By Michael Cherewka, Esq.
The dawn of a new year is always a time for fresh starts and thoughtful planning, and 2025 is no exception. With the changing of the presidential administration, many individuals are understandably curious about how potential shifts in the political climate might affect their financial and estate planning. Whether you’re new to estate planning or revisiting an existing plan, now is the perfect time to ensure that your affairs align with your goals and the evolving legal and tax landscape.
Tax Policies May Change
A new administration often brings the potential for changes in tax policy, which could significantly impact estate planning strategies. While no concrete changes may yet be in effect, it’s wise to stay informed about proposed legislation. Adjustments to estate, gift, or capital gains taxes could alter the financial implications of how wealth is transferred to beneficiaries. Consulting with an estate planning attorney and your financial advisor now ensures that you’re prepared to adapt if new laws come into play.
Lifetime Exemption and Gift Tax Considerations
As of now, the federal estate tax exemption remains historically high, allowing individuals to transfer significant wealth tax-free during their lifetimes or upon death. However, with political shifts, there’s always a possibility of these thresholds being reduced. If you’ve been considering making substantial gifts to heirs or funding trusts, it might be prudent to act sooner rather than later to lock in current benefits.
Review and Update Existing Documents
The new year is a great time to revisit existing estate planning documents, including your will, trusts, powers of attorney, and healthcare documents. Changes in your personal circumstances—such as a new marriage, divorce, birth of a child, or significant financial growth—should be reflected in your estate plan. Additionally, keeping these documents up-to-date ensures they align with any new laws or tax rules introduced during the political transition.
Emphasize Asset Protection
With economic uncertainty and potential policy shifts, asset protection strategies are more important than ever. Consider options like irrevocable trusts or business succession plans to safeguard your wealth for future generations. These tools can also offer protection against creditors and lawsuits, adding an extra layer of security to your estate.
Charitable Giving Opportunities
If you’re inclined to support causes close to your heart, the new year is an excellent time to explore charitable giving strategies. Donor-advised funds or charitable trusts not only provide tax advantages but also enable you to leave a lasting legacy.
Stay Proactive
The intersection of a new year and political change underscores the importance of proactive estate planning. By reviewing your plan now, you can take advantage of current laws, prepare for potential changes, and ensure your legacy is preserved for your loved ones.
As 2025 unfolds, seize the opportunity to align your estate planning with your long-term vision and the changing world around you.