Estate Planning Update: Potential Changes Ahead Following the 2024 Election Results

Dear Valued Client,

With President Trump’s re-election and Republican control of the Senate and  the House, we anticipate some changes in the estate planning landscape. However, it’s important to note that campaign promises may not always translate directly into law due to budget constraints and conflicting priorities.

 A Republican Sweep May Still Lead to Potential Changes in Estate Tax Law

The current federal estate tax exemption, set at $13.61 million per individual for 2024, was scheduled to sunset at the end of 2025, potentially reducing to approximately half that amount thereby exposing many more estates to the 40% federal estate tax. With the election results, it’s now more likely that this high exemption amount will be extended beyond 2025. However, we cannot be certain of this outcome, and it’s crucial to remain prepared for various scenarios.

 Planning Considerations

1. Beware of the Consequences of Growth and Time For Estates Under $7 Million (Unmarried Individuals) or $14 Million (Couples): If your estate falls below this threshold, your estate tax planning strategy likely remains unchanged. However, it’s essential to consider potential growth, as assets can double in value over a decade at a 7% annual compound growth rate.

• Build in Optionality For Larger Estates: Estate tax planning remains relevant, but the rules are still uncertain. We may want to consider strategies that allow for completed gifts while retaining some access to the gifted assets, especially as we approach 2025.

• Proactive Income Tax Planning: With potentially lower income tax rates continuing, we should explore opportunities such as Roth IRA conversions over an extended period, which could provide significant long-term benefits for you and your heirs.

 Beyond Estate Taxes

It’s crucial to remember that estate planning encompasses much more than just tax considerations. Regardless of the election outcome, we should continue to focus on:

1. Asset protection for you and your family
2. Planning for potential disability
3. Income tax minimization
4. Probate avoidance
5. Long-term care planning

Next Steps

Given these potential changes and ongoing uncertainties, we recommend scheduling a review of your current estate plan. We can discuss how these developments might affect your specific situation and make any necessary adjustments to ensure your plan continues to meet your goals.

Please don’t hesitate to contact our office to schedule an appointment. We’re here to help you navigate these changes and ensure your estate plan remains robust and aligned with your wishes.

Sincerely,

Attorney’s at Hook Law

Citations:

[1] https://hooklaw.net/blog/a-letter-to-our-clients-2020-year-end-planning/

[2] https://altmanassociates.net/client-letter-2023/

[3] https://nlfforms.com/2024-estate-and-tax-client-planning-letter-5-pages.html

[4] https://www.thinkadvisor.com/2024/11/06/what-trumps-win-means-for-estate-tax-planning/

[5] https://www.plantemoran.com/explore-our-thinking/insight/2024/09/2024-election-what-does-it-mean-for-your-estate-plan

[6] https://www.wealthmanagement.com/estate-planning/impact-election-results-estate-planning