For those considering wealth transfer strategies, the time to act is now. The current federal estate and gift tax exemption—set at $13.99 million per individual in 2025—is scheduled to be cut roughly in half on December 31, 2025, reverting to an estimated $7 million per person in 2026. If you have a sizable estate, planning now can help maximize tax-free transfers to your heirs.
What Does This Mean for You?
The 2017 Tax Cuts and Jobs Act temporarily doubled the estate and gift tax exemption, allowing individuals to make substantial lifetime gifts without incurring federal taxes. However, without congressional action, the exemption will be significantly reduced. The IRS has clarified that gifts made before the sunset won’t be retroactively taxed, making 2025 an ideal year for strategic gifting.
How Can You Take Advantage?
- Use the Exemption Before It Shrinks: If your estate is large enough to be affected, consider gifting assets now while the higher exemption is still in place.
- Leverage Annual Gifting: The 2025 annual gift tax exclusion allows individuals to give up to $19,000 per recipient without affecting their lifetime exemption.
- Consider Trust Strategies: Irrevocable trusts, such as Spousal Lifetime Access Trusts (SLATs), can help remove assets from your taxable estate while providing financial security for your family.
- Evaluate Tax-Efficient Transfers: Certain assets, such as business interests or real estate, may qualify for valuation discounts, allowing you to transfer more wealth tax-efficiently.
Start Planning Now
Estate planning takes time, and as the 2026 deadline nears, estate attorneys and financial advisors will be in high demand. By acting now, you can ensure that your estate plan aligns with your goals while maximizing available tax benefits. Consult with an estate planning professional to discuss your options and safeguard your financial legacy.
Contact our attorneys at Logan & Logan LLP for a free consultation today! 617-209-3784.
