November 7, 2025 | Amanda C. Andrews.
With year-end approaching, certain planning opportunities remain as well as opportunities to consider moving into 2026. Following the passage of the One Big Beautiful Bill (OBBB), tax rates appear to be set, at least in the near-term. Family offices have an opportunity to evaluate the tax efficiency of their current structures, including if the layering of entities creates a tax drag or, ideally, couples tax benefits with streamlined processes. As part of such an evaluation, active family offices may want to consider additional trust structures for wealth transfer purposes, as well as consider opportunities to involve the next generation.
Non-Grantor Trusts and Qualified Small Business Stock (QSBS)
Individuals and families should consider taking both individual advantage of the increased opportunity to exclude capital gain upon the sale of qualifying QSBS stock, as well as potentially utilizing new or existing non-grantor trusts in order to multiply the potential capture of the increased benefits. A non-grantor trust is an irrevocable trust that is a separate taxpayer from the grantor (i.e., generally, the trust pays income tax associated with the trust, as opposed to the grantor of the trust being responsible for income tax on the grantor’s individual income tax returns).
The OBBB increased the amount of potential capital gains a non-corporate taxpayer can exclude from taxable income upon the disposition of certain C-corporate stock qualifying as QSBS issued after July 4, 2025. First, under the OBBB, the requirement that the “aggregate gross assets” of the entity at the time of issuance, for purposes of Internal Revenue Code Section 1202, increased from $50 million to $75 million. Second, the holding period for qualifying stock decreased from 5 years to 3 years. Third, the cap on excludible capital gains for eligible taxpayers for a single issuer increased to the greater of $15 million (including all prior dispositions for the same issuer) or 10 times the adjusted basis of the taxpayer with respect to the QSBS.
Therefore, an individual could potentially exclude $15 million of gain after 3 years for qualified QSBS. And, if that same taxpayer establishes and funds a non-grantor trust, or a family utilizes an existing non-grantor trust that in turn purchases stock in a qualifying entity, that benefit could be multiplied.
Increased Federal Estate, Gift, and Generation-Skipping Transfer Tax Exemption in 2026
In 2026, the Federal lifetime exemption will be set at $15,000,000 per individual and $30,000,000 per married couple, permanently indexed for inflation beginning in 2027. This increased opportunity to transfer wealth to subsequent generations should be considered, in addition to basis planning and wider wealth transfer and succession planning. For individuals and families interested in making gifts of non-marketable assets, which require valuations for transfer tax purposes, planning should begin now.
Risk Management
In conjunction with reviewing estate plans, trust structures, and existing entity structures, it is important to consider reviewing debt to equity ratios as well as intrafamily loans in order to determine how existing planning is functioning, as well as opportunities to bifurcate risk. For example, cross-collateralization coupled with low levels of liquidity could impact a family’s ability to manage economic fluctuations. Additionally, while intrafamily loans often pose opportunities for families to extend credit at more advantageous rates than those available in the marketplace, it is important to make sure loans are being tracked, documented, and booked correctly in order to make sure they are respected for tax purposes and not a source of unnecessary exposure.
Involving families in the review process may be an opportunity to foster opportunities for family education and family governance projects. Appropriately involving the next generation in thoughtful planning, and contextualizing why structures are in place, may be important training opportunities for rising family leaders. Training the next generation of family leaders is, in and of itself, a risk management strategy.
Looking Ahead
Regardless of the economic and geopolitical changes that may occur next year, assessing risk in family structures and maximizing planning opportunities will help families protect and promote their wealth. Those conversations cannot be siloed between advisors, however. As a result, thoughtful planning and practical approaches continue to provide families with some level of control as well as opportunities to capture upside while, hopefully, minimizing risk.