One of the tasks for families and business owners to consider at the start of a new year is estate planning. Did any special events occur in 2024, making it necessary for your estate plan to be updated? Or has another year passed and you didn’t get to update an existing plan or even have an estate plan created? What about a succession plan? A recent article from Cincinnati Business Courier, “5 key considerations for personal estate planning in 2025: An attorney’s perspective,” examines steps to take in the new year.

What’s going to happen with the federal gift, estate and generation-skipping transfer tax exemptions?

The federal exemption for 2024 was $13.61 million (i.e., the amount of money you can transfer by gift or inheritance that will not incur an estate tax) and will increase to $13.99 million in January (indexed for inflation). The legislation creating these levels expires on January 1, 2026, which should mean an exemption amount of around $7 million for 2026, but the future of the exemption remains uncertain. No one knows whether the exemption will be extended or changed by congress and the new administration. Many high-net-worth individuals and families are going forward with estate planning strategies to ensure that their estates are not hit with taxes in case the exemption is reduced.

Missouri does not have an estate tax in addition to the federal tax, but Illinois does. The exemption amount in Illinois is currently $4 million.

Annual gift tax exclusion rises to $19,000 in 2025.

The IRS recently announced an increase in the annual gift tax exclusion, which took place in January 2025, from $18,000 to $19,000. This is the amount any individual can gift to as many people as they wish without using up any of their lifetime exemptions. A married couple can make gifts of $38,000 to as many individuals as they want.

Grandparents who gift $38,000 to grandchildren and adult children can transfer a tidy sum to their descendants in a single year without using any of their own exemption amounts. Speak with your estate planning attorney about whether or not it makes sense to file a gift tax form with the IRS. There are instances where this is not required. However, it is helpful for future planning.

Deadline for the Corporate Transparency Act is approaching…or is it?

Business owners should speak with their estate planning attorney about the Corporate Transparency Act (“CTA”) to see if they need to file a beneficial owner information report. Under the legislation passed by congress, any reporting company established before January 1, 2024 was required to file the initial beneficial owner information report before January 1, 2025, and any reporting company created in 2024 has 90 days to file a report (this timeline reduces to 30 days for any company created in 2025 or thereafter). However, there have been many challenges to the CTA in the courts and recent rulings, including a December ruling in the 5th Circuit that granted a nationwide preliminary injunction against the filing deadline, have put the need to file a report in question. As of the writing of this blog on January 2, 2025, that injunction is still in place with one panel of the 5th circuit court of appeals staying the injunction and a separate panel overruling that stay a few days later. FinCEN (the bureau within the treasury department responsible for managing this reporting system) is currently saying that submissions of reports is voluntary as long as the injunction is in place.

Family-owned and other closely held business organizations should consider the new year a time to start creating or updating a succession plan.

Your succession plan needs to align with your estate plan and serve two goals: avoiding probate and ensuring a seamless transition for employees and clients.

Will the recent Connelly decision impact your business succession plan?

This high court decision centered on whether or not proceeds from a business owner’s life insurance should be included in the value of the business for estate tax purposes. The court ruled a company’s obligation to redeem a deceased shareholder under a stock redemption plan cannot be used to offset the insurance proceeds when calculating the value of the company as part of the owner’s estate. Business owners need to consider how their succession plan is structured, including life insurance, and discuss whether changes need to be made.

Reach out to our experience team of estate planning attorneys today to get help evaluating your best path for 2025 estate planning. Frankel Rubin’s attorneys are licensed in Missouri and Illinois and our law firm services all of the St. Louis Metropolitan Area. We are especially convenient for estate planning in Clayton, Brentwood, Des Peres, Frontenac, Glendale, Webster Groves, Kirkwood, Ladue, Maplewood, Olivette, Overland, Richmond Heights, Rock Hill, Shrewsbury, Town and Country, Creve Coeur, Affton, Crestwood, Sappington, Sunset Hills, Maryland Heights, University City, Warson Woods, and St. Louis City.

Reference: Cincinnati Business Courier (Dec. 3, 2024) “5 key considerations for personal estate planning in 2025: An attorney’s perspective”