The landscape of federal estate and gift taxes may face significant changes that could have major implications for individuals with considerable estates. The federal estate and gift tax exemption provision is set to sunset after 2025. Read more about the potential changes here. While the future of federal estate and gift tax exemptions currently remains uncertain, there are steps individuals can take to proactively prepare for the potential changes:
- Estate Plan Review: Work with a qualified estate planning attorney to review and update your estate plan. Ensure that your plan remains effective and minimizes potential tax liabilities under the new exemption limits.
- Consider Gifting: Evaluate your gifting strategy in light of the potential lower exemption. Making gifts before the sunset provision takes effect can help leverage the current higher exemption.
- Irrevocable Trusts: Explore the use of irrevocable trusts to protect your assets and potentially remove future appreciation from your taxable estate as well as lock in the current gift and estate exemption amounts. Such trusts can provide greater control over the distribution of assets not only to your children but to future generations.
- Life Insurance: Life insurance, structured correctly, can be a strategic tool to offset potential estate tax liabilities, providing a source of funds to cover taxes without depleting the estate.
- Family Meetings: Discuss your estate plans and potential changes with your family members. Open communication can help prevent misunderstandings and ensure everyone is on the same page.
While the specifics of the tax landscape remain subject to change, staying informed and seeking professional advice can empower individuals to navigate these potential changes with confidence. By taking action now, individuals can safeguard their wealth, optimize their estate plans, and secure the financial well-being of their loved ones. If you’d like to discuss these strategies and how they relate to your estate plan, contact us today.
