Last Chance to Plan for Estate Tax Increase for 2025 before the Cliff in 2026
There are major changes coming in 2025 to estate planning. If you’ve been keeping an eye on the federal estate tax exemption, you already know how crucial it is. This exemption determines how much of your wealth can be passed on to your loved ones without being reduced by federal taxes. For many families, it can mean the difference between leaving a lasting legacy or seeing a significant portion of their estate go to the IRS.
The good news? That exemption is set to increase in 2025. This will create a rare opportunity for individuals and families with substantial estates, and they could save millions in taxes. But as with any good news, there’s a catch—the higher exemption is only temporary. If no changes are made to current law, the exemption will drop sharply at the start of 2026, leaving many estates vulnerable to increased taxes.
With these changes on the horizon, it’s critical to review your estate plan now. Whether you’re just starting or revisiting an existing strategy, the decisions you make before the end of 2025 could significantly impact your family’s financial future.
At John Park Law, our estate planning attorneys are licensed in Nevada, California, and Utah and can help you review your estate plan now – before the tax exemption increase disappears. We have decades of experience helping individuals plan for the future and safeguard what they value most. Read more from our satisfied clients and don’t hesitate to call us today at 702-857-7879.
Upcoming Changes to the Estate Tax Exemption
In 2025, the federal estate and gift tax exemption will rise to $13.99 million per individual, up from $13.61 million in 2024. This means a married couple can transfer up to $27.98 million without incurring federal estate or gift taxes.
However, this increase is temporary. On January 1, 2026, the exemption is scheduled to revert to its pre-2018 level of $5 million per individual, adjusted for inflation.
Why Immediate Action Is Crucial
If your estate exceeds $5 million as an individual or $10 million as a married couple, you must act quickly. The clock is ticking on the current elevated estate tax exemption, and waiting until 2026 could have significant financial consequences for you and your heirs.
In 2025, the estate tax exemption will rise to $13.99 million per individual, allowing married couples to shield up to $27.98 million from federal estate taxes. This means you have a one-year window to transfer a substantial amount of wealth—estate tax-free. Once the exemption drops in 2026, it’s expected to return to around $5 million per person, adjusted for inflation. For many, this sharp decrease could result in a hefty estate tax bill.
For example, let’s say your estate is valued at $20 million as a married couple. Under the 2025 exemption, the entire estate would pass to your heirs without triggering federal estate taxes. But in 2026, with the exemption slashed to $5 million, approximately $10 million of your joint estate would be subject to federal taxes at up to 40%. That’s a potential tax bill of $4 million—money that could otherwise stay with your family.
The Power of Estate Planning NOW
By taking action now, you can lock in the higher exemption and reduce or even eliminate your estate’s exposure to federal taxes. Here are some key strategies to consider:
- Lifetime Gifting: One of the most effective ways to utilize the current exemption is through lifetime gifting. You can transfer assets to family members or trusts now, taking advantage of the $13.99 million exemption before it shrinks.
- Establishing Trusts: Trusts, such as Spousal Lifetime Access Trusts (SLATs) or irrevocable life insurance trusts (ILITs), can help move assets out of your taxable estate while still providing financial flexibility for you and your spouse.
- Valuation Discounts: Certain assets, like business interests or real estate, may qualify for valuation discounts, allowing you to transfer even more wealth under the exemption.
- Generation-Skipping Transfers: If you plan to leave assets to grandchildren or future generations, the current exemption also applies to generation-skipping transfer taxes, creating a unique opportunity to maximize multi-generational wealth transfers.
If you delay until 2026, the reduced exemption could expose your estate to substantial taxes. Even families with estates that hover around the current $13.99 million limit may be surprised at how quickly assets add up and increase over time—especially when factoring in real estate, retirement accounts, business interests, and investments.
In addition, if Congress makes further changes to estate tax laws, it could become even harder to shield your wealth. Acting during 2025’s high exemption window allows you to take advantage of the current rules with confidence.
Contact Us Before the 2025 Estate Tax Exemption Window Closes
The clock is ticking on a rare opportunity to protect your wealth and secure your family’s financial future. In 2025, the federal estate tax exemption will temporarily rise to $13.99 million per individual ($27.98 million for married couples). This is your chance to transfer significant wealth—tax-free—but the window closes at the end of the 2025 year.
At John Park Law, we help families like yours navigate the complexities of estate planning. Whether it’s through lifetime gifting, trusts, or multi-generational planning, we’ll create a custom strategy to lock in the current exemption and protect what matters most.
Take control of your financial future today. Schedule a consultation with our experienced attorneys in Nevada, California, or Utah to review your estate plan before the 2025 deadline. Your legacy is too important to leave to chance. Call our law firm today at 702-857-7879 or fill out our confidential case evaluation form online.
John Park is a highly experienced attorney in estate planning, probate, business law and guardianship to help people organize the elements of their lives through careful estate planning and asset protection measures.