As a new presidential administration takes the reins, the estate planning landscape is shifting in ways that demand attention. If you’ve been waiting for the “right time” to create or update your estate plan, now is that time. Current opportunities won’t last forever, and anticipated changes make understanding your options more critical than ever. In this two-part series, we’ll explore what we know, what remains uncertain, and – most importantly – what you can do to protect your family and assets. This week, we’re focusing on taxes, interest rates, and asset protection. Next week, we’ll cover strategies for protecting loved ones who may be particularly vulnerable in the years ahead. Let’s dive in.
What We Know About Taxes and Interest Rates
Here’s what’s clear: the current estate planning environment offers unprecedented opportunities.
- Estate Tax Exemption: The 2024 federal estate tax exemption is at an all-time high of $13.61 million per person($27.22 million for married couples). This increases slightly in 2025 to $13.99 million ($27.98 million for couples), allowing substantial wealth transfers without triggering federal estate taxes.
- Sunset of Current Exemptions: Without new legislation, these generous exemptions will drop significantly to around $7 million per person on January 1, 2026. This means that 2025 presents a rare chance to transfer assets worth up to $7 million more than would be possible under the reduced exemptions.
When planning for these transfers, remember to consider:
- Growth Potential: Evaluate not just the current value of your assets but their potential future growth.
- Retaining Control: Some gifting strategies allow you to retain control or use of the assets.
- Timing: Starting early ensures your plan is both cost-effective and completed on time.
Your estate may be larger than you think. For tax purposes, your estate includes the market value of your home (minus the mortgage), other real estate, life insurance policies, retirement accounts, and investments. Even if your total assets are below the exemption now, you could be affected when the exemption drops in 2026.
- Annual Gift Tax Exclusion: In 2024, you can give up to $17,000 per person annually without tax consequences ($34,000 for married couples). This increases to $19,000 per person in 2025. These annual gifts don’t count against your lifetime estate tax exemption and are a valuable tool for reducing your taxable estate.
- Interest Rates: Interest rates, which had been at historic highs, are starting to decline. Lower rates make certain estate planning strategies more effective, especially those involving wealth transfers to future generations.
What Remains Uncertain
While some aspects of the estate planning landscape are clear, others remain in flux. Here’s what we don’t know:
- Whether new legislation will preserve current exemptions or let them sunset in 2026.
- How long interest rates will continue to decline.
- Potential changes to gift tax exclusions and other wealth transfer tools.
- Shifts in state-level estate taxes in response to federal changes.
- Evolving rules for retirement accounts and inherited IRAs.
- Restrictions on currently available planning strategies.
It’s tempting to adopt a “wait and see” approach, but history shows that tax law changes often come quickly, leaving little time to act. Taking proactive steps now is the best way to protect your family and financial future.
Why You Need to Act Now
The combination of current opportunities and future uncertainties makes this the perfect time to take action. Here’s why:
- Secure Current Benefits: High exemption amounts and favorable interest rates won’t last forever. Acting now ensures you lock in these advantages.
- Adaptable Plans: At Cheever Law, we create flexible estate plans that can adapt to future changes, using strategies like specialized trusts and family limited partnerships.
- Peace of Mind: Beyond tax considerations, a well-crafted estate plan protects your family and ensures your wishes are honored – regardless of what changes occur.
Estate planning isn’t just about saving on taxes; it’s about protecting your family and preserving your legacy. This includes safeguarding inheritances, providing for loved ones with special needs, and ensuring your charitable goals are met.
Your Next Steps
At Cheever Law, we understand that navigating these changes can feel overwhelming. That’s why we offer a Life & Legacy Planning Session to help you take full advantage of today’s favorable conditions and prepare for what’s ahead.
During your session, we’ll:
- Review your current estate plan or discuss creating one if you don’t have one.
- Identify opportunities to secure your assets under current laws.
- Develop strategies to protect your wealth from future tax changes.
- Ensure your plan is flexible enough to adapt to new legislation.
Don’t wait until it’s too late – proactive planning today can save your family time, stress, and money in the future.
Looking Ahead
In Part 2 of this series, we’ll focus on strategies for protecting vulnerable family members, including planning considerations for LGBTQ+ families, those with special needs, and other unique situations.
At Cheever Law, APC, 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, starting with a valuable and educational Life & Legacy Planning Session. This will allow you to get more financially organized and make the best choices for the people you love. If you have already completed your estate plan, we will review that plan at your Life & Legacy Planning Session to ensure that it will work the way you intend and address any holes or gaps that may be present if circumstances have changed since you executed your plan.
To learn more about our one-of-a-kind systems and services, contact us or schedule a no-obligation 15-minute introductory phone call today.