Federal Estate Tax Exemption Changes in 2025 and 2026
In 2025, the federal estate tax exemption will be $13.99 million, but it is set to decrease to $7 million in 2026. This means that starting January 1, 2026, any amount you give over $7 million during your lifetime will be subject to a federal gift and estate tax rate of approximately 40%. To avoid this, it may be wise to take advantage of the higher exemption before it expires.
While there is a possibility that the federal estate tax exemption could be extended beyond 2025, this requires action by Congress. Proactive planning now can help shield your gifts from taxes under the current exemption limit. Contact the attorneys at HighPoint Law Offices to learn about strategies for estate tax savings through gifting.
New Rules for Inherited Retirement Accounts
If you inherited an individual retirement account “IRA”), you may be subject to new annual required minimum distributions.
Before 2019, individuals who inherited an IRA could stretch the withdrawals over their lifetime. However, since 2020, certain inherited IRA’s have been subject to the ten-year rule, meaning that the IRA must be fully distributed by the 10th year after the original account owner’s death. There was confusion regarding whether this rule required yearly withdrawals and in July 2024, the Internal Revenue Service clarified the issue. Starting in 2025, certain heirs will be required to take annual required minimum distributions from inherited IRA accounts. If you fail to take the required distributions, you could face a 25% penalty on the amount that should have been withdrawn.
If you’ve recently inherited an IRA or expect to in the near future, it’s important to review these new rules and ensure compliance. Contact HighPoint Law Offices today to discuss how these changes may impact your estate planning strategy.
FinCen Filing Deadline
Beginning in 2025, companies (including limited liability companies used for estate planning purposes) will be required to file a Beneficial Owner Information Report (“BOIR”) that identifies all individuals who own 25% or more of the company or exercise substantial control over the company.
Failure to file the BOIR on time can result in severe penalties. To avoid these penalties, make sure the BOIR is filed on time (by January 13, 2025, for companies formed prior to 2024; within 90 days of formation for companies formed in 2024). Need help filing your BOIR? Contact HighPoint Law Offices today.
Digital Assets and Cryptocurrency and Your Estate Plan
As digital assets (including online accounts, social media profiles, and intellectual property stored online) and cryptocurrency play an increasingly significant role in our lives, it is essential to include them in your estate plan. By addressing these assets, you can ensure that your online legacy is managed in line with your wishes.
Take action now to update your estate plan and safeguard the future of your digital assets. The attorneys at HighPoint Law Offices can help you navigate this important aspect of your estate plan. Contact us today for an appointment.
Charitable Giving and Your Estate Plan
Charitable giving is increasingly becoming an important aspect of estate planning. In 2023, charitable donations reached a record-breaking $557.16 billion, and this trend is expected to grow. Donors are looking to give to organizations that align with their values and core identity. When approached strategically, charitable giving can also provide tax benefits.
At HighPoint Law Offices, we can help you explore specialized strategies, such as donor-advised funds, charitable trusts, or using retirement assets for charitable bequests, to achieve your giving goals while reducing your tax burden. Contact us to learn more.
