Skip to main content

Tuesday, January 21, 2025

By Jeff Velastegui
Founder of The Legacy Group, Personal Estate & Business Advisor

Introduction

Estate planning mistakes can be costly—especially with the major tax changes coming in 2025. Without proactive strategies, even the most well-intentioned plans can lead to excessive taxes, family conflicts, or lost opportunities for wealth preservation. Below, we outline common pitfalls to avoid and provide practical insights to keep your plan on track.

Why 2025 Estate Tax Changes Matter

In 2025, the federal estate tax exemption is set to drop from $13.99 million to approximately $6.8 million per individual. This change could result in higher estate taxes for families who fail to adjust their plans. Whether you’re passing down a business, personal assets, or investments, preparation is key to minimizing tax burdens.

Pitfall #1: Overlooking Regular Updates

Tax laws evolve, and so do your personal circumstances. Outdated estate documents can lead to unintended asset distribution or tax consequences.

Action Plan:

  • Schedule annual reviews of your will, trusts, and powers of attorney.
  • Work with an advisor to ensure documents reflect current laws and your testamentary intent.

Pro Tip: Don’t forget healthcare directives—they’re just as crucial.

Pitfall #2: Ignoring Gifting and Trust Opportunities

Strategic gifting and trust planning are underutilized tools in estate planning. These strategies can reduce your taxable estate while supporting your loved ones.

Consider These Options:

  1. Annual Gifting: Use the $19,000 annual gift tax exclusion to transfer wealth tax-free.
  2. Trusts: Tools like dynasty trusts and spousal lifetime access trusts (SLATs) can protect assets and minimize taxes.
  3. Charitable Donations: Establishing charitable trusts can reduce taxable estate size while benefiting causes you care about.

Pro Tip: Plan gifting strategies over time to maximize their impact.

Pitfall #3: Avoiding Family Conversations

Failing to communicate your plans with heirs often results in disputes or misunderstandings. Clear conversations can ease tensions and ensure alignment.

How to Navigate These Discussions:

  • Share your intentions and the reasoning behind your decisions.
  • Educate heirs about financial stewardship to foster responsibility.
  • Use a trusted third party, like a financial planner, to facilitate difficult conversations.

Pitfall #4: Failing to Adjust After Life Changes

Marriage, divorce, the birth of grandchildren, or the sale of a business are just a few events that can dramatically alter your estate plan’s effectiveness.

How to Stay Agile:

  • Update your plan after every major life event.
  • Collaborate with professionals to adapt your strategies in response to new circumstances.

Your Next Steps

Avoiding estate planning mistakes isn’t just about preserving wealth—it’s about ensuring your legacy supports your values and your family’s future.

Here’s what you can do today:

  1. Review Your Plan: Evaluate whether your current strategy reflects the upcoming tax changes.
  2. Engage Experts: Partner with financial planners and estate attorneys to refine your approach.
  3. Take Action: Proactively implement gifting, trust strategies, and plan updates to avoid pitfalls.

Final Thoughts

With significant tax law changes on the horizon, there’s no better time to take control of your estate plan. Avoid common mistakes by staying informed, communicating with your heirs, and working with experts who understand the complexities of wealth preservation.

📩 For personalized guidance, visit The Legacy Group’s Estate Planning Page or contact us directly. To schedule a meeting, get started now or call (516) 682-3383 or email jvelastegui@legacygroupny.com.

Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate.

Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. The Legacy Group is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. [1393 Veterans Memorial Hwy, Suite 307S, Hauppauge, NY 11788] (516) 682-3383. CRN202801-7889738