Estate Tax Planning: What You Need to Know for 2025

The estate tax is a key consideration for families planning their financial future. In 2017, the Tax Cuts and Jobs Act (TCJA), sometimes referred to as the Trump Tax Cuts, significantly increased the federal estate tax exemption, making complex tax planning unnecessary for many Americans. However, these provisions are set to expire at the end of 2025 unless Congress acts to extend them.

In this article, we’ll explore what the sunset of the estate tax cuts could mean and how you can ensure your estate plan is ready—whether your estate falls above or below the exemption limit.

Current Estate Tax Exemption Limits

Under the TCJA, the federal estate tax exemption for individuals increased to approximately $13.99 million in 2025, with annual adjustments for inflation. Married couples can double this amount, with the help of legal counsel, protecting almost $28 million from estate taxes.

If the cuts expire, the exemption will revert to pre-2017 levels, approximately $5 million per individual (adjusted for inflation). This change would subject significantly more estates to federal estate taxes.

Will the Estate Tax Cuts Be Extended?

Whether the estate tax cuts will be extended depends on several factors, including political control of Congress and public sentiment. Historically, estate tax policy has been a point of contention between political parties:

• Supporters of Extension argue that maintaining the higher exemption levels prevents families from being forced to sell assets like family farms or businesses to pay estate taxes. They also contend that the current levels reduce the complexity of estate planning for middle- and upper-middle-class families.
• Opponents of Extension argue that the estate tax only affects the wealthiest individuals and that reverting to lower exemption levels ensures the ultra-wealthy contribute their fair share to public revenue. They also argue a lower exemption amount may help lower national debt, a looming concern for many.

After the 2024 election, the composition of elected officials closely mirrors that of the Congress that initially passed the TCJA. However, Donald Trump’s campaign promises for additional tax cuts, such as eliminating taxes on Social Security benefits, tips, and overtime pay, may require negotiation to gain support. To achieve these goals, compromises could be made in other areas, including estate taxes, leaving the future of the current exemptions uncertain.

Simplified Planning for Smaller Estates

If your estate is under the federal exemption amount—even if it reverts to pre-2017 levels—you likely won’t need complex tax strategies. Instead, a comprehensive estate plan, such as the Texas Family Will and Trust Plan offered by Texan Wills and Trusts, can meet your needs. These plans include essential documents like wills, trusts, and powers of attorney, ensuring your wishes are clear and enforceable without unnecessary complications.

TexanWillsandTrusts.com makes the process easy and affordable, and we even offer an optional attorney review to provide added peace of mind.

Advanced Planning for Larger Estates

For individuals or families whose estates may exceed the exemption limits post-2025, more sophisticated planning is critical to minimize tax burdens and preserve assets. Strategies such as irrevocable trusts, gifting, and other advanced tools can help use the bonus exemption amount and reduce your estate tax liability.

If your estate falls into this category, contact Book Law Firm to schedule a free consultation with an experienced estate planning attorney. Book Law Firm specializes in complex estate tax planning and can help you design a strategy tailored to your unique needs.

• Website: www.booklawfirm.com
• Phone: (214) 305-6974

Preparing for the Future

Here’s how you can prepare for the potential sunset of the estate tax cuts:

1. Review Your Estate Plan
   Ensure your current plan aligns with your goals and considers the potential reduction in exemption limits.
2. Explore Trust Options
   For smaller estates, a revocable living trust simplifies estate administration and avoids probate. For larger estates, advanced trusts can help mitigate tax burdens.

The Texan Wills and Trusts Advantage

Texan Wills and Trusts specializes in affordable, state-specific estate planning documents tailored for Texas residents. With plans designed to meet the needs of estates under the federal exemption limit, we provide a straightforward way to secure your family’s future.

For larger estates requiring advanced planning, Book Law Firm offers personalized consultations to develop sophisticated strategies. Call (214) 305-6974 or visit www.booklawfirm.com to schedule your free consultation.

Final Thoughts on Estate Tax

While the future of the estate tax cuts remains uncertain, proactive planning is essential. Whether your estate falls under the exemption or exceeds it, taking action now can protect your family’s assets and ensure your wishes are honored.

Disclaimer:

The information provided in this article may include legal or tax information, but it does not constitute legal or tax advice and should not be construed as such.