The Tax Cuts and Jobs Act of 2017 doubled the federal estate, gift, and generation-skipping transfer (GST) tax exemption. The provisions that caused that doubling are scheduled to sunset after December 31, 2025. Without congressional action, the exemption reverts to its pre-2018 level, indexed for inflation.
For families with combined estate values above approximately $14M, the sunset is the largest scheduled tax event of the decade. The arithmetic is simple. The execution is not.
This guide walks through the math, the eight strategies that still work, and the deadlines that govern each one.
The math, in two sentences
For 2025 the exemption is approximately $13.99M per individual, $27.98M for a married couple. After the scheduled sunset, the exemption reverts to roughly $7M per individual, $14M per couple. The federal estate tax rate above the exemption is 40%.
What that means in practice: a family with $25M of net worth that does nothing before the sunset, and dies after the sunset, pays roughly 40% × ($25M − $14M) = $4.4M in federal estate tax they would not have paid under current law. State estate tax, where applicable, is on top of that.
The "use it or lose it" rule
The IRS has clarified, in final regulations under §20.2010-1(c), that gifts made under the higher pre-sunset exemption will not be "clawed back" if the donor dies after the exemption drops. In other words: if you use the high exemption now, the IRS will not re-tax it later.
This is the single most important fact in TCJA sunset planning. It creates the use-it-or-lose-it dynamic that drives almost every strategy below.
The eight strategies that still work
1. Outright lifetime gifts to use the high exemption
The simplest move: give assets to the next generation now using the lifetime exemption. The maximum federal-tax-efficient gift in 2025 is the full $13.99M per donor. A married couple can give roughly $27.98M without triggering federal gift tax, and the appreciation on those assets is then outside the donors' estates.
The catch: outright gifts mean control is gone. For most HNW families this is too blunt an instrument and one of the trust-based strategies below is preferable.
2. Spousal Lifetime Access Trusts (SLATs)
A SLAT is an irrevocable trust funded by one spouse for the benefit of the other (and typically descendants). It uses the donor spouse's exemption while keeping indirect access to the assets through the beneficiary spouse during their lifetime.
SLATs are the workhorse strategy for the sunset because they let a married couple use one or both lifetime exemptions and retain practical access to the cash flow. Done right, both spouses can fund SLATs for each other — but they must be carefully drafted to avoid the "reciprocal trust doctrine," which would unwind the structure.
3. Grantor Retained Annuity Trusts (GRATs)
A GRAT lets the grantor transfer appreciation above the §7520 rate (currently elevated, but still beatable in many growth assets) without using lifetime exemption. Short-term, "rolling" GRATs are popular when the underlying asset has volatile appreciation.
GRATs are not a "use it before sunset" strategy per se, but their efficiency drops if the lifetime exemption shrinks, because the alternative — gifting outright with high exemption — disappears.
4. Sales to Intentionally Defective Grantor Trusts (IDGTs)
A sale to an IDGT lets the grantor freeze the value of an appreciating asset (for example, a closely held business). The grantor sells the asset to a trust in exchange for a promissory note at the AFR. The trust pays the note from the asset's cash flow, and all appreciation above the AFR is outside the grantor's estate.
For families with rapidly appreciating private business interests, this is often the highest-leverage move on the table. It pairs well with a small "seed gift" using lifetime exemption to capitalize the trust.
5. Charitable Lead Annuity Trusts (CLATs)
A CLAT pays an annuity to charity for a term of years, then distributes the remainder to family. In a high §7520 rate environment, CLATs are less attractive than they were a few years ago, but they still solve a specific problem: a family with strong charitable intent that wants to compress estate value while honoring a giving plan already in place.
6. Qualified Personal Residence Trusts (QPRTs)
A QPRT lets the grantor transfer a personal residence at a discounted gift value while retaining the right to live in it for a term of years. After the term, the home passes to the next generation. Useful for families with high-value primary or vacation residences who do not need to "consume" the asset's value during retirement.
7. Annual exclusion gifts and 529 superfunding
The annual exclusion is $19,000 per donor per recipient in 2025. Married couples can split-gift to give $38,000 per recipient. 529 plans permit "superfunding" — five years of annual exclusion gifts in a single year, $95,000 per donor per beneficiary. None of this uses lifetime exemption. It's the floor of every wealth-transfer plan, and the lowest-friction tool available.
8. State estate tax planning
Twelve states plus the District of Columbia impose their own estate tax, often with exemptions far below the federal threshold (Massachusetts and Oregon at $1M, for example). For families in those states, the federal sunset is only half the story. Strategies range from changing residency to placing assets in states with no estate tax to using disclaimer trusts that minimize state-level exposure independent of federal positioning.
The deadlines that actually matter
| Deadline | What's due |
|---|---|
| October 2025 | Final practical window to start a SLAT or IDGT structure. Drafting, funding, and trust accountings take 60–90 days even when nothing goes wrong. |
| November 2025 | Asset valuations should be in hand. Closely held business appraisals take 30–60 days and are required to defend the gift on Form 709. |
| December 2025 | Funding deadline. Gifts must be completed (assets transferred, trust funded) before December 31, 2025. A pending gift is not a completed gift. |
| April 15, 2026 | Form 709 (gift tax return) due for any gift made in 2025. Filing the return starts the three-year statute of limitations on IRS challenge of the gift's reported value. |
A gift is "completed" only when the donor has parted with both possession and control. For real estate, that means a recorded deed. For business interests, that means a transfer recorded on the company's membership ledger. A signed but unrecorded transfer is not a completed gift — and the IRS will treat it as such.
How to know which strategy fits
The right strategy depends on three variables: how much exemption you want to use, how much liquidity you need to retain, and what assets you're transferring. A family that holds most of its wealth in operating-business equity has very different options than a family that holds most of it in publicly traded securities or in a primary residence.
The Compendium's AI estate roadmap includes a TCJA sunset analysis as a standard section. It calculates current-law exposure, post-sunset exposure, the dollar value of unused lifetime exemption, and the strategies most likely to apply given the family's actual asset roster. It is not a substitute for sitting down with your estate attorney and your CPA — but it is the document you walk into that meeting with so you spend the meeting deciding rather than discovering.
What if Congress acts?
Congress could extend, modify, or replace the TCJA sunset provisions. As of this writing, no such legislation has passed. Planning continues to assume the sunset takes effect on schedule — and most attorneys are advising clients accordingly. If Congress extends the exemption, the worst-case for a family that completed a SLAT or IDGT is that they used a higher exemption than they ultimately needed. That is not a bad outcome.
The opposite outcome — assuming Congress will act, doing nothing, and finding out in late 2026 that they didn't — is the one with no recourse.
Run a TCJA sunset analysis on your family
The Compendium's AI estate roadmap calculates current and post-sunset exposure for your specific asset roster — $19 per run.
Request a Demo → See PricingThe Compendium provides software, not legal, tax, accounting, or financial advice. Run TCJA sunset planning with your licensed estate attorney and CPA. Specific exemption figures referenced in this article reflect 2025 inflation-adjusted values; consult IRS published guidance for the most current numbers.