Countdown to the Cut: Family Offices Rush to Navigate $7 Million Estate Tax Exemption Sunset

At the end of this year, a tax break that has helped the ultra-wealthy pass on millions without paying a dime in federal estate taxes is set to shrink dramatically — and family offices are scrambling.

The “One, Big, Beautiful Bill,” President Trump’s proposed tax and spending legislation, would prevent that sunset and raise the exemption to $15 million for individuals and $30 million for couples. But the bill is headed to the Senate, where it could undergo quite a few changes or stall.

The lifetime estate and gift tax exemption, now $13.99 million per person, is poised to drop to roughly $7 million unless Congress steps in. That looming deadline has kicked off a high-stakes race among advisers, attorneys and heirs to move money fast — or risk losing the chance to do so tax-free.

“That's going to cast a huge net [on] folks who didn't have liability before [who] do now.,” said Katie Sheehan, a wealth strategist and managing director at Crestwood Advisors and a board member at the National Association of Estate Planners & Councils (NAEPC). “And at 40%, that's a lot of estate tax revenue that's being generated.”

Crain Currency spoke with Sheehan and four other wealth management professionals to understand how family offices are preparing clients for what could be a compressed timeline—and a permanently lower exemption.

How family offices are responding

Family office clients potentially have a lot at stake if the estate tax exemption does in fact sunset. For those who have already used up their full exemption, there’s some peace of mind: thanks to the 2019 anti-clawback regulations, their prior gifts will not be retroactively taxed under the lower threshold.

Others have been making large gifts well ahead of the deadline. “We had a lot of clients making larger gifts back in 2021, when there was a proposal to reduce the gift and estate tax exemption that didn't go through, of course,” said Nicole Jackson-Leslie, managing director and senior wealth planner at Brown Brothers Harriman.

Liquidity events, like the sale of a business, can also trigger conversations about gifts. “We've had a lot of clients who have had liquidity events this year,” said Sheehan. “Maybe we should do some gifting just because it'll be cheaper to do it pre-event.

But for families who haven’t yet used their lifetime exemption, the uncertainty is daunting. “Almost all of our clients are taking a wait-and-see approach,” said Carolyn Yun, a client adviser at the multifamily office, Hollow Brook Wealth Management.

‘Don’t predict, and don’t panic’

The impending deadline matters most for clients who are on the fence — those who want to act but aren’t sure when or how. The temptation to wait for legislative clarity is strong, but so is the risk of running out of time.

“It may give us a rush of people making gifts at the end of 2025,” said Jane Ditelberg, senior vice president and director of tax planning at The Northern Trust Institute. “That certainly has happened in other years when we were expecting potential changes to the tax law. The other thing it could do is slow down wealth transfers in 2026, with people expecting that maybe the exemption will go up again.”

Waiting too long could leave clients scrambling to find attorneys or appraisers in a crowded marketplace. That’s why many advisers recommend a strategy that leaves room to adjust.

“Our general advice through this process has been: plan. Don't predict, and don't panic,” Ditelberg said. “Think about getting your ducks in a row — your appraisal lined up, your trust document drafted. Maybe even [have] everything funded with a revocation power till the end of the year so people can decide at the last minute what they're going to do.”

Planning ahead doesn’t mean acting recklessly either. “Do not plan in haste,” Sheehan said. “Understand the consequences of what you are doing and that these are irrevocable transactions and that when you give things away, they are not yours anymore.”

Rushing to make a large gift to beat a deadline can backfire. Giving should always be guided by thoughtful conversation and financial modeling.

“We don't want clients coming back years from now saying that they gifted too much to their kids or it wasn't the right structure,” said Jackson-Leslie.

Making giving decisions

If high-net-worth and ultra-high-net-worth individuals are prepared to make a gift before the year’s end, they must consider how much to give, why they’re giving and how to structure it.

“You have to understand your current lifestyle and long-term goals and objectives,” said Judy Raffa, head of strategic advisory solutions for PNC Private Bank.

For ultra-high-net-worth clients with $100 million or more in assets, using the full $13.99 million exemption may be an easy decision. But for those with less than that — say, $20 million to $30 million — it’s not as simple.

The risk of over giving

A looming deadline can put pressure on families to give. But families should still take a strategic, rather than rushed, approach to determine how much to give.

“The people who are in that $20 [million] or $30 million range … making a gift of the full $13.99 million could potentially cause hardship,” Ditelberg said.

In other words, give smartly. Don’t part with — or tie up in trust — more wealth than you can afford.

Sheehan stressed the importance of working with a team that sees the client’s full financial picture. “There's the financial planner. There's the tax adviser, and there's the attorney,” she said. “If one of those legs of the stool is missing, the stool is going to collapse.”

Sheehan recalled a client whose attorney developed an aggressive gifting plan that would have transferred the bulk of their assets to hit the gift exemption limit.

“We had, in that instance, to totally pump the brakes,” she said. “We backed into a number that these clients could comfortably afford to gift, which was far less than the attorney was recommending.”

Giving tools and strategies

For clients who are ready to move forward, tried-and-true tools are still the norm. “We do see people using trusts rather than giving stuff outright for the most part, and a lot of the reason they do that is for creditor protection,” said Ditelberg.

Spousal lifetime access trusts (SLATs) are among the common trust options for gifts and wealth transfers. “SLATs have become very popular during this time of high exemption amounts because they do add a little bit more flexibility in terms of the safety net, in that the nongrantor spouse is the beneficiary,” said Jackson-Leslie.

Other options include grantor retained annuity trusts (GRATs), charitable remainder annuity trusts (CRATs), charitable remainder unitrusts (CRUTs), irrevocable gift trusts (IGTs) and intentionally defective grantor trusts (IDGTs). Intrafamily loans are also common.

“The interest rate is higher than it was a few years ago but still a fairly good rate,” Jackson-Leslie said. “These can be used to loan money to family members. And that loan could be forgiven all at once or over time using exemption.”

Families may also bundle assets into a limited liability company (LLC) and gift interests through that vehicle.

“There aren't any new crazy acronyms really that have been added to the toolbox,” Sheehan said. “It's the same tried-and-true ones that we've had for a good long time.”

Managing generational issues

Gifting offers practicality. Families can pass wealth through the generations and do so in a tax-advantaged way. But the process isn’t simply about running the numbers; Family offices are faced with the often delicate and daunting process of working with different generations.

Every family, and its dynamics, is different. Grandparents, parents and children can each have vastly different views on wealth, its distribution, its concomitant values and its use. “Even if we make all the numbers flow to the right optimized bucket, there's the emotional and psychological element of being inside of a family that can completely derail a plan,” said Yun.

That potential tension among family members is why family office leaders and wealth advisers in general prioritize education. Whether the sun sets on the estate and gift tax exemption, the complications that come with family office governance and making decisions across different generations will remain.

Whether the sun sets on the exemption or not, those conversations — and the preparation behind them — may be the most lasting gift of all. “The best thing clients could do today is host an annual family meeting with inheritors or future beneficiaries,” Yun said. “Explain to them the values and philosophies around wealth.”