Estate planning is a multifaceted financial task that can feel overwhelming. It encompasses managing your financial assets and minimizing estate taxes as well as ensuring your loved ones are taken care of and content with their inheritance. On top of that, estate laws can change from time to time, which makes it essential to stay informed about the latest regulations.
If you are planning your estate in 2025, one of the smartest moves you can make is to work with a financial advisor who can guide you through estate tax planning strategies and inheritance planning. This article will also walk you through key estate planning strategies to help you navigate this seemingly herculean task with ease in 2025.
Below are 5 estate planning strategies you may use in 2025:
1. Evaluate your estate’s value
Before making any estate planning decisions, you need to understand the total value of your estate. This includes all your assets, both liquid and non-liquid. Your bank accounts, real estate, businesses, collectibles, cars, and jewelry contribute to your estate’s worth. Some of these assets may have appreciated or depreciated since you bought them. Evaluating their current net worth will give you a clear picture of where you stand financially. Once you have an estimate of your estate’s value, determine which category you fall into. If you are a high-net-worth individual, your estate planning strategy will be different from someone with a smaller estate. This can help you make informed decisions, especially with the upcoming changes to federal estate tax laws.
The federal estate tax exemption is currently $13.99 million per person in 2025, but it is scheduled to drop to around $7 million in 2026. You could face significant estate tax liabilities if your estate’s value is close to or above this threshold. This makes 2025 a key year to act. If your estate may be taxable under the new limits, you may need to consider advanced estate planning strategies to minimize tax burdens. This could include setting up trusts to protect assets and reduce taxable estate size or gifting assets while the exemption is still high to transfer wealth tax-free, among other things.
2. Understand and use the new exemption limits to your benefit
There have been some changes in estate tax laws in 2025, which can help you maximize tax-free transfers. As stated above, the federal estate and gift tax exemption has increased to $13.99 million per person in 2025, up from $13.61 million in 2024. With this new change, you can transfer nearly $14 million tax-free during your lifetime or at death. The Generation-Skipping Transfer (GST) tax exemption is also the same at $13.99 million per person in 2025. So, you can additionally pass wealth directly to your grandchildren or future generations without further tax consequences. It is important to take advantage of these higher limits this year as soon as you can, as the current law dictates that the exemption will drop to approximately $7 million per person in 2026. Leveraging the new limits can be one of the best estate planning strategies for high net worth this year. If the exemption drops in 2026, estates worth between $7 million and $13 million could suddenly face hefty estate taxes. So, if you have a large estate, using this window now can be beneficial to transfer your assets without incurring higher tax burdens in the future.
You must also know about the annual gift tax exclusion that lets you transfer money or assets to other individuals each year without reducing your lifetime exemption. This exclusion has increased to $19,000 per recipient in 2025, up from $18,000 in 2024. The greatest benefit of using this exemption limit is that there is no limit to how many people you can gift, which makes it a simple way to transfer wealth without incurring taxes. For married couples, the benefits are even better. You and your spouse can split gifts, which allows you to give $38,000 per recipient tax-free. This can be a great option if you have multiple heirs or grandchildren. For example, say you have five heirs. You can move $190,000 out of your estate and give the money to all your heirs in a single year without touching your lifetime exemption. You also do not need to report these gifts to the IRS. So, prioritize making the most of this provision in 2025.
You can also consider a Spousal Lifetime Access Trust (SLAT) in 2025. A SLAT is a powerful tool for married couples looking to transfer assets while maintaining financial security. Under SLAT, one spouse gifts assets into an irrevocable trust for the benefit of the other. This removes the assets from their taxable estate while still allowing indirect access to the funds. With the current $13.99 million exemption, this is a great time to set up a SLAT. This way, you can ensure that any growth on the gifted assets happens outside of your taxable estate. Locking in the current high exemption now can provide significant long-term tax savings. If you wait until 2026, when the exemption may be cut in half, you could lose the chance to protect millions in wealth from future estate taxes.
Make sure that you use 2025 to plan ahead before the 2026 changes. Preparing now ensures your estate is structured as efficiently as possible. With the potential for a dramatic drop in the exemption limit in 2026, transferring assets in 2025 could be a once-in-a-lifetime opportunity. So, discuss these tax laws and how you can use them with your financial advisor as soon as you can.
3. Review your previous will and trusts
Reviewing your will and trusts regularly ensures they still reflect your wishes and that you take advantage of the latest tax laws. If your estate planning documents were created under older tax laws, they might not be as efficient today as they once were. In most cases, trusts are structured to optimize estate tax savings based on thresholds that existed when they were drafted. If these limits change, your trust may need updates to remain tax-efficient. This is the perfect time to revisit your estate plan and make necessary adjustments to your estate planning strategies to reduce estate taxes. Reach out to an estate planning attorney to understand how you can continue using your trust to maximize the current exemption before it decreases. You may also consider setting up new trusts if required. Additionally, if your will does not account for tax-free gifting strategies, now may be a good time to update it. The annual gift tax exclusion has increased to $19,000 per recipient in 2025. This allows you to transfer more wealth tax-free before the limits potentially lower. As a married couple, you can double the annual gift tax exclusion, gifting up to $38,000 per recipient in 2025 without triggering gift taxes.
Reviewing your estate plan also helps you understand how the latest federal estate laws affect you. For instance, some states impose their own estate or inheritance taxes, with exemption thresholds lower than the federal level. Review how the changes at the federal level impact your state’s rules and adjust your plan accordingly.
Your estate plan should also reflect any changes in your personal life. Marriage, divorce, losing a spouse, birth of children or grandchildren, etc., could necessitate updates to your will and trusts. If you have had a major life change, ensure your beneficiaries, guardians, and trustees align with your current wishes. For example, if you have recently welcomed a grandchild, you may want to add them as a beneficiary. If you have gone through a divorce, you might need to update or remove an ex-spouse as a beneficiary. After a divorce, you would also return to the individual gift tax exclusion of $19,000 per recipient in 2025. If you previously used a spousal gifting strategy, you may need a new plan to minimize taxes now.
4. Incorporate technology into your estate planning
Technology can play a massive role in ensuring your estate is well organized. Several apps and online platforms allow you to create wills, health directives, and other essential estate planning tools from the comfort of your home or office. These apps are ideal for individuals just starting their estate planning journey and want a simplified way to get organized. Many estate planning apps and websites also feature real-time updates on changes to federal estate tax exemptions, gift tax limits, and other relevant laws. You can set up notifications about changes in tax laws, so you do not miss any crucial information. These tools also provide resources to help you understand how the new laws may impact your estate and what actions you should take. While not entirely comprehensive, these apps and websites can be a good way to start estate planning this year and educate yourself about the entire process.
5. Hire the right professionals for estate planning
Estate planning is a complex process, especially with frequent changes in tax laws and exemption limits. If you want to maximize current exemptions before they potentially reduce next year, you must implement suitable estate planning strategies carefully and accurately. Any mistakes you make now could cost you in the future if the opportunity to benefit from the current limits is missed. Hiring the right professionals can help you navigate these changes and implement them effectively, especially if you have a large estate, a complicated asset portfolio, or multiple heirs.
Understanding the nuances of estate taxes, exemption limits, and gifting strategies can be tricky. Implementing the best strategies to minimize your tax burdens requires a thorough understanding of how the tax system works. A qualified financial advisor can guide you through these processes and help you use the correct tools to minimize estate taxes.
The professional you choose should be selected based on the value and complexity of your estate. For instance, high-net-worth individuals may need the help of a specialized estate planning attorney who understands the intricacies of tax laws and the best ways to lower or avoid taxes using advanced approaches such as trusts or generation-skipping strategies. These strategies can help ensure the efficient transfer of wealth while minimizing the tax burden for both you and your heirs. Moreover, given the significant changes expected in the next year, hiring a professional can help you act promptly. A professional can ensure that your estate plan is aligned with the current laws and executed before any major shifts in the tax policy take effect.
When selecting a suitable professional for your estate planning, you must ensure that they are experienced and knowledgeable about the latest changes in tax laws and estate planning strategies. The professional should also have experience in handling estates similar to yours. For individuals with smaller and simpler estates, a financial planner may be sufficient for implementing tax-free gifting strategies, updating the will, and determining the best estate planning asset protection strategies. For larger estates, you might need a team of experts, including a tax professional and a wealth manager, who can work together to create a comprehensive plan based on your financial needs and goals.
To conclude
With the new changes in estate tax laws and upcoming adjustments slated for the next year, estate planning should be your top priority in 2025. You can start by using technology. Estate planning apps can help you get the basics in place and offer an accessible way to write a will, set up a trust, and create health directives. However, for more complex estate planning needs, you may have to consider hiring a financial advisor who can guide you through advanced estate planning strategies and help you with tax laws and exemptions. It is also important to stay informed about how these new rules may impact your estate, so you do not miss out on opportunities to minimize your tax liability.
Use the free advisor match tool to get matched with seasoned financial advisors who can help ensure your estate is protected from unwanted taxes. Answer some simple questions about your financial needs and get matched with 2 to 3 advisors who can best fulfill your financial requirements.
