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In the ever-shifting landscape of election cycles, one thing is certain: change is inevitable. As tax policies, regulations, and exemptions fluctuate with each new political outcome, high-net-worth individuals must stay ahead of the curve to protect their estates. While we can’t predict the outcome of any election, we can prepare for its potential financial impact. Election stress shouldn’t lead to financial stress—especially when thoughtful, proactive planning is in place. No matter what happens in the election, by partnering with Finley Davis Financial, we will help you achieve your wealth and legacy goals.
With potential changes to estate-tax laws on the horizon, high-net-worth families are increasingly turning to strategic estate planning to protect their wealth. As the 2025 expiration of the 2017 tax cuts approaches, the potential for a significant reduction in the estate tax exemption looms, making it more important than ever to take action. While a variety of planning options are available, navigating the complexities of estate law requires careful consideration. That’s where working with the experienced private wealth management team at Finley Davis Financial becomes crucial. We specialize in evaluating each unique situation and helping clients identify the most effective strategies to safeguard their legacy.
From trusts and lifetime gifts to tax-efficient investment planning, the strategies available today can make a dramatic difference in helping to minimize future tax liabilities. But the key to success is understanding which tools best suit your financial goals and personal circumstances—something our team at Finley Davis Financial can guide you and your family through.
Irrevocable trusts are a popular tool for removing assets from an estate, effectively locking in the current estate tax exemption. When assets are placed into an irrevocable trust, they are no longer part of the grantor's taxable estate, which can result in substantial tax savings. This strategy is particularly beneficial if the estate tax exemption drops in the future.
For example, couples can currently protect up to $13.61 million each (or $27.22 million combined) from estate taxes by utilizing these trusts. By setting up trusts now, individuals can preserve today's higher exemption amounts, even if future changes reduce the threshold.
However, it's essential to recognize the permanent nature of irrevocable trusts. Once assets are transferred, they are typically out of your control, unless beneficiaries or a court allow modifications. Therefore, careful planning is required to help ensure this strategy aligns with both tax goals and personal financial needs.
Another effective strategy involves making substantial lifetime gifts to heirs. Currently, individuals can gift up to $13.61 million tax-free over their lifetime. These gifts reduce the value of your taxable estate and help lock in the current exemption rates.
For many, spreading gifts over multiple years might be more practical. The annual gift-tax exclusion allows individuals to gift up to $18,000 per person (projected to increase to $19,000 in 2025) without using their lifetime exemption. This method can transfer wealth efficiently without triggering estate or gift taxes.
Spouses can create trusts for each other to help maximize the estate tax exemption. Known as Spousal Lifetime Access Trusts (SLATs), these structures allow one spouse to gift assets to a trust for the benefit of the other spouse. The assets are removed from the taxable estate but still offer access to the funds for one spouse during their lifetime.
If structured carefully, this strategy allows couples to maintain access to their wealth while also shielding it from future estate taxes.
For those focused on long-term family wealth preservation, dynasty trusts are an effective tool. These trusts can be set up to benefit multiple generations of a family, allowing wealth to pass from one generation to the next without incurring estate taxes at each step.
While dynasty trusts have come under scrutiny by lawmakers, they remain a viable option for families who want to maximize estate tax efficiency over the long term. However, potential changes to the rules governing these trusts are worth monitoring.
For those concerned about potential future changes but not ready to commit to irrevocable trusts, tax-efficient investment strategies may offer a middle ground. Working with a financial advisor, individuals can build portfolios designed to minimize future tax liabilities. This could include strategies such as maximizing contributions to tax-advantaged retirement accounts, investing in assets with a stepped-up basis, or considering charitable giving.
Given the uncertainty of estate-tax law changes, flexibility is key. Estate plans should be regularly reviewed and updated to reflect evolving financial circumstances, as well as any new legislation. Setting up structures like trusts now allows individuals to make adjustments later depending on how the political landscape shifts.
In a rapidly changing tax environment, proactive and informed estate planning is essential to protect your hard-earned wealth. Whether you're considering setting up a trust, making significant lifetime gifts, or exploring tax-efficient investment strategies, these decisions require insight and customized advice from a knowledgeable team. By partnering with Finley Davis Financial, you gain access to a team that is deeply experienced in crafting personalized plans tailored to your unique needs.
Finley Davis Financial doesn’t just help you understand the tax implications of each strategy; we work with you to help ensure that your plan adapts to life’s changes and evolving tax laws. Our goal is to secure your legacy and provide peace of mind, knowing that your wealth is positioned to benefit future generations. Don’t wait until it's too late—now is the time to act, and Finley Davis Financial is here to help you evaluate and implement the best possible options for your estate.
Tax and legal services are not offered by Lion Street Financial, LLC, or Lion Street Advisers LLC.