As we approach the end of 2025 (which will be here before we know it!), significant changes to the estate tax law are on the horizon, which could greatly affect your tax planning strategies. Currently, the estate tax exemption stands at approximately $14 million, but on January 1st, 2026, it is scheduled to be slashed in half to approximately $7 million ($5 million pre-2018 law adjusted for inflation). Along with this reduction, the tax rates are scheduled to rise from 40% to 45%.
Why You Need to Act Now
Last year, we emphasized the importance of considering estate planning strategies in light of these impending changes: Estate Tax Law Changes in 2026 May Impact Your Taxes A LOT—Gift Now! Now, it’s critical to delve into the “how” and understand the type of team you need to effectively navigate this complex landscape.
Building Your Estate Planning Team
To ensure your estate is managed efficiently and in accordance with the changes to the estate tax law, you need a well-rounded team of professionals:
- Certified Public Accountant (CPA)
- Estate & Trust Attorney
- Financial Advisor
Each of these professionals plays a distinct and crucial role in your estate planning process.
Role of the CPA
A CPA is essential for understanding and managing the tax planning of your estate in order to reduce your tax burden (to hopefully $0!). They help you with:
- Tax Planning and Compliance: CPAs ensure that your estate plan aligns with current tax laws, helping to minimize tax liabilities.
- Strategizing Gifting Plans: CPAs can advise on the best strategies on what, how, and when to gift assets to reduce the taxable estate.
- Financial Record Keeping: Maintaining accurate financial records is vital, and CPAs ensure that all transactions and valuations are properly documented for tax purposes.
Role of the Estate & Trust Attorney
An estate and trust attorney provides legal guidance and ensures that your estate plan is robust and legally sound. Their responsibilities include:
- Drafting Legal Documents: They create wills, trusts, and other legal documents that outline your estate plan.
- Navigating Legal Requirements: Estate laws can be complex, and these attorneys ensure that your plan complies with all legal requirements.
- Setting Up Trusts: They help establish various types of trusts, which can be instrumental in managing and protecting your assets and reducing estate taxes.
Role of the Financial Advisor
A financial advisor is the linchpin in managing your overall financial strategy. They offer:
- Comprehensive Financial Planning: Financial advisors provide a holistic view of your financial situation, integrating estate planning with your overall financial goals.
- Asset Management: They help manage and grow your assets, ensuring that your estate is well-prepared for future needs.
- Facilitating Coordination: Financial advisors often serve as the primary point of contact, coordinating efforts among CPAs, attorneys, and other professionals.
The Importance of Connecting Your Estate Planning Team
It’s not enough to simply have a CPA, estate attorney, and financial advisor; they must work together seamlessly to ensure that your estate plan is cohesive and effective. Here’s why connecting these professionals is crucial:
- Unified Strategy: When your CPA, estate attorney, and financial advisor communicate regularly, they can develop a unified strategy that takes into account tax implications, legal requirements, and financial goals. This holistic approach ensures that all aspects of your estate plan are aligned and optimized.
- Streamlined Decision-Making: Coordinated efforts among your team members lead to more efficient and informed decision-making. They can quickly address any issues that arise and adjust your plan as needed, saving you time and reducing the risk of errors.
- Comprehensive Risk Management: Collaboration among your CPA, estate attorney, and financial advisor allows for comprehensive risk management. They can identify potential risks and develop strategies to mitigate them, ensuring that your estate plan remains robust and adaptable to changing circumstances.
Taking Immediate Action
If you do not currently have access to these professionals, it’s imperative to seek them out promptly. Contact LSL to connect you with the right experts. The window to act is closing fast, and delaying could result in limited availability of these essential professionals. Act now to ensure your estate planning is handled efficiently and effectively, safeguarding your wealth for future generations.
Want more resources about this subject? Check out our webinar on the “Estate Tax Apocalypse“.
