Navigating Estate Planning During Uncertain Times: Part 1 of 2With a new presidential administration on the horizon, the estate planning landscape is undergoing rapid transformation. If you’ve been holding off on creating or updating your estate plan, now is the time to act. This moment presents unique opportunities and pressing reasons to prioritize your planning efforts. As changes loom and favorable conditions may soon vanish, understanding your options has never been more vital.
In this two-part series, we’ll explore what’s known, what remains unpredictable, and, most importantly, what actions you can take right now. Next week, we’ll focus on strategies to safeguard vulnerable loved ones in the face of upcoming challenges. This week, however, we’ll dive into taxes, interest rates, and asset protection. Let’s get started.
What We Know About Taxes and Interest Rates
The current estate planning climate offers unprecedented opportunities that won’t last forever. In 2024, the estate tax exemption is at its highest: $13.61 million per person ($27.22 million for married couples). This amount increases to $13.99 million per person in 2025 ($27.98 million for couples). These exemptions allow for substantial tax-free wealth transfers, creating a rare chance to protect your assets from future estate tax exposure.
However, these advantages come with an expiration date. On January 1, 2026, without new legislation, the exemption will revert to approximately $7 million per person. This means that gifting assets in 2025 could save families millions in taxes. If your estate is likely to exceed this lower threshold, it’s critical to act early. Consider:
- The future growth of your assets, not just their current value.
- Strategies to gift assets while retaining certain controls or benefits.
- Starting the process early to minimize costs and ensure timely planning.
Remember, your estate may be larger than you think. For tax purposes, it includes the fair market value of your home, life insurance policies, retirement accounts, and other assets. Even if your total assets fall below the 2025 threshold, the reduced 2026 exemption could affect your estate. If you’re unsure, I’m here to help.
Additionally, the 2024 gift tax laws allow you to give $17,000 per person annually tax-free ($34,000 for married couples). This exclusion will increase to $19,000 per person in 2025, providing another powerful tool for reducing taxable estates.
Interest rates also play a pivotal role. After a period of historic highs, rates have begun to decline, presenting opportunities for wealth transfer strategies that benefit future generations. If you’re considering these options, I’d love to discuss them with you.
What Remains Uncertain
While we anticipate changes from the incoming administration, the specifics remain unclear. Key unknowns include:
- Whether the current estate tax exemption will be extended or allowed to expire in 2026.
- How long interest rates will continue to fall.
- Possible changes to gift tax exclusions and wealth transfer tools.
- State-level responses to federal tax changes.
- New rules around retirement accounts and inherited IRAs.
- Potential restrictions on current estate planning strategies.
While waiting for clarity might feel tempting, it could mean missing valuable opportunities. Legislative changes often occur swiftly, leaving little time to adapt. Acting now ensures you’re prepared for any scenario.
Why Acting Now Is Crucial
The combination of known advantages and future uncertainties makes immediate action imperative. Here’s why:
- Capitalize on Today’s Benefits: High exemptions and declining interest rates provide an ideal environment for wealth transfers. Acting now locks in these benefits.
- Prepare for Future Changes: With a customized Life & Legacy Plan, you can protect your assets from potential tax law shifts and adapt to new circumstances. Flexible tools like specialized trusts and family limited partnerships offer lasting protection.
- Gain Peace of Mind: Beyond tax planning, a comprehensive Life & Legacy Plan ensures your wishes are honored and your loved ones are cared for, no matter what changes occur.
- Secure Your Family’s Future: Effective estate planning extends beyond financial savings. It ensures your family is supported, children’s inheritances are safeguarded, and your philanthropic goals are met.
Next week, in Part 2, we’ll explore strategies for protecting vulnerable family members and addressing unique planning needs for LGBTQ+ families, families with special needs children, and other scenarios requiring special consideration.
Your Next Steps
Navigating these changes doesn’t have to feel overwhelming. I offer a Life & Legacy Planning® Session to help you understand how today’s conditions and upcoming changes could affect your family.
During this session, we’ll:
- Review your current estate plan or discuss creating one from scratch.
- Identify opportunities to take advantage of favorable conditions.
- Develop strategies to protect your assets from future tax changes.
- Build flexibility into your plan to adapt to new laws.
Don’t wait. Protecting your family and preserving your legacy starts with a single step. Schedule your Life & Legacy Planning Session today and secure your family’s future.
This article is a service of The Life and Legacy Law Center, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning® Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning Session.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.