Trends in Estate Planning for 2025:
Digital Assets
With the increasing digitization of our lives, estate planning now includes managing digital assets. This encompasses online accounts, cryptocurrencies, and digital photos or videos. It’s crucial to outline how these assets should be accessed and managed after your death. It is also suggested that you utilize a password manager. Many of these programs allow you to set up an emergency contact who can gain access upon your death. You may also want to utilize a password manager for cell phone passwords and safe combinations.
Inherited Retirement Accounts
Retirement accounts have seen tremendous growth over the years. As of January 1, 2025, beneficiaries (non-spouse) must withdraw the entire account within 10 years of the death of the account owner. If the deceased owner was required to take annual distributions, the inheritor must take the distributions annually. If the deceased owner was not subject to required distributions, the inheritor can take the proceeds at any point as long as the account is liquidated within 10 years.
Changes in Tax Laws:
Tax laws are continually evolving, and 2025 is no exception. Keeping abreast of the latest changes can help you minimize the tax burden on your estate. For instance, the 2025 lifetime gift/estate exemption is $13,990,000 per person. However, that limit is set to “sunset” (go away) after 2025. It will take an act of Congress to extend this exemption beyond 2025. Also, the annual gift amount is $19,000. Meaning you can give anyone $19,000 in 2025 without using any of your gift exemption.
Common Pitfalls to Avoid:
One of the biggest mistakes is delaying the process. They say it is never too early to start planning for the future. Luck favors the prepared. As stated earlier, in our digitized world, make sure you have clear instructions to access and manage these assets. Finally, know the tax implications of your estate. Heavy in retirement plans, look at options to reduce that potential burden.
Another big pitfall can be avoided by carefully reviewing your asset titling. Make sure your assets are correctly titled in the name of your trust. You can have only $184,500 in cumulative assets (not including real property) outside of your trust to avoid probate. If you have refinanced your real property, check the recent deed to make sure it is titled in your trust (even if you haven’t refinanced, it is worth a look).
