A Busy Year in Estate Planning: Key Updates for You
2024 has been an eventful year for estate planning, and I want to ensure you’re up to date on important changes that could affect your planning strategies for 2025 and beyond. The upcoming sunset of the Tax Cuts and Jobs Act (TCJA) and other legislative shifts make this a good time to review your plans and take action where needed. Effectively, this means there are new estate planning rules for 2025 coming down the road.
Tax Cuts and Jobs Act Changes
The TCJA increased federal estate, gift, and generation-skipping transfer (GST) tax exemptions to historically high levels. For 2024, the exemption amount is $13.61 million per person, rising to $13.99 million in 2025. However, these exemptions are set to drop significantly on January 1, 2026, likely reverting to around $7 million per person.
This means individuals and families have a limited window to make use of these higher exemption amounts. If you’re considering gifting assets or transferring wealth, acting sooner rather than later could help maximize your tax savings.
Annual Gift Tax Exclusion Updates
You can make annual gifts of up to $18,000 per recipient in 2024, increasing to $19,000 in 2025. Married couples can double this amount to $36,000 (2024) or $38,000 (2025) per recipient without using any lifetime exemptions. This is a straightforward and effective way to reduce your taxable estate while helping loved ones.
Corporate Transparency Act Requirements
Beginning January 1, 2024, the Corporate Transparency Act (CTA) requires many business entities to report ownership information to the U.S. Treasury Department. While common law trusts are not typically required to file, trusts owning businesses may still have reporting obligations. If you’re involved in a business entity, I recommend reviewing your structure to ensure compliance before the 2025 deadline for older entities.
Illinois-Specific Updates
For Illinois residents, two key legal updates may impact your estate planning, creating new estate planning rules for 2025:
- Trust Property Control: New rules effective January 1, 2025, require trustees to search for unclaimed or abandoned trust property and keep trust records for at least seven years after termination.
- Power of Attorney Acceptance: Amendments clarify when third parties must honor Illinois statutory short-form powers of attorney. Refusals based on outdated forms or other minor issues are now explicitly unreasonable. My experience has been that many banks and investment companies inappropriately try to coerce clients who already have valid Illinois powers of attorney into needlessly executing additional forms. I recommend asking me whenever they urge you to do so.
How These Changes Impact You
Given the upcoming changes, here are some simple steps to consider before the end of 2024:
- Use Your Annual Gift Exclusions: Make tax-free gifts to family members or others to reduce your taxable estate.
- Review Formula Bequests: Ensure your estate plan’s provisions still reflect your goals under the higher exemption amounts. Talk to your estate planning lawyer!
- Consider Larger Gifts: If your wealth significantly exceeds the current exemption levels, making larger lifetime gifts to trusts or directly to beneficiaries can lock in tax savings.
- Prepare for Business Reporting: If you own a business, check whether the CTA’s new requirements apply to you.
What to Do Next
The sunset of the TCJA creates a unique opportunity, but it also may add urgency to your planning. I’m here to help you navigate these changes and make informed decisions. If you’re interested in exploring your options or have questions about any of these updates, please reach out to me soon so we can get started. Whether you’re nearby in Naperville or Plainfield, or farther afield elsewhere in Cook, DuPage, Will, Kane, Kendall, or Grundy Counties, I am available to help your family preserve their wealth.
This is a critical time to ensure your estate plan is up to date, flexible, and aligned with your goals. Let’s work together to make the most of these opportunities.
