As the 2025 legislative session unfolds, wealthy families, their advisors, and the executives of family offices are watching closely. A series of tax proposals from Trump-aligned lawmakers in the House and Senate promises to reshape the federal tax code—particularly in ways that could fundamentally alter estate and succession planning for owners of family businesses, legacy real estate, and valuable collections.
From permanent tax cuts to full repeal of the estate tax, these proposals signal a dramatic policy shift. Yet they also inject considerable uncertainty. Now is the time for sophisticated planning.
The Trump Tax Agenda: Overview and Impact
Several bills—each with varying degrees of support and momentum—aim to extend or enhance the Tax Cuts and Jobs Act of 2017 (TCJA), which is set to expire at the end of 2025. Key proposals include:
- Permanency of TCJA individual tax cuts (H.R. 976)
- Extension of the 20% pass-through business deduction (Main Street Tax Certainty Act)
- Indexing capital gains to inflation (Capital Gains Inflation Relief Act)
- Complete repeal of the estate and generation-skipping transfer (GST) tax (Death Tax Repeal Act)
- Estate tax rate reduction to match capital gains rates (~20%) (H.R. 601)
- The FairTax Act, proposing to replace the federal tax code with a national sales tax (H.R. 25)
Each of these proposals has direct and profound implications for how wealthy families transfer wealth—and for the strategies their advisors must adopt.
What Happens If the Estate Tax Reverts?
Absent legislative action, the estate and gift tax exemption will revert to approximately $7 million per person in 2026 (down from nearly $14 million in 2025). With the 40% top tax rate remaining, a substantial number of estates will suddenly become taxable. For families with closely held businesses, landholdings, or collectible-rich portfolios, this could mean millions in tax liabilities—requiring liquidity events or forced sales.
In this scenario, estate planners should consider:
- Making large lifetime gifts in 2025 to use the remaining high exemption.
- Leveraging grantor retained annuity trusts (GRATs), family limited partnerships, and valuation discounting.
- Funding irrevocable life insurance trusts (ILITs) to provide liquidity.
- Using Section 6166 installment payment options for estate tax on qualifying business assets.
What If Estate Tax Is Repealed?
The Death Tax Repeal Act proposes eliminating estate and GST taxes altogether, retaining a reduced 35% gift tax only on lifetime transfers above the exemption. The bill would preserve step-up in basis, allowing heirs to inherit assets tax-free and sell with no capital gains tax on prior appreciation.
While a repeal would simplify succession planning, planners should prepare for the possibility of future reinstatement. Strategies like credit shelter trusts, dynasty trusts, and GST exemption allocation remain relevant tools for asset protection and long-term tax resilience.
Middle Ground: Lower Rates or High Exemptions
If repeal proves politically unattainable, compromise proposals such as lowering the estate tax rate to 20% or maintaining the high exemption levels may become the most likely outcome. For many wealthy families, this would:
- Reduce urgency to implement complex planning structures.
- Shift focus to liquidity management rather than tax avoidance.
- Encourage use of trusts for non-tax goals such as governance, philanthropy, or asset protection.
Implications by Asset Class
1. Family Businesses
Estate tax relief would reduce disruption in generational transfers. But governance remains critical. Families should still maintain succession plans, shareholder agreements, and leadership transition structures regardless of tax treatment.
2. Artwork and Collectibles
A $10 million art collection can tip an estate into taxable territory. Estate tax relief would allow these assets to transfer more seamlessly across generations. However, estate planning for art still requires expertise in valuation, insurance, and legal structuring—especially with international issues and 28% capital gains rates on collectibles still in play.
3. Legacy Real Estate
Whether a working ranch or coastal estate, illiquid real estate poses unique challenges under high estate tax regimes. A lower estate tax rate or repeal would reduce the risk of liquidation. Families should also consider Section 2032A valuations, conservation easements, or entity structuring to manage estate exposure.
The “FairTax” Wild Card
One proposal—the FairTax Act—would eliminate income, estate, gift, and capital gains taxes entirely in favor of a national sales tax. While unlikely to pass, it represents an ideological push for simplification and underscores the range of possible outcomes clients must prepare for.
Advisors: Act Now, Adjust Later
Uncertainty is the constant. Whether Congress passes full repeal, partial relief, or no reform at all, planning today can lock in advantages and create flexibility. Advisors should:
- Review all estate planning documents for outdated tax clauses.
- Model multiple tax scenarios with clients.
- Maximize use of the 2025 gift exemption window.
- Monitor closely as reconciliation bills progress later this year.
Final Thought: Legacy Requires Leadership
Tax law may change, but values endure. For wealthy families, the goal isn’t just minimizing taxes, it’s preserving a legacy. That requires clear governance, intentional succession planning, and an estate strategy that can weather political swings. This is a rare moment of opportunity. Let’s plan for it.
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