Recent years have seen significant changes in estate planning, particularly around the federal estate tax exemption and its impact on tax-efficient charitable giving. The estate tax exemption refers to the portion of an individual’s estate that can be passed on to heirs without being subject to federal estate tax.

The Tax Cuts and Jobs Act of 2017 substantially increased the estate tax exemption to $11.2 million per individual, doubling the previous $5.6 million threshold. Married couples may combine their exemptions, thereby enabling the transfer of substantial wealth across generations without estate tax implications. These elevated exemption levels were originally scheduled to sunset on January 1, 2026.

However, with the signing of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, President Trump made the elevated exemption levels permanent. For 2025, the exemption is $13.99 million per individual and $27.98 million for married couples. These numbers will rise to $15 million and $30 million, respectively, in 2026.

Despite this legislative extension, future administrations or Congress could still alter the exemption. That uncertainty underscores the importance of proactive estate planning to minimize potential tax exposure. High-net-worth individuals should remain vigilant and prepared for potential adjustments that could reduce the exemption in years to come.

Charitable giving continues to serve as an effective estate planning strategy to mitigate estate tax exposure. Bequests to qualified charitable organizations, whether through a will or a revocable trust, reduce the donor’s taxable estate by the value of the gift, thereby decreasing, and in some cases eliminating, estate tax liability.

In addition, high net worth individuals are increasingly turning to Donor Advised Funds (DAFs) to integrate charitable giving into their long-term estate and financial planning strategy. DAFs allow individuals to contribute assets now, receive an immediate tax deduction, and distribute grants to their favorite charities over time. Contributions can include cash, publicly traded securities, real estate, cryptocurrency, and even business interests.

Donating appreciated assets to a DAF may yield significant tax advantages. Donors may avoid capital gains tax on the appreciation while receiving a charitable deduction equal to the asset’s fair market value. Moreover, contributed assets are excluded from the donor’s taxable estate.

The next two years present a key opportunity for high-net-worth individuals and families to reassess their estate plans. Working closely with estate planning attorneys, financial advisors, and tax professionals, they can leverage the extended exemption window to implement thoughtful strategies—including charitable giving—that align with their legacy goals and reduce tax burdens.

While the OBBBA provides greater certainty in the short term, the long-term future of estate tax policy remains subject to change. Now is the time to act.