As we look to 2025 with a new president, one of the most pressing topics is what will happen to the Tax and Job Cuts Act of 2017 passed during President Donald Trump’s first administration. Much of that bill is expected to expire in 2026, including several aspects of estate planning.
The biggest change could cost your estate millions of dollars if you do not act now – a significant decrease in the estate tax exemption.
Before the Trump tax law was passed, families did not have to pay estate taxes on roughly the first $6.5 million in an estate. The new law increased that exemption to the 2025 level of $13.6 million.
Without any change, the exemption will go down to approximately $7 million in 2026. That simple change could cost your heirs millions of dollars.
The attorneys at The Orlando Law Group can work with you to find ways to limit your estate’s tax liabilities, regardless of who is in office.
How Does the Election Affect My Estate Tax?
The reality of the situation with the tax law is that it may not matter who is in the White House for this exemption. That is because the exemption is not something easily overturned. After all, the law was written with sunset provisions in place.
To overturn the exemption, a new law must be passed by Congress, a virtually impossible task considering how close the majorities are in the Senate and the House of Representatives.
What do each of the presidential candidates promise?
Trump has promised to make the exemption permanent.
Kamala Harris proposed following the current tax plan proposed in the American Housing and Economic Mobility Act of 2024, dropping the exemption to just $4 million.
However, that bill was introduced in Congress months ago and has yet to have one vote or committee hearing. Unless there is a major change in Congress, a similar fate would most likely happen to any large tax bills introduced with either Trump or Harris in office.
That’s why many groups are working hard to show how the Tax and Job Cuts Act of 2017 helped spur the economy and to convince Congress to eliminate the sunset provisions that were part of that act.
Still, don’t bet millions on that being successful.
The time to act on your estate plan and the transfer of any wealth accumulated must happen soon to ensure you are protected.
What Can I Do Today?
The biggest thing that needs to be done as soon as possible is to put together a full estate plan, including a will, any trusts that can be developed, charitable giving and more.
A high-income individual who will be affected by the estate tax exemption should have done this already. If not, stop reading and call The Orlando Law Group immediately.
If the will is done and the estate plan is complete, it is time to review to make sure you pay as little taxes as necessary under current and future rules.
One of the things you can do is establish legacy charity gifts in your estate plan. These are targeted gifts for your favorite non-profits who can all use your gifts to help others.
After all, do you want the Internal Revenue Service to take your money, or would you rather it go to help children, to help the homeless or help the environment? By having those gifts established in your estate plan, it will lessen the impact of taxes.
Another thing to do is develop and annual plan of gifting to your heirs. For instance, every year a couple can give $36,000 to each of their heirs. It’s not a lot of money compared to the change in estate tax exemption, but it will help lower the taxes on those gifts.
You could also set up a 529 account for your grandchildren’s college education. This fund is tax-free and can be used for a wide range of needs around higher education.
Finally, make sure you transfer assets into a trust. This creates a separate entity that is not taxed while you are alive and only taxed with funds or assets are removed from the trust.
When do I need an attorney?
Estate planning is truly a team effort with your financial planner, your accountant and your attorney. Each of those three has very specific roles and responsibilities that come with estate planning.
At The Orlando Law Group, our team of attorneys and advisors can work with your team to handle all legal aspects of your estate plan. After all, an estate plan is a set of legal documents for the courts to understand your wishes for your estate after your death.
The attorneys at The Orlando Law Group can these types of issues in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on September 30, 2024 by The Orlando Law Group