Key Estate Planning Changes You Need to Know for 2025

Staying informed about estate planning is crucial, especially as we look ahead to 2025. With potential legal and tax changes on the horizon, these updates can significantly impact your financial legacy. Understanding them can empower you to make informed decisions and proactively secure your plans.

 

Annual Gift Tax Exclusion

In 2025, the Annual Gift Tax Exclusion has increased to $19,000 per recipient. This adjustment, driven by inflation, presents an excellent opportunity for individuals to reduce their taxable estates through gifting. By taking advantage of this provision, you can effectively manage your estate and minimize tax liabilities for your heirs.

 

Step-Up in Basis Rule

There are ongoing discussions about potential changes to the Step-Up in Basis Rule, which plays a critical role in determining tax obligations on inherited assets. While no decisions have been finalized, being aware of these discussions is essential. The rule’s future could significantly affect how inherited assets are valued for tax purposes.

 

Federal Estate and Gift Tax Exemption

Currently, the Federal Estate and Gift Tax Exemption is set at $13.99 million. However, it's scheduled to decrease to approximately $5 million after December 31, 2025, unless legislative action intervenes. This reduction could profoundly impact estate planning strategies, making it crucial to reassess your estate plans accordingly.

 

State-Level Estate Tax Thresholds

Changes are also underway with state-level estate tax thresholds, which are being revised in various states. If you own property across multiple jurisdictions, these changes could impact your estate planning. It's important to stay updated on your state's specific tax regulations and how they may affect your estate.

With these potential changes ahead, it's vital to stay proactive. Regularly reviewing your estate plans, adapting to new laws, and consulting with experts for personalized advice will ensure that your financial legacy remains secure for future generations. Give us a call if you need to update your estate plan, (925) 891-5006.