Estate planning should never be a one-time proposition. Changes in financial circumstances, personal relationships and tax laws could mean that prior plans you’ve made no longer reflect your intentions. No one can ever predict what will happens, so waiting to review wills, trusts and other legal instruments might harm the people you love and prevent your wishes from being honored. 

A critical legal shift currently slated for the end of 2025 makes updating your estate plan even more of a priority. That is when the federal estate tax exemption, which determines the amount of assets that can be transferred at death without triggering estate tax liability, is scheduled to drop sharply. Until that date, individuals can leave approximately $13.6 million in assets to heirs and couples can leave about $27.2 million without incurring estate tax. Unless Congress passes legislation revising that sunset provision, those figures will be reduced by approximately 50 percent on January 1, 2026. This would greatly increase the number of estates that would be taxed by the federal government.

Anyone with an estate whose value might even approach the revised exemption threshold should speak with a knowledgeable attorney about revising their will and other estate planning instruments to minimize the tax liability that will affect their loved ones. The value of assets that exceed the exemption are taxed at a rate between 18 and 40 percent, so wills prepared in reliance on the 2017 law that increased the exemption amount might result in substantial tax exposure. 

Fortunately, there are numerous options available that can help you protect your assets regardless of what might lie ahead. Methods of minimizing estate tax liability include implementing gifting strategies, establishing trusts and leveraging other estate planning tools to facilitate the orderly transfer of assets to family members and worthy organizations. When you speak with a qualified estate planning lawyer, you can determine what revisions might be warranted.

Even if the current federal estate tax exemption remains intact, regular review and updates to estate plans are essential to account for events such as marriages, divorces, birth of children or grandchildren, major inheritances and other shifts in financial status. Parsons & Nardelli in Red Bank assists residents in Monmouth, Ocean and Middlesex counties with the creation and revision of comprehensive, personalized estate plans. Please call 888-309-5589 or contact us online for a consultation.