Estate planning is a critical aspect of financial management. It ensures that your wealth is preserved and transferred according to your wishes. However, with President Donald Trump back in the White House, potential policy shifts could significantly impact your current estate planning strategies. While no concrete changes have been made at this time, understanding the Trump administration’s past policies and campaign proposals can help you proactively adjust your current plan.
One of the most significant potential changes under Trump’s administration could involve the federal estate tax. During his previous term, Trump and the Republican-controlled Congress passed the Tax Cuts and Jobs Act (TCJA) of 2017, which doubled the estate tax exemption from about $5.5 million per individual to $11.18 million. When adjusted for inflation, the exemption has climbed to $13.99 million in 2025.
However, this increase is set to sunset in 2026, reverting to pre-2018 levels. The new administration may push to extend or even eliminate the federal estate tax altogether. If this happens, high-net-worth individuals may need to reassess their estate plans, focusing less on tax-avoidance strategies such as trusts and gifting and more on wealth preservation.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
As the future of the federal estate tax hangs in the balance, individuals should continue to monitor legislative developments related to estate tax policy. If the exemption remains high, it might be necessary to consider revising complex tax-avoidance structures. If tax rates increase, it might be a good idea to explore gifting strategies or irrevocable trusts before the changes actually take effect.
Since lifetime gift and estate tax exemptions are closely linked, any changes made to the estate tax could also impact the gifting strategies you may currently have in place. Under the TCJA, individuals could gift significant assets without incurring gift taxes. But, if Trump seeks to maintain the current exemption levels or eliminate the estate tax, gifting may become a less urgent concern for many families. However, if exemption levels decrease, or if Democrats regain control of Congress in the fall of 2026 and push for estate tax hikes, individuals may want to take advantage of gifting before new laws take effect.
What to do now
To prepare, folks should consider making larger gifts now to lock in current exemption levels. You can also utilize the annual gift exclusions, which is $19,000 per recipient in 2025, to minimize future estate tax liability. Consider working with an estate planning attorney to reassess trust structures and gifting schedules.
Another point of discussion in regard to tax policy has been the step-up basis rule. This rule allows inherited assets to be valued at their fair market value upon the owner’s death. While no changes were made to this policy during the president’s first term, discussions surrounding capital gains taxation could resurface.
If Trump pursues capital gains tax cuts or maintains the step-up in basis, individuals may find it advantageous to hold appreciated assets rather than gifting them during their lifetime. Conversely, if there are shifts in capital gains taxation, proactive selling or restructuring of assets may be necessary.
To ensure you’re prepared, make sure you’re informed about potential changes to the step-up in basis and capital gains tax and consider the timing of asset sales or transfers based on anticipated tax changes. A financial adviser or tax professional can also help you determine the best approach for minimizing capital gains liabilities.
What to know about trusts
Many estate planning strategies involve the use of trusts, such as grantor retained annuity trusts (GRATs), irrevocable life insurance trusts (ILITs) and dynasty trusts. Depending on Trump’s tax policies, these tools may become more or less relevant. If estate tax exemptions remain high or if tax burdens decrease, simpler estate plans may be viable.
However, if exemptions drop or if Biden-era proposals, such as limiting the duration of dynasty trusts, gain traction, more advanced strategies may be needed to protect generational wealth.
If your estate plan utilizes trusts, you’ll want to make sure they align with changing tax laws. It may be helpful to set up irrevocable trusts before potential restrictions take place since the terms of these trusts can be very difficult to change or dissolve. You can also explore life insurance strategies to provide liquidity for estate tax obligations.
While federal estate tax laws often dominate discussions, it’s crucial to consider state-level estate and inheritance taxes. Some states impose their own estate taxes with much lower exemption limits than the federal government. If federal estate tax laws become more favorable, states with high estate tax burdens may see an increase in wealth migration.
Start reviewing state-level estate tax laws and explore potential migration options. A tax professional can also help you develop strategies that can minimize your state-level tax exposure. Another option is to relocate to a state that doesn’t have estate or inheritance taxes, though this is not a viable option for everyone.
What to know about inherited retirement accounts
Changes to estate planning laws may also affect retirement account strategies. Under the SECURE Act of 2019, most non-spouse beneficiaries must withdraw inherited retirement account funds within 10 years, potentially accelerating tax liabilities. Trump may seek further reforms to retirement tax structures, which could influence how individuals plan their estate distributions.
In the meantime, it’s important to review the beneficiary designations listed on your retirement accounts and explore Roth conversions to minimize tax burdens on heirs. Charitable remainder trusts or other tools for tax-efficient retirement asset transfers should also be considered.
While estate planning always requires foresight, Trump’s return to the White House introduces new considerations. Tax policy shifts, regulatory changes and economic factors will all influence the best strategies for wealth preservation and transfer.
Consulting with estate planning professionals and staying informed about legislative developments is key to making informed decisions. By proactively adjusting estate plans in response to changing policies, individuals and families can ensure their wealth is protected and distributed according to their wishes, regardless of political shifts.
Related Content
-
Is Your IRA Protected in Bankruptcy?Can creditors take some or part of your IRA funds if you file for bankruptcy? Learn more about the federal protections that exist and to what extent they protect your IRAs.
-
What Retirees Need to Know About TaxesTake steps to avoid a surprise tax bill and underpayment penalties.
-
My Husband Is Terrible With Money. I Worry He'll Quickly Spend Our $1.3 Million Nest Egg. How can I Ever Retire?We asked expert financial advisers and therapists to weigh in.
-
Roth Conversion in a Down Market: Is it Right For You?Facing a future tax hit on your retirement savings? A Roth conversion may be a way to lower the taxes you owe.
-
Tax Advantages of Oil and Gas Investments: What You Need to KnowTax incentives allow for deductions and potential tax-free earnings — benefits accessible only to accredited investors in small producer projects.
-
Charitable Contributions: Five Frequently Asked QuestionsMake the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
-
Financial Leverage, Part Two: Don't Say We Didn't Warn YouA lesson in how highly leveraged investments can benefit the first movers and crush the next round of buyers.
-
Taxes in Retirement: What ESOP Participants Need to KnowMost Employee Stock Ownership Plans (ESOP) participants transfer company stock to an IRA starting around age 55, so taxes on that money have been deferred.
