Five Tips For Estate Planning in 2025
Estate planning is a must for most Americans, yet it often falls on the need-to-do but never-get-around-to list.
As it stands, 55% of Americans don’t have any estate documents and only 31% have a basic will, according to a recent survey by estate planning firm Trust & Will. That’s worse than the 46% who had a will back in 2021 when Gallup surveyed American adults.
While estate planning is important any time, in 2025 it has taken on particular urgency. That’s especially true for high-net-worth individuals, since there’s the potential for the lifetime estate and gift tax exclusion under the Tax Cuts and Jobs Act to expire at the end of the year if Congress doesn’t intervene.
Subscribe to Kiplinger’s Personal Finance
Be a smarter, better informed investor.
Save up to 74%
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
“We don’t know if the tax cuts from the Jobs Act will be extended for a few years under the reconciliation process,” says Bill Ringham, director of private wealth strategies at RBC Wealth Management. “A lot of people assume it might but we’re not hearing much out of Washington given the focus on tariffs. It does leave our clients somewhat in the dark on estate plans, particularly those with extreme wealth.”
“It’s prudent to have an estate planning discussion to make sure its meeting the objectives, whether or not the federal gift exemption could be cut in half in 2026,” he said.
Even if you don’t have millions of dollars you want to leave your heirs, estate planning is a necessity. Whether you have a plan or need to create one, here are five estate planning tips for 2025.
1. Create a will if you don’t already have one
There are lots of reasons people don’t have an estate plan. They don’t have the time, they don’t think anything will happen to them or they think they don’t have enough assets to warrant one.
But an estate plan that includes a last will and testament, a financial power of attorney and an advance healthcare directive or living will is important for everyone.
The last will and testament spells out how to distribute your assets when you die, allows you to name guardians for your children and an executor to manage your estate. Without it your estate could end up in probate court for years.
A financial power of attorney names who will take care of your finances, pay your bills and make financial decisions for you if you become incapacitated.
An advanced healthcare directive/living will is similar to a financial power of attorney but enables you to lay out the type of medical treatment you want if you cannot speak for yourself. It also enables you to designate someone to make any medical decisions.
“The biggest red flag is not having any estate plan whatsoever,” says Douglas Boneparth, a CFP and president of Bone Fide Wealth. “It’s not great when you have kids, assets and people you love and are responsible for.”
To create a will and estate plan you have two options: work with a trust and estate attorney to draft the documents or you can leverage technology to DIY. There are several websites that will help you create these legal documents.
Whether it’s your online presence on social media sites like Facebook and instagram, your digital subscriptions to Netflix or Spotify or your online investment and bank accounts, these days everyone has some form of a digital footprint that you may want to protect in the event of your death.
A law, known as the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADDA), which passed in 2015, addresses that. It creates a legal framework pertaining to how executors, trustees and other fiduciaries can access and manage the digital assets of a deceased person.
Under the law digital assets are to be handled the same way as physical assets. At last count, 47 states follow this law. The only three that don’t are Louisiana, Massachusetts and Oklahoma.
To make it easy on your loved ones when you pass, Maggi Keating, a CFP at FBB Capital Partners, says it’s important to designate a digital executor.
“It’s not just in regards to your crypto holdings, it’s all your online presence, from social media accounts to online subscriptions,” says Keating. “These things need to be dealt with in a legal way.”
When creating a digital executor you can also dictate what you want to happen with your online accounts whether it’s passing your Netflix subscription on to your spouse or requiring Facebook to delete your account to protect your privacy. “It’s a very 2025 estate planning topic,” she says.
You don’t need to hire an attorney for this one but you can. Boneparth says you can write everything down in what he calls a death note and store it in your safe or put it in an email. If you have an extensive digital footprint you may want to hire an attorney to craft one for you.
For DIYers follow these steps:
-Take inventory of all your digital assets.
-Store all your passwords and logins somewhere secure.
-Assign someone to handle your digital accounts when you pass.
3. Take advantage of exemptions while they are still in effect
Thanks to the Tax Cuts and Jobs Act passed in late 2017, the annual tax gift exclusion is $19,000 per recipient and the lifetime exclusion for gifts and estates is $13.99 million.
While expectations are that it will get extended, if Congress can’t pull it off, those generous tax breaks go away in 2026, which means you may want to act now. If you are wealthy and already plan to give money to your heirs, now may be a good time to amp that up.
“I can give $13.99 million in 2025 to my children without a federal gift tax liability. If the federal estate and gift tax exemption goes to $7 million in 2026, I can only give $7 million without a tax liability and I lost an additional almost $7 million I could have gotten out of the estate today,” says Ringham. “That’s an additional $2.8 million in federal taxes I’d owe in 2026 that I could have gotten out in 2025.”
If you’re uncomfortable giving your children that much money, Ringham says you can create an irrevocable trust that can benefit your children, grandchildren and great grandchildren.
An irrevocable trust takes the money out of your estate and also creates protections for your heirs.
4. Gift more while the markets are down
The markets have been turbulent ever since President Trump announced his tariff plan earlier this month. While you may be bemoaning the decline in your retirement account it also gives you an opportunity to give your heirs more stock, which could eventually appreciate.
Let’s say you have 10,000 shares of a stock worth $100 per share. That amounts to $1 million. If the price of that stock has declined you can give more shares to get to the $1 million threshold. If and when that appreciates, your heir has more money.
“Sometimes market turbulence provides opportunities,” says Ringham.
5. Don’t procrastinate
Whether you need to make sure your estate plan matches your current wants and needs or you haven’t taken the time to create one, now is the time to act.
Nobody likes to think about death or disability but procrastinating could harm your loved ones in the event of your death.
“Get it done,” says Boneparth. “I fully understand how morbid and depressing the topic of death and disability is. But the sooner you get it done the sooner you’ll sleep well at night.”
Related content
Source link
