As family offices continue to adapt to economic, financial, and technological changes, several ongoing developments are giving family offices plenty consider heading into 2025, including gift and estate tax exemptions, which are set to be halved at the start of 2026; federal and state updates regarding noncompetes; ongoing IRS campaigns around sports investing and business aircraft use; a federal mandate regarding anti-money laundering programs; and the evolving use of AI in cybersecurity.
The Internal Revenue Service (IRS) has announced that the annual gift tax exclusion is increasing in 2025 due to inflation. The exclusion will be $19,000 per recipient for 2025—the highest exclusion amount ever. In addition, the estate and gift tax exemption will be $13.99 million per individual for 2025 gifts and deaths, up from $13.61 million in 2024.
For family offices, these updates may provide additional capital for wealth preservation and transfer as part of a tax planning strategy. This is especially true as family offices and high-net-worth individuals consider gifts in the next year. For a couple that has already maxed out lifetime gifts, this means that they may now give away another $760,000 starting in 2025.
As a reminder, although the IRS has announced that the lifetime estate and gift tax exemption will increase to $13.99 million in 2025, under current law, that amount will be decreased by half at the start of 2026. While the new administration is likely to take a friendly stance on extending these tax cuts, it is nevertheless imperative that family offices take the necessary steps in 2025 to secure the tax-free transfer of select assets.
See more: IRS Announces Increased Gift and Estate Tax Exemption Amounts for 2025
In May 2024, the Federal Trade Commission (FTC) approved a Final Rule banning noncompete clauses for almost all workers—a rule that was set to become effective on September 4, 2024. While the rule was blocked by a nationwide injunction issued by a Texas federal judge prior to the September 4 effective date, delaying its implementation indefinitely, a growing number of states have taken steps to enact their own noncompete restrictions. This includes California, a key state for family offices, which has long banned noncompete clauses but recently passed legislation to apply this ban to contracts signed outside the state.
Although recent Supreme Court rulings have weakened the power of agencies like the FTC to make sweeping change at the federal level, family offices must still be mindful of the rapidly changing state landscape. The absence of noncompete clauses may affect a family office’s ability to secure and retain talent, especially in an era of increased professionalization, and protect proprietary family and business information.
See more: Texas Federal Court ‘Sets Aside’ FTC’s Noncompete Clause Rule
The IRS has several initiatives that affect family offices, particularly in the areas of tax compliance, reporting, and regulatory updates. Two particular IRS audit “campaigns” that will continue to affect family offices in 2025 are the Sports Industry Losses campaign and the crackdown on corporate jet use.
The Sports Industry Losses campaign is meant to “identify partnerships within the sports industry that report significant tax losses and determine if the income and deductions driving the losses are reported in compliance with the applicable sections of the Internal Revenue Code.”
The Business Aircraft campaign is intended to address “compliance concerns related to business aircraft usage by large corporations, large partnerships, and high-income taxpayers” to “ensure tax compliance while also increasing awareness related to the business aircraft regulations and reporting requirements.”
These campaigns are part of a broader IRS audit focus on high-income and high-wealth individuals, partnerships, and their partners. The IRS’s intention is to investigate whether taxpayers within these broad groups are in compliance with the applicable law and paying the taxes they owe. While the priorities of the new administration are unclear, family offices must remain vigilant in staying up to date with their tax strategy to avoid penalties and ensure proper reporting.
In recent years, partly in response to several high-profile money laundering criminal matters, anti-money laundering (AML) compliance has grown increasingly complex as certain countries have enhanced legal requirements and financial services firms have instituted more robust best practices.
Accordingly, institutional investors, such as family offices, are facing an even more tangled web of information requests when making investments in private funds or direct investments in operating companies—particularly where those investments are offshore. In conflict with that trend, family offices have a heightened interest in maintaining information about their ownership structure in confidence, given ongoing threats of cybercrime and identity theft.
In 2025, family offices can expect to see requests for AML-related information expand even further. In August 2024, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) adopted a final rule that will subject US Securities and Exchange Commission (SEC)–registered investment advisers to AML regulations and related reporting requirements, including Suspicious Activity Reports (SARs).
Unless this rule is delayed or revisited in connection with the upcoming change in presidential administration, US investment advisers will have to comply with the new rule as of January 1, 2026.
See more: Deciphering FinCEN’s New Anti-Money Laundering Rules for Advisers
Family offices continue to cite cybersecurity and data protection as top concerns and with good reason, as family offices are prime targets for bad actors due to the substantial financial resources they oversee and the sensitive information they handle. Further complicating the issue is the fact that family offices generally have less robust defenses than larger organizations and maintain smaller, more siloed internal teams.
In addition to the more established threats around data breaches, ransomware, and phishing, family offices must also remain proactive around evolving threats, particularly those that make use of AI. For example, while Text-to-Speech (TTS) models are a rapidly evolving tool in the spectrum of AI solutions for businesses, they also provide an avenue for cybercriminals to misuse voice as personal data.
Many global regulatory bodies have implemented a broad definition of personal data, inclusive of voice (both recorded and synthesized), so family offices should ensure that their cybersecurity policies are comprehensive and include provisions for how voice data can be collected, stored, and processed and transferred to third parties.
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