Steps You May Want to Take Before Tax Laws That May Sunset in 2025

As we approach 2025, individuals and families, not just the ultra-wealthy, must understand the potential changes in tax law. For instance, particularly concerning is the area of estate planning.
The current estate tax exemption, provided under the Tax Cuts and Jobs Act of 2017 (TCJA), expires on 12/31/2025. This change could significantly impact estate planning strategies. Let us share with you the steps you should consider taking to navigate these potential changes sooner rather than later.

Tax law changed with passage of The Tax Cuts and Jobs Act of 2017

Under the TCJA, the estate tax exemption was more than doubled. Initially, it was $5,490,000 for an individual and $11,180,000 for a married couple. Since then, adjusted annually for inflation, it is $12.92 million for individuals and $25.84 million for couples in 2023.

These elevated exemption levels are scheduled to revert to the 2017 levels, adjusted for inflation, at the end of 2025. This means a potential reduction to approximately $6 million to $7 million for an individual. This reversion could have significant implications for many families, not just those with ultra-high net worth.

While the future of these exemptions is uncertain, it is possible that Congress may intervene. The lower income tax brackets set by the TCJA are also set to expire. This could prompt legislative changes affecting a broad range of taxpayers. There are a few steps you can consider guided by your estate planning attorney in advance. In essence, they include, but are not limited to, the following:

Review your current Florida estate

plan. Evaluate with your attorney how the potential reduction in exemptions might impact your estate plan. You must understand how your assets will be taxed and whether your current plan optimizes your tax situation.

Consider utilizing the current exemption.

Does your estate exceed the anticipated lower post-2025 exemption amounts? You may take advantage of the current higher exemption levels through strategies such as lifetime gifts or trust formations.

Explore trust agreements that can help you reach your goals.

Specific trust agreements can be powerful tools in Florida estate planning. They offer benefits like asset protection, tax optimization, and legacy preservation. Your attorney will be able to help you understand the types of trusts that might be suitable for your situation.

Charitable planning.

Charitable contributions can provide tax benefits and help reduce the taxable value of your estate. Consider establishing charitable trusts or other philanthropic vehicles as part of your Florida estate plan. Equally important, create the legacy you want to leave to future generations.

Tax law is subject to change.

Keep in mind, tax laws and exemptions are subject to change. Stay informed and maintain flexibility in your Florida estate planning to adapt to any legislative changes. The potential sunset of the current estate tax exemptions in 2025 presents both challenges and opportunities in Florida estate planning. Taking proactive steps now will enable you to position your estate for effectively adapting to these changes. These changes could impact a broad range of estates not just those of the ultra-wealthy.

We know this article may raise more questions than it answers. Our estate planning law firm takes a very different approach from what you might have come to expect. We strive to create lifelong relationships with each of our clients, guiding your legacy for the rest of your life. Please contact our offices to learn more.

Law Offices of John Mangan, PA
Palm City – Stuart, FL
CALL: 1 (772) 218-0480

Do you question the need for attorney guidance with so many online resources? Because laws and regulations are complex, and because every person has a lot at risk, more people than ever are seeking professional guidance from an experienced, knowledgeable source. That helps explain the rapid growth of our firm. Whether you happened upon this website by accident or are one of the many referrals we receive from a nearly 15-year collection of satisfied clients, our staff can provide customized estate planning guidance for you. Call us. Our number: 1 (772) 218-0480

Written by: John Mangan, JD, MBA