Your 2025 Estate Planning FAQs: What I Tell My Clients

Yes. Estate planning isn’t just for the ultra-wealthy — it’s about control, clarity, and protecting your loved ones. Even if your net worth is modest, having a will, healthcare proxy, durable power of attorney, and updated beneficiary designations ensures your assets go where you intend without probate delays or family disputes.

For example, I worked with a client whose estate was under $500,000, but because she lacked a will and didn’t name beneficiaries, her children spent nine months in probate court. A basic plan would have saved time, cost, and stress.

Here’s what I tell clients: If you own property, have dependents, or want to avoid leaving a mess, you need a plan.

The federal estate tax exemption in 2025 is $13.61 million per person. For married couples, that means you can shield up to $27.22 million with proper planning.

However, this is a temporary gift — it’s scheduled to sunset in 2026, cutting the exemption roughly in half unless new legislation is passed. That’s why high-net-worth families are accelerating gifting strategies in 2025 to lock in the higher limits.

Client example: A business owner I advised gifted $6 million to his children through a trust this year, locking in that exemption before it potentially shrinks.

Gifting during your lifetime can reduce your taxable estate and allow you to see your family benefit from your generosity. In 2025, you can give up to $18,000 per person tax-free annually, and lifetime gifts count against the $13.61M exemption.

If you expect the exemption to drop in 2026, it might be smart to gift now — especially appreciated assets that could grow.

One mistake I see all the time is clients waiting too long to gift, then passing with a taxable estate that could’ve been reduced significantly.

When someone inherits property or investments, the cost basis resets to the fair market value at the date of death. This is called a “step-up in basis” and helps eliminate capital gains taxes on past appreciation.

Let’s say you bought a rental home for $200,000 and it’s worth $500,000 when you pass. If your child inherits it and sells it immediately for $510,000, they only owe capital gains tax on $10,000 — not $310,000.

Here’s what I tell clients: This is one reason it’s often better to leave assets at death than gift them during life — especially appreciated assets.

In many cases, yes. A revocable living trust allows you to bypass probate, control asset distribution, and plan for incapacity. A will is essential, but it only goes into effect after death and doesn’t cover all assets (like retirement accounts or jointly owned property).

Trusts are especially useful if:

• You own property in multiple states
• You have minor children
• You want to avoid public probate records

Client example: A widow I advised used a trust to manage property for her grandchildren while keeping the details out of court. It gave her peace of mind and simplified distribution.

Retirement accounts pass to your designated beneficiaries, not through your will. Under the SECURE Act 2.0, most non-spouse beneficiaries must withdraw the full balance within 10 years.

Spouses have more options — including treating the account as their own and delaying Required Minimum Distributions (RMDs) until age 73.

CPA Insight: I always remind clients to regularly check and update their beneficiaries. If your ex is still listed, that’s who gets the account — not your kids.

In many cases, yes. Roth IRAs don’t have RMDs during your lifetime, and withdrawals are tax-free for your heirs if certain rules are met. This makes them an excellent estate planning tool, especially if your beneficiaries are in higher tax brackets.

Converting now — before RMDs begin at age 73 — can reduce your taxable estate and future tax liability.

Client example: A couple I advised converted $300K into a Roth over five years, preserving tax-free growth and simplifying things for their children.

Absolutely. Life insurance can provide liquidity, cover estate taxes, or fund charitable giving. For larger estates, placing the policy inside an irrevocable life insurance trust (ILIT) keeps the proceeds outside your taxable estate.

This is especially helpful if your wealth is tied up in real estate or a business and your heirs need cash to pay taxes or settle debts.

As of 2025, 12 states and D.C. still impose estate or inheritance taxes, with exemptions far below the federal level — some as low as $1 million.

States like Massachusetts, Oregon, and New York require proactive planning if you live or own property there. Strategies might include:

• Gifting
• Trusts
• Changing domicile

Here’s what I tell clients: Don’t assume you're in the clear just because you’re under the federal exemption. Check your state’s rules or you could face surprise taxes.

Yes — and it can be highly tax-efficient. You can:

• Name a charity as a beneficiary of a retirement account
• Donate appreciated assets directly
• Establish a charitable remainder trust (CRT) or donor-advised fund (DAF)

This not only supports your causes but may reduce estate and income taxes. Plus, charitable giving can preserve your values and legacy long after you’re gone.

Top ones I see:

• Not updating beneficiaries after marriage, divorce, or a new child
• Assuming a will covers everything (it doesn’t)
• Failing to plan for incapacity (no power of attorney)
• Letting old trusts become outdated by law changes

Client example: A couple had a trust written 20 years ago. After the SECURE Act 2.0, their IRA distribution plan no longer worked. We updated the trust and avoided a massive tax hit for their kids.

Multiple properties often mean multiple probate processes unless you use a revocable trust or joint ownership with rights of survivorship.

If you own homes in different states, I strongly recommend using a trust to consolidate everything under one legal framework and avoid court delays.

Yes — 2025 is a key window. The generous $13.61M estate tax exemption could drop by nearly half in 2026 unless Congress acts. Now is the time to:

• Make large gifts
• Use valuation discounts (for business interests)
• Lock in the current exemption through trust strategies

Here’s what I tell clients: Don’t wait until the law changes — it may be too late to act efficiently.

At minimum:

• Will
• Durable financial power of attorney
• Healthcare directive
• HIPAA authorization
• Beneficiary designations

Possibly a revocable living trust

This gives you control during incapacity and clarity after death.

At least every 3–5 years, or immediately after:

• Marriage, divorce, birth, or death
• Buying/selling major assets
• Moving to another state
• Big tax law changes (like the 2026 sunset)

Regular reviews help avoid legal gaps and ensure your plan still reflects your goals.