Blogs from November, 2024

As the year winds down, we want to remind you of a crucial tax planning opportunity that could impact you and your loved ones if your estate plan has substantial wealth. The current high exemptions for the federal estate and gift tax are set to expire at the end of 2025. This shift—often referred to as the “sunset” of the estate and gift tax exemption—will bring the exemption amount back to pre-2018 levels, which are significantly lower. For those who have accumulated assets above $7 million for individuals, or $14 million for married couples, this change presents both a challenge and an opportunity to act proactively.

What’s Changing?

Under the current law, the federal estate and gift tax exemption is $13,610,000 per person (or $27,220,000 for married couples). In 2025, the exemption will be $13,990,000 per person ($27,980,000 for married couples). This exemption allows a person to leave assets up to the exemption limit to beneficiaries without paying any estate tax. If estate taxes apply, up to a 40% tax is taken on anything above the exemption amount. This high exemption was established by the 2017 Tax Cuts and Jobs Act (TCJA) and has allowed many individuals to make substantial tax-free gifts, transferring wealth without the burden of estate or gift taxes.

However, on January 1, 2026, this exemption is scheduled to return to the pre-TCJA levels, likely around $6-7 million per person, adjusted for inflation. This reduction means that without taking action, many more estates could face federal taxes, potentially reducing the legacy you leave behind.

What Does This Mean for You?

With the impending reduction of the exemption, now is the time to consider strategies to maximize your estate and gift tax benefits. Even if Congress changes course and extends or adjusts the exemption, current law suggests a return to the lower exemption threshold. Taking action before the 2025 sunset ensures you won’t miss out on the higher exemption currently available.

Key Steps to Consider

1. Evaluate Your Estate Plan: Work with us to review your existing plan if you have a high net worth compared to the estate exemption. Now is the time to align your estate documents, tax strategies, and gifting plans with the pending tax law changes. Clients who are not within their current 12-month comprehensive estate plan period or are not lifetime clients are subject to an attorney meeting fee of $370 per hour.

2. Consider Making Large Gifts Now: If you have substantial wealth, using your gift tax exemption by making large, tax-free gifts before 2026 can lock in the current higher exemption. Once the exemption amount drops, this opportunity will be gone, and more of your estate may become taxable.
   
   If you have a revocable trust, you can transfer these assets from the trust to your beneficiaries now or transfer them to a new or existing irrevocable trust designed to hold these assets and benefit your chosen recipients. You’ll need to file Form 709 to allow the IRS to track your exemption use. By transferring assets into an irrevocable trust or directly to beneficiaries, you lock in the current exemption and maximize tax savings.

3. Keep an Eye on Legislative Developments: While the law currently mandates a reduction, it’s possible Congress may take action that impacts the estate and gift tax landscape. Staying informed will be essential to make the most of any available opportunities.

Why Take Action Now?

If you wait until 2026, your ability to use today’s historically high exemption could be lost. Acting now allows you to safeguard your wealth for future generations under the more favorable tax terms available today. Planning early can be the difference between passing on your legacy tax-free or leaving your heirs with a substantial estate tax burden.

Ready to Review Your Plan? If you have questions or would like to explore your options, we’re here to help. Our team can work with you to craft a strategy that aligns with your goals and takes full advantage of the current exemption.

As winter approaches, estate property managers face unique challenges in maintaining and protecting their properties. From snow and ice removal to preventing damage from freezing temperatures, there are many factors to consider when it comes to managing an estate during the colder months.

1. Snow and Ice Removal:

One of the most pressing concerns for estate property managers during winter is snow and ice removal. Failure to properly clear walkways, driveways, and other outdoor spaces can pose a safety hazard for residents and visitors and lead to costly liability issues. Property managers need a plan for regular snow removal and de-icing to ensure that their estates remain safe and accessible throughout the winter.

2. Preventing Frozen Pipes:

Another common issue that estate property managers must address during the winter is preventing frozen pipes. When temperatures drop below freezing, water in pipes can freeze and expand, causing them to burst and leading to extensive water damage. To avoid this costly problem, property managers should insulate exposed pipes, keep indoor temperatures consistent, and allow faucets to drip slowly during particularly cold nights.

3. Roof Maintenance:

Heavy snowfall combined with freezing temperatures can put a strain on a property's roof, potentially leading to leaks or even collapse in extreme cases. Estate property managers should regularly inspect roofs for signs of damage or stress, such as sagging or ice dams, and address any issues promptly. Clearing excess snow from roofs can help prevent structural damage and ensure that residents remain safe throughout the winter.

4. Landscaping Considerations:

Winter weather can also significantly impact a property's landscaping features, such as trees, shrubs, and gardens. Property managers should take steps to protect these elements from harsh conditions by pruning trees before winter storms hit, mulching garden beds to insulate plants' roots, and covering delicate shrubs with burlap or other protective materials. By preparing landscaping features ahead of time, estate property managers can help ensure that their properties maintain their aesthetic appeal year-round.

5. Emergency Preparedness:

Despite careful planning and maintenance efforts, unexpected emergencies can still arise during winter. Property property managers should have a comprehensive emergency preparedness plan outlining procedures for responding to severe weather events or other unforeseen circumstances. This plan should include contact information for emergency services providers, details on communicating with residents during emergencies, and protocols for addressing any necessary repairs or maintenance tasks.

Dallas-Fort Worth Estate Planning & Probate Lawyers

Winter weather presents unique challenges for estate property management, but with the right strategies and preventative measures, property managers can protect their investments and ensure the safety and comfort of their residents. At Crain & Wooley, we specialize in providing comprehensive estate and probate services to help you navigate the complexities of property management. Our team of experienced professionals is here to assist you with everything from winterization techniques to long-term planning and sustainability. If you are in Plano, TX, and need expert advice or assistance with managing your estate property, don't hesitate to contact us at (972) 945-1610. Let us help you safeguard your property and ensure it remains in excellent condition throughout the winter and beyond.