Charting Your Legacy: Maximizing Estate Planning Opportunities Under the TCJA for Business Owners in 2025

The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, ushered in a wave of changes to estate planning that continue to shape the strategies of business owners in 2025. Understanding how these provisions impact your estate plan is key to protecting your wealth, minimizing tax burdens, and ensuring a smooth transition for both your business and your family. Whether your goal is to pass leadership to the next generation, transfer ownership interests to a trust, or safeguard the long-term value of your legacy, now is the time to take proactive steps.

The Surge in Estate and Gift Tax Exemption

One of the most noteworthy provisions of the TCJA was the temporary doubling of the federal estate and gift tax exemption. As of 2025, individuals can exempt up to an inflation-adjusted $13.61 million from estate and gift taxes, while married couples can shield over $27 million. This increased lifetime gift tax exemption enables business owners to transfer ownership interests and assets more efficiently and without incurring substantial federal estate tax liability.

However, these elevated exemption levels are set to sunset at the end of this year, reverting to an estimated $7 million per individual and $14 million for married couples starting in 2026. Proposed legislation introduced in both the House and Senate aims to override this scheduled sunset provision and permanently increase the exemption to $15 million per individual and $30 million for married couples, indexed annually for inflation. The legislation has passed the U.S. House of Representatives and advanced through the Senate Finance Committee. While it is part of a broader tax package—its outcome remains uncertain as Congress continues deliberations. If enacted, it would provide long-term certainty for high-net-worth individuals and family business owners as they navigate their estate planning decisions.

Utilizing the Annual Gift Tax Exclusion as a Strategic Tool

The annual gift tax exclusion allows business owners to gift up to $18,000 per recipient or $36,000 for married couples annually without reducing their lifetime estate and gift tax exemption. This provision can be a powerful tool for those seeking to gradually transfer business ownership or other assets to children, grandchildren, or key stakeholders. By making annual gifts over time, owners can systematically shift significant value out of their taxable estate while maintaining day-to-day control of the business. When implemented thoughtfully, this strategy can significantly reduce the size of a taxable estate, minimize future estate tax exposure, and facilitate a smoother transfer of ownership across generations. It is especially valuable for family-owned or closely held businesses with long-term succession plans in place.

Unlocking Wealth with Grantor Trusts and Estate-Freezing Strategies

Grantor trusts remain a cornerstone of high-net-worth estate planning. Tools such as intentionally defective grantor trusts (IDGTs) and grantor-retained annuity trusts (GRATs) enable business owners to transfer future appreciation out of their estates while maintaining a degree of control over the assets, which can be ideal for business interests expected to grow. These strategies are especially effective in taking advantage of the elevated exemption.

Additional Strategies to Maximize Opportunities

Business owners should also consider incorporating other advanced planning techniques into their estate strategy. These tools can help reduce taxable estate value, transfer future appreciation, and maintain control over assets—all while aligning with long-term business and family goals. Key strategies include:

• Irrevocable Trusts: Establishing irrevocable trusts provides long-term protection for business assets by removing them from your taxable estate and shielding them from creditors and legal claims. This safeguard is especially valuable if tax laws change or rates increase. Additionally, these trusts can be customized to support family and business goals—such as providing for heirs, managing distributions, and preserving the business legacy for future generations.

• Spousal Lifetime Access Trusts (SLATs): For married couples, SLATs enable one spouse to transfer assets into a trust for the benefit of the other spouse and their children, effectively removing those assets from the taxable estate while still providing indirect access to the funds. This strategy is particularly effective for utilizing the estate tax exemption without sacrificing practical control or financial benefits.

• Valuation Discounts: Using family limited partnerships (FLPs) or limited liability companies (LLCs) to transfer business interests can create valuation discounts, potentially reducing the taxable value of those interests for estate and gift tax purposes. This strategy is often combined with entity structuring and trust planning to achieve maximum tax efficiency.

Beware of Local and State Laws

While the TCJA addresses federal estate taxes, many states impose their own estate or inheritance taxes, often with much lower exemption thresholds. For example, while Florida does not impose a state estate or inheritance tax, estate planning still requires careful consideration of the state’s probate laws. Engaging with an estate planner who understands federal and state tax laws is crucial to mitigating this additional burden.

Estate Planning Advisory Experts

With over 67 years of leadership, experience, and expertise, our talented team of CPAs and advisors understands the nuances of estate planning. In today’s ever-changing economic landscape, we provide resources that go beyond traditional audit, accounting, and tax services. We can help you develop a comprehensive estate plan that streamlines the process, minimizes tax liabilities, and ensures your assets are distributed according to your wishes. We will work with your attorney as they draft the legal documents required to implement a plan that best suits your needs—providing peace of mind for you and your loved ones across generations.

Here to Help

Estate planning is not a one-time task but an ongoing process that should evolve with your business and personal life. If you have questions about your unique situation or need strategic financial advice, we are here to help you on this journey of charting your legacy. Contact us to let us know how we can best support you.