This is a unique, and uniquely challenging, point in time for estate planning. Two developments are bringing to an end the platinum age of planning in the near future, meaning the time to act is now.  

This blog post explores the impending impact of the looming sunset of the current federal estate tax exemption amounts and potential landmines lining the current great wealth transfer. Combined, this pair of developments make a compelling case to engage in intentional estate planning before the storm hits.

The Impact of the Sunset

One of the imminent challenges facing estate planning is the sunsetting of the current federal estate tax exemption amounts that were established in the Tax Cuts and Jobs Act of 2017 at the end of 2025.

Current law affords every couple an approximately $26 million estate tax exemption. At the end of 2025, this law will “sunset” and nearly halve the current exemption to $13 million per couple, subjecting every dollar above that amount to a 40% tax rate. 

The table available on our website illustrates the stark reality of the potential estate tax exposure due to the sunsetting of the current exemption levels, emphasizing the urgency for families to take proactive measures in safeguarding their wealth.

The shrinking exemption underscores the critical need for individuals and families to reassess and fortify their estate plans to navigate the challenges that lie ahead. Without intentional estate planning, families with taxable estates face the risk of paying millions in unnecessary taxes.  

The Hidden Dangers in the Great Wealth Transfer

An equally pressing concern arises from the startling statistics provided by wealth consultancy experts. They estimate that 70% of wealthy families will witness a dissipation of their wealth by the second generation, escalating to a staggering 90% by the third.

This statistic is incredibly relevant today as the United States has just commenced the greatest transfer of wealth in history. In the upcoming two decades, this anticipated transfer is set to surpass $80 trillion. 

Without intentional estate planning, rather than a seamless asset transition that preserves wealth through responsible asset management, successful families might find themselves on the wrong side of the above statistical trend.

What to Do?

The simple answer? Intentional, holistic estate planning.

However, it’s not quite that easy! Given the complexity of estate planning and the evolving landscape, seeking the guidance of experienced estate planning professionals becomes paramount.

Crafting a comprehensive estate plan for a family is a personal experience and demands a customized process and outcome. Two families with nearly identical estates may have extremely different concerns and objectives. 

The key is to create a plan that is tailored to each family’s unique considerations. You can get a glimpse into our personalized process at our website.

With respect to your estate plan, there are only three possible beneficiaries: your family, a charity, and the U.S. Treasury. We find that most people would prefer to determine for themselves how their tax dollars are spent. 

In short, an estate plan should transfer the assets you want, when you want, to whom you want. 

To that end, we believe an effective estate plan accomplishes three things:

• It employs well-defined estate planning strategies to eliminate and minimize/discount estate taxes.
• It establishes a structure to pay any taxes that remain in the most cost-effective way. 
• It provides future flexibility.

Conclusion

The perfect estate planning storm is brewing, fueled by the impending sunset of the current federal estate tax exemption amount and the monumental wealth transfer on the horizon. Families who recognize the urgency of this moment and embrace intentional estate planning can weather the storm and safeguard their legacies for generations to come. 

At Stavis Wealth Transfer Solutions, we can work with you and your other advisors to ensure that the challenges ahead are met with resilience, foresight, and a commitment to preserving the fruits of your hard-earned success.

To learn more, feel free to reach out to the Stavis Wealth Team.