High-Net-Worth Clients Should Consider Gift Trusts By Year-End

To lock-in historically high gift and estate tax exemptions, which are set to expire at the end of 2025, high-net-worth individuals should consider establishing an optimized gift trust prior to year-end, advises a tax attorney at Frazer Ryan Goldberg & Arnold.

The all-time-high gift and estate tax exemptions which are set to expire on January 1, 2026, may be extended, but preemptive actions are recommended to protect against the risk of the exemptions not being extended.

The current lifetime gift tax and estate tax exemptions (approximately $14M per individual and $28M per married couple) are 20 times greater than the historic exemption. For perspective, just 25 years ago, the federal exemption was approximately $600k with a 55% gift and estate tax rate. Since then, the exemption has ballooned to the current $13.99M exemption, largely due to the temporary doubling of the exemption under the 2017 Tax Cuts & Jobs Act. In 2025, an individual can make aggregate gifts totaling $13.99M, during life or at death, without tax, but if aggregate gifts exceed $13.99M, there is a 40% gift and estate tax on the excess.

For more information see Jonathon M. Morrison “High-Net-Worth Clients Should Consider Gift Trusts By Year-End” Bloomberg Law, January 30, 2025. 

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.