22 Jan The Top Estate Planning Issues to Tackle For 2025

As 2025 gets into full swing, families and business owners should prepare for the opportunities and challenges that the year may bring.  With the holidays behind us, now is the time to focus on and ensure your estate plan protects your wealth and legacy for future generations. Here are the top issues you need to prioritize as the new year begins.

1. Estate Tax Wildcard: Federal and State Implications

The federal estate tax exemption, currently $13.99 million per person (increased from 13.61 million per person in 2024), is set to sunset at the end of this year.  Will that still happen?  With Republican leadership in Washington, many experts predict the exemption may remain high. While this provides some relief, it’s far from guaranteed, and even high exemptions require careful planning for families near or above the threshold.

For families in states with state-level estate taxes, such as New York or Connecticut, planning remains critical regardless of federal exemption levels. State exemptions are often much lower, exposing more of your wealth to taxation.

Action Plan for 2025:

1. Strategic Gifting: Use lifetime exemptions or annual exclusion gifting to reduce your taxable estate while keeping control of your wealth.

2. State-Specific Strategies: If you live in a state with estate taxes, consider tools like spousal trusts or other types of trusts to minimize the impact.

3. Flexibility: Build estate plans with tools like disclaimer trusts to adapt to future legislative changes.

2. Asset Protection: Safeguard Your Wealth

Significant wealth makes you a target for lawsuits, creditors, and even family disputes. Proactively protecting your assets ensures your legacy stays intact.

Action Step:

Use tools such as Domestic Asset Protection Trusts (DAPTs) or Spousal Lifetime Access Trusts (SLATs) to shield your wealth from potential risks without giving up too much control. Don’t overlook business-related risks—ensure your business structure and insurance are optimized for asset protection.

3. Business Succession Planning: Secure the Future

As a business owner, your company is likely your family’s largest asset. Yet, many business owners fail to establish clear succession plans. Without one, your company’s value could erode, and disputes may arise among family or key employees.

Take Action:

1. Draft or update a buy-sell agreement that outlines how ownership transitions in cases like death, disability, departure of a shareholder, and other exit events.

2. Ensure the next generation or leadership team is prepared to sustain and grow the business.

3. Align your succession plan with your personal estate planning goals.

4. Preventing Family Disputes: Build Harmony, Not Conflict

Without a clear, thoughtful estate plan, misunderstandings about inheritance can lead to costly disputes and strained relationships. Families with significant wealth often face challenges like unequal distributions or differing priorities among heirs.

Proactive Solutions:

1. Use family meetings or letters of instruction to explain your intentions.

2. Consider incentive provisions in your planning to guide beneficiary behavior while preserving family harmony.

3. Appoint a neutral third party, like a professional trustee, to administer plans and to mitigate or avoid family discord later.

5. Review and Update Your Plan Regularly

Tax laws and family dynamics evolve. What worked in the past may not address current realities. Reviewing your estate plan ensures it remains aligned with your goals and legal requirements.

Commit to 2025 as the Year of Review:

1. Update wills, trusts, and powers of attorney to reflect life changes.

2. Reassess beneficiary designations and plan for significant wealth transfers.

3. Make sure your plan reflects the latest state and federal laws.

Your Next Step: Secure Your Legacy Today

The new year offers a fresh start, but waiting to act could risk family disagreements over money and control of your assets after you’re gone.  It could also cost your family substantial avoidable costs and taxes. Don’t let uncertainty derail your plans. Take the first step toward securing your wealth and legacy.

Reach out to us to discuss your estate planning goals. Visit https://lgarzalaw.com/schedule-online/ now to secure your spot.