Staying informed about estate planning in 2025 is crucial, especially with potential legal and tax changes on the horizon. These updates could significantly impact financial legacies, making it vital for you to proactively secure your plans. Understanding these changes can empower you to make informed decisions.

Federal Estate and Gift Tax Exemption

Currently set at $13.99 million, the federal estate and gift tax exemption is scheduled to decrease to approximately $5 million after December 31, 2025, unless legislative action is taken. This reduction could have a substantial impact on estate planning strategies, necessitating a review of your current plans.

Annual Gift Tax Exclusion

In 2025, the annual gift tax exclusion has increased to $19,000 per recipient, driven by inflation adjustments. This change presents an opportunity to use gifting as a strategic way to reduce your taxable estate.

Step-Up in Basis Rule

There is ongoing discussion about potential changes to the step-up in basis rule, although no final decisions have been made. This rule is significant in determining tax obligations on inherited assets, making it a critical factor to consider in your estate planning.

State-Level Estate Tax Thresholds

Various states are revising their estate tax thresholds, which may affect those owning properties in multiple jurisdictions. It's essential to consider how these changes might impact your estate plan and take action accordingly.

In light of these potential changes, it is imperative to stay proactive. Regularly reviewing and adapting your estate plan to new laws can protect your legacy. Consulting with experts can offer personalized advice and keep you ahead of the curve.