Essential Estate Planning Strategies: Maximizing Your Legacy

Effective estate planning is crucial in determining how your assets will be distributed after your passing, while also navigating the complexities of income and estate taxes that may apply. With the recent One Big Beautiful Bill Act (OBBBA) solidifying the estate and gift tax exemptions, individuals and families now have an opportunity to strategize effectively without the looming pressure of future reductions. Below, we’ll explore various estate planning strategies tailored for different asset levels, ensuring a comprehensive understanding for everyone involved.

Key Insights for Estate Tax Planning

Navigating the intricate landscape of estate planning can significantly impact how your wealth is preserved and passed on. Key strategies include:

• Using Exemption Trusts and Gifting Strategies: Effectively minimize your estate tax liability.
• Leveraging Life Insurance and Charitable Giving: Achieve financial goals while supporting causes you care about.
• Consulting with Professionals: Adapt your strategies in response to potential changes in tax laws.

Understanding your estate size will inform the specific strategies you deploy, yet the principles of successful planning remain consistent across the board.

Changing Approaches to Estate Planning

From a tax perspective, estate planning involves the transfer of assets to three primary beneficiary groups: family and friends, charities, and tax authorities. Effective planning thus becomes a balancing act of avoiding unnecessary tax burdens while fulfilling your wishes.

Planning for the “What If’s”

The iterative process of estate planning is best approached with expert guidance. The enacted OBBBA keeps overall taxes intact, as the estate tax remains at a rate of 40%, with numerous states also imposing their own estate-level taxes. Beginning in 2026, the federal lifetime exemption will be adjusted to $15 million per person, providing planning opportunities that can mitigate potential tax implications.

Strategies for Estates Valued Under $15 Million

For those with estates below this threshold, proactive planning is essential. Here are strategies to consider:

• Schedule Annual Gifts: Utilize the annual exclusion by gifting up to $19,000 per person each year.

• Explore Non-Taxable Gifts: Pay directly for education or medical expenses to avoid tax implications.

• Make Charitable Donations: Qualifying taxpayers can donate up to $110,000 annually from an IRA to charity without incurring taxes.

• Plan for Appreciating Assets: Transfer valuable assets early to reduce potential estate tax exposure.

• Form Family Limited Partnerships: Pool assets and create different classes of ownership to facilitate wealth transfer at discounted values.

• Manage Cash Flow and Trusts: Set up trusts to both protect and prepare beneficiaries for inheriting wealth.

• Stay Flexible: Be ready to adapt your plans as tax laws evolve.

“No estate plan is identical, because no taxpayer is identical; the goals you set to provide for your family and charity are as unique to you as the assets you own.”

Estate Planning Dynamics for Couples with Estates Valued Between $15 Million and $30 Million

For married couples in this category, employing strategies effectively is crucial. With a combined exemption of $30 million starting in 2026, consider the following tactics:

• Take Advantage of Current Lifetime Exemptions: Utilize the $13.99 million exemption for 2025 proactively.

• Employ Spousal Lifetime Access Trusts (SLATs): This irrevocable trust permits one spouse to access income while protecting assets from estate tax.

Advanced Strategies for Estates Over $30 Million

For estates exceeding the exemption threshold, early planning is pivotal to greatly reduce tax liabilities. Consider these strategies:

• Make Taxable Gifts to Trusts: Decrease your taxable estate with current exemptions and exclude future asset appreciation from taxes upon your passing.

• Sell Irrevocable Grantor Trusts: Sell assets to a trust and defer taxes, allowing for further wealth transfer to beneficiaries.

• Combine Gifting and Selling: Use a blend of gifts and sales to maximize exemption benefits.

• Utilize Grantor Retained Annuity Trusts (GRATs): Particularly beneficial for high appreciation assets, allowing you to retain income while passing excess to beneficiaries.

• Establish an Irrevocable Life Insurance Trust (ILIT): Keep life insurance payouts outside of your estate, shielding them from taxes.

• Plan Charitable Giving Wisely:

Maximize your charitable gifts to minimize estate taxes while supporting causes close to your heart.

How CLA Can Help with Estate Planning

By implementing these estate planning strategies now, you can leverage the high exemption rates to safeguard wealth for future generations while solidifying your charitable legacy. It’s crucial to recognize the various tax implications and legal considerations that accompany these strategies.

If you’re ready to embark on your estate planning journey, consult with professionals who can align your financial goals with effective tax strategies. Reach out to our private client services team to explore tailored solutions for your unique financial journey.

Contact Us

To harmonize your financial aspirations with comprehensive estate tax planning, fill out the form below to connect with our expert team at CLA. Let’s work together to secure your legacy and financial future!