People in their 40s think they don’t need to worry about an estate plan, especially if they had one created when their children were young. However, life doesn’t always follow expected timelines, says the article “Estate Planning Checklist: 13 Smart Moves” from Kiplinger. Estate planning attorneys hear it all the time—couples who thought they had decades before needing to update their estate plan find themselves scrambling for documents they didn’t expect to need until later in life.
Estate taxes are still in limbo. The current federal estate tax exemption is $13.99 million. However, it is unclear whether this will continue after its original sunset date of December 31, 2025. Many people are taking a wait-and-see approach, which could be costly. If the federal estate exemption reverts to $6 million, there’s going to be a mad rush in every estate planning attorney’s office, and not all plans will be done in time.
Anyone with wealth needs to plan. Estates worth more than the current exemption could be taxed at 40%, and don’t forget, many states still have their own estate taxes. If the gift exemption is cut, then many of the strategies used to minimize taxable estates will be eliminated.
Asset protection strategies used to protect wealth during your lifetime should also work to protect inheritances for heirs. When times are good, there tends to be less litigation. However, when economic environments decline, family fights over inheritance increase. Talk with an estate planning attorney about whether or not your estate plan should include trusts to preclude litigation.
Some other items on your estate planning checklist:
- IRA Conversions: If you convert a traditional IRA to a Roth, you’ll pay taxes on the conversion, but heirs won’t pay taxes.
- Annual gift tax exclusion is $19,000 in 2025 per person. Gifting now may help your heirs and shrink your taxable estate.
- If you pay medical or educational expenses directly, it takes assets out of your taxable estate.
- Review your investments and see if you can simplify them by consolidating accounts.
- Create an inventory of all your assets, including digital assets.
- Medicaid, Special Needs and Long-Term Care require advanced planning.
Trusts accomplish many goals. If you haven’t already met with an experienced estate planning attorney to discuss the role of trusts in your estate, now is the time to discuss:
- An irrevocable trust for your spouse, like a Spousal Lifetime Access Trust. This takes assets out of your taxable estate, protects your spouse and ensures that the remainder will go to your beneficiaries.
- Domestic Asset Protection Trusts are used to protect assets from lawsuits, creditors and estate taxes. These irrevocable, self-settled trusts are permitted in 20 states.
- Revocable trusts are used to avoid probate and reduce taxes. They’re not as powerful as irrevocable trusts during your lifetime. However, they are useful for incapacity planning as you age.
Having your estate protected with a comprehensive estate plan serves many purposes. It protects you in case of incapacity, ensures that your wishes are met for asset distribution, preserves wealth for heirs and minimizes the impact of litigation. An experienced estate planning attorney will create a plan to address all of these issues, giving you the peace of mind of planning for the future.
Reference: Kiplinger (June 10, 2025) “Estate Planning Checklist: 13 Smart Moves” from Kiplinger.