of OPM and the Administrator of the United States DOGE Service (USDS), shall submit a plan to reduce the size of the Federal Government’s workforce through efficiency improvements and attrition… Upon issuance of the OMB plan, this memorandum shall expire for all executive departments and agencies, with the exception of the Internal Revenue Service (IRS).” The discussion of hiring additional employees for the IRS can often stir political debate depending on various circumstances, but many professionals working within the tax and estate planning areas routinely find it incredibly difficult to get timely responses from the IRS, if getting a response at all for certain questions. Needless to say, an extended hiring freeze will not solve these issues for the foreseeable future.
Redefining Birthright Citizenship
On his very busy first day, one of the more controversial executive orders by Trump pertained to “Protecting the Meaning and Value of American Citizenship.” In general, this executive order declares the end of birthright citizenship in circumstances where an individual is born within the United States, but neither of the parents of such child are lawful permanent residents or U.S. citizens. This executive order has far-reaching implications, but analyzing it from a purely tax and estate planning perspective is fascinating assuming it survives the barrage of legal challenges rooted in the interpretation of the Fourteenth Amendment of the U.S. Constitution.
The Internal Revenue Code’s treatment of U.S. citizens and permanent residents versus non-U.S citizens and non-permanent residents is quite significant. One such example, although there are certainly many more, is that in 2025 the inflationary adjusted estate tax exemption for U.S. citizens is $13.99M, but for non-resident aliens the exemption amount is only $60,000. (Interestingly, the TCJA did not adjust the $60,000 amount for inflation.) For estate planning purposes, even if one spouse is a U.S. citizen and the other spouse is not, it can add substantial complexity to documents such as revocable living trusts in potentially requiring qualified domestic trust (QDOT) provisions and even prevent the non-U.S. citizen / non-permanent resident spouse from serving in a fiduciary capacity and also substantially limit the use of the unlimited marital exemption in assets passing to a surviving spouse. If Trump’s executive order stands, there will be a corresponding impact to the estate plans of those affected by the new interpretation of the Fourteenth Amendment.
Exiting the OECD’s Global Tax Deal
The most tax oriented memorandum issued on President Trump’s first day back in office was “The Organization for Economic Co-Operation and Development (OECD) Global Tax Deal (Global Tax Deal).” Through this memorandum, Trump has withdrawn the U.S. from the agreement signed by the U.S. in October of 2021, along with approximately 140 other countries, regarding the implementation of a globally universal corporate minimum tax rate. Previously, Trump’s implementation of the TCJA generally cut the corporate tax rate from 35% to 21%. With this new memorandum and the forthcoming sunset of the TCJA, many are curious if the new Trump administration will attempt to lower the corporate tax rate again.
Conclusion
Despite no immediate changes to laws on January 20, 2025 directly impacting estate planning, it is clear that tax reform will continue to play a significant role in shaping the strategies used by wealthier individuals to manage their estates. The uncertainty surrounding potential tax reforms could prompt many individuals to review their estate plans in anticipation of future changes. In the meantime, estate planners may advise their clients to remain flexible and stay informed about developments in tax policy that could impact inheritance planning, wealth transfer strategies, and charitable giving. Thus, as a reminder, don’t wait until the TCJA expires to do your estate planning!
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