Category: Succession Planning

As we step into the new year, it’s an ideal time to reflect on the state of our personal finances and take proactive steps toward securing the future for ourselves and our loved ones. Estate planning is a critical element in this process, providing the tools and strategies necessary to protect your assets, ensure your wishes are carried out, and reduce the burden on your family. In 2025, with evolving laws, emerging technologies, and societal shifts, estate planning takes on new importance, offering a chance to adapt and refine your approach to wealth preservation.

Why Estate Planning Matters

Estate planning is not just for the wealthy. Everyone, regardless of the size of their estate, can benefit from having a plan in place. At its core, estate planning is about ensuring that your assets are distributed according to your wishes, minimizing taxes, and avoiding conflicts among family members after your death. It also includes making provisions for your care in case of incapacity, ensuring your healthcare wishes are honored, and naming trusted individuals to manage your affairs.

Adapting to Change in 2025

The landscape of estate planning is evolving. With ongoing changes in tax laws, especially those related to estate and gift taxes, it’s essential to stay informed about new rules that may impact your planning strategies. For instance, the 2025 expiration of certain tax provisions, including higher estate tax exemptions, is creating urgency for many to reassess their plans. Actively working with an estate planning attorney can help you take advantage of tax-saving strategies before potential changes take effect.

Digital Assets and Technology

Another trend to consider in the new year is the rise of digital assets. In today’s digital world, many individuals hold valuable online accounts, cryptocurrency, digital art, and social media profiles. These digital assets require specific attention in your estate plan to ensure they’re properly managed and passed on to your beneficiaries. Make sure to review and update any digital accounts, passwords, and other online assets.

Additionally, technology continues to influence estate planning tools. Online platforms such as blockchain technology used for securely transferring assets, are becoming increasingly popular. These innovations make the estate planning process more accessible and efficient, ensuring your wishes are securely documented.

Healthcare and Long-Term Care

As the population ages and life expectancy increases, long-term care and healthcare planning become even more crucial. Whether it’s creating healthcare directives, selecting a healthcare proxy, or securing long-term care insurance, preparing for medical needs in later life is an essential part of a comprehensive estate plan. With the rising costs of healthcare, planning ahead for these potential expenses can safeguard your wealth and provide peace of mind.

Estate planning in the new year offers a fresh opportunity to review and refine your plans. Whether you are addressing new tax laws, digital assets, charitable giving, or healthcare concerns, the time to act is now. By taking a thoughtful, proactive approach to estate planning, you ensure that your wishes are respected, your loved ones are cared for, and your legacy endures for generations to come. Don’t wait for the unexpected; start the year off with a clear, updated estate plan that will guide you through the future with confidence.

About the Author

Todd A. Stewart, JD
Founding Partner

In the context of the current election, it’s important to proactively plan for potential shifts in tax laws and regulations that could significantly impact your estate planning. Elections often result in changes to fiscal policies, tax exemptions, and regulations that directly affect estate planning strategies. Here are some key areas you should be focusing on right now:

1.   Estate and Gift Tax Exemptions

• Federal estate and gift tax exemptions are a significant area to watch. As of 2024, the exemption is historically high ($13.61 million per individual), but this amount could be lowered, especially if there’s a shift in political power toward more tax-heavy policies. Even now, unless Congress acts, this amount is scheduled to expire on December 31, 2025, to about $6-7 million range per person beginning on January 1, 2026.
• Proactive Strategy: Consider making large gifts or transferring assets now under the current high exemptions. You can use strategies like spousal lifetime access trusts (SLATs), irrevocable children’s trusts, or dynasty trusts to lock in the current exemption for your heirs.

2.   Charitable Giving and Deductions

• Charitable giving could be impacted by changes to deductions or incentives. Certain platforms propose reducing the deductions available to high-income earners, which could lessen the tax benefits of charitable contributions.
• Proactive Strategy: If you’re planning to make significant charitable gifts, it may be better to do so before any deduction limits are imposed. Setting up a donor-advised fund (DAF) or charitable remainder trust (CRT) now could lock in current tax benefits.

3.   Trust and Estate Structures

• Depending on your estate size and family situation, you may want to reassess the types of trusts or estate structures you use. A revocable trust provides flexibility and avoids probate, but tax-driven structures like irrevocable trusts (e.g., Grantor Retained Annuity Trusts (GRATs) or Qualified Personal Residence Trusts (QPRTs)) may need adjustment based on new rules or limits.
• Proactive Strategy: If you have existing trusts, it’s worth reviewing whether these are still effective given potential policy changes.

4.   Review Your Estate Plan Regularly

• With elections comes uncertainty, and legislation can move quickly after new officials take office. It’s crucial to keep your estate plan flexible and updated regularly to reflect changing laws.
• Proactive Strategy: Work closely with your team (ie financial advisors, accountants, and your estate planning attorney) to ensure your plan is ready to adapt to any changes resulting from the election. Regularly reviewing and updating your will, trusts, and overall strategy is key.

Being proactive with your estate planning ahead of a current election can help mitigate potential negative impacts from policy changes while maximizing the use of current tax benefits and exemptions. It’s a good idea to have a firm understanding of your plan so that you can be prepared for any shifts that come after the election.

About the Author

Hillary E. Mims
Paralegal

About the Author

Todd A. Stewart, JD
Managing Partner

A number of topics may motivate someone to consider estate planning.  A change in family circumstances, a reminder of mortality, a new life, management of tax burdens, succession planning, and many others.  The tax system can feel especially intimidating.  In addition to managing the estate tax, estate planning can also help clients address income taxes.

One of the most effective ways to manage income taxes through estate planning is by addressing the step-up in basis at death.  At death, certain assets, such as real estate, stocks, or other investments, may receive a “step-up” in their cost basis. Cost basis is essentially the original value of an asset for tax purposes, typically the purchase price. The step-up adjusts this basis to the asset’s fair market value on the date of death.  But how does this help the beneficiaries who receive that asset?

Imagine you purchased a piece of property for $1,000,000 many years ago, and its value has appreciated to $5,000,000 by the time of your death. Under the step-up in basis rule, your beneficiaries would inherit this property with a cost basis of $5,000,000, not the original $1,000,000. If they decide to sell the property immediately, they would likely incur little to no capital gains tax, as the sale price would be close to the new stepped-up basis.  Alternatively, if you sold the property before passing away in order to transfer cash to your beneficiaries, you would pay capital gains tax on the $4,000,000 increase in value between the sale price (assuming the actual price matches the fair market value) and the cost basis.

Key Benefits of the Step-Up in Basis:

1. Significant Tax Savings: By resetting the basis of appreciated assets, the step-up in basis can eliminate substantial capital gains taxes that would otherwise be due upon the sale of inherited assets.
2. Simplified Record-Keeping: Your beneficiaries won’t need to track the original purchase prices and adjustments over the years. The step-up provides a clear, current market value basis for tax purposes.
3. Enhanced Estate Value: The step-up in basis can preserve more of your estate’s value for your beneficiaries because less will be lost to taxes.

Understanding the step-up in basis can help you make strategic decisions about which assets to retain in your estate. For instance, assets with significant appreciation might be better held until death to maximize the tax benefits for your beneficiaries.  Conversely, assets with little or no appreciation might be more advantageous to sell or gift during your lifetime, utilizing annual exclusion gifts or lifetime gift tax exemptions. Keep in mind, however, that not all assets qualify for a step-up in basis. Retirement accounts, such as IRAs and 401(k)s, for example, do not receive this treatment. Additionally, it is crucial to consider your entire financial picture, your goals, and the specific needs of your beneficiaries.

Looking for the best way to maximize the use of your Estate Plan? Contact our team to discuss the best way to review or create an Estate Plan that works for your family.

About the Author

S. Blaydes Moore, JD
Attorney

When children are tasked with the responsibility of caring for aging parents, they are often intimately involved with financial care as well.  Despite both the parents’ and children’s best intentions, mistakes can often be made that unintentionally alter the disposition of assets and create headaches during the administration process post-death.

One of the most common mistakes that we see is making children co-owners on accounts to easily allow children access to funds to care for parents.  While this accomplishes the goal of providing children access to accounts, this also makes a gift of ½ of the account to the child which could trigger gift tax depending upon the value of the account.  Additionally, in most cases, this also means that the child added to the account will inherit 100% of that account to the exclusion of other children not named as owner.  This can result in inheritances among children not being equal, children (if they are cordial and want to honor the intent of the parents, which in some situation is a BIG if) having to gift large sums of money between each other post-death to even up inheritances (which again can trigger gift tax for the children), and a loss in step-up in basis for ½ of the account depending upon the types of assets in the account.

While these situations can be worked through and sorted out, there are cleaner options available to accomplish the same results.  First, having an up-to-date financial power of attorney in place ensures that an agent can step into the principal’s shoes to assist in providing that financial care from the principal’s accounts.  Second, a comprehensive revocable trust plan with assets titled in that revocable trust allows a co-trustee or successor trustee to step in and manage trust assets on behalf of the grantor when that need arises. These options provide the same access for children on their parents’ accounts without the unintended consequences outlined above.

Here at Stewart Law, we can help plan for these situations ahead of time to ensure clients, and their families, are set up for success now and into the future.

Looking for the best way to avoid these mistakes? Contact our team to discuss the best way to review or create an Estate Plan that works for your family.

About the Author

John J. Long, Jr., JD
Partner

• Problem: Delaying the creation of an estate plan can leave your assets unprotected and your wishes undocumented. Yes, this is the case even if you were meaning to get to it soon.
• Solution: Work with a team that does this every day who can walk you through a well-defined process.

• Problem: Significant life changes, such as marriage, divorce, the birth of a child, or acquiring significant assets, can render your estate plan outdated.  New laws can also leave your planning in need of attention.
• Solution: Regularly review and update your estate plan to reflect any major life events or changes in your financial situation. Some people review their plan throughout the year. On the other end of the spectrum, no one should let more than 3 to 5 years pass without a thorough review of how their current plan addresses their needs.

• Problem: Many people fail to include online accounts and digital assets in their estate plans, leading to confusion and legal issues.
• Solution: Create a comprehensive list of your digital assets and include instructions for their management in your estate plan. Give the appropriate persons authority to handle or dispose of your digital assets according to your wishes

• Problem: Estate taxes can significantly reduce the value of the assets passed on to your heirs.
• Solution: The vast majority of our clients see their net worth grow substantially over time. Understand tax implications and explore strategies to minimize the tax burden.

• Problem: Lack of communication with heirs can lead to disputes and misunderstandings regarding your estate plan.
• Solution: Clearly explain your plans and decisions to your family members to manage expectations and reduce potential conflicts. A general overview of your thinking, even without any discussion of values, can go a long way to promote harmony among your family members later.

• Problem: If assets are left to pass to heirs only through the court-supervised probate process, it can be time-consuming and costly.
• Solution: Consider using trusts and other estate planning tools to allow assets to pass directly to heirs without the need for probate, thus saving time and money. Importantly, these techniques add privacy regarding your assets and their disposition, as well as maximizing the value of what you leave to family and others.

Looking for the best way to avoid these mistakes? Contact our team to discuss the best way to review or create an Estate Plan that works for your family.

About the Author

Todd A. Stewart, JD
Managing Partner