The Platinum Age of Estate Planning: Secure Your Wealth Now
Why is it referred to as such?
Simply put, we have access to an arsenal of tools and techniques to safeguard substantial wealth for future generations, effectively minimizing gift and estate taxes.
However, in 2026, several provisions in the Tax Cuts and Jobs Acts are set to expire, so now is the time to take action. In this insider's guide to estate planning, we've explained some of the tools and methods that can help you reduce your estate tax liabilities on the assets you intend to leave behind.
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Why Are We in the Platinum Age of Estate Planning?
There are several reasons why now is one of the most favorable times for estate planning in recent U.S. history:
High Exemptions: We now enjoy the highest gift, estate, and generation-skipping exemptions ever. These exemptions allow us to use our estate and gift tax exemptions without losing access to our wealth. Spousal Lifetime Access Trusts (SLATs), along with other trusts like DAPTs and SPATs, offer a way to achieve this.
Dynasty Trusts: Dynasty Trusts allow you to place assets into a trust that will remain exempt from estate tax for generations to come. It's a way to preserve your wealth indefinitely.
Discounts: Discounts are a powerful tool that enables you to argue that your assets are worth less than their face value, reducing your estate or gift tax liability.
Life Insurance: Life insurance can be a vital component of estate planning. It not only builds up income tax-free but also provides a tax-free death benefit when structured correctly.
Grantor Trusts: Grantor trusts allow you to sell assets to an irrevocable trust at a low-interest rate and ensure no capital gains tax is incurred.
Non-Equity Split-Dollar: This strategy allows you to pay the premium on life insurance owned by an irrevocable trust and make the gift a fraction of the premium to the trust.
Now, here's the catch. The Tax Cuts and Jobs Act of 2017, which dramatically increased the federal estate tax exemption, will expire on January 1, 2026. When this occurs, the existing exemption will be cut in half, and estate tax rates will increase from 40% to 45%. This is why time is of the essence.
The History of Federal Estate Taxes in the U.S.
Federal estate taxes made their debut in the United States in 1916. Initially, any estate worth more than $50,000 was subject to estate taxes. By 1926, the exemption was increased to $100,000, only to revert to $50,000 in 1932. Over the years, the exemption has predominantly risen, accompanied by a decline in general tax rates.
In 2017, President Trump enacted the Tax Cuts and Jobs Act. This resulted in some significant changes to the federal tax code including a larger standard deduction, reduced deductions for state and local taxes, and a sizeable increase to the estate tax exemption. By 2025, the exemption will reach an all-time high of approximately $14.4 million per individual.
However, these provisions are expected to expire at the beginning of the following year. On January 1, 2026, the estate tax exemption will decrease to less than half of its current level, or about $6.8 million when adjusted for inflation. The federal estate tax rate will also increase by 5% for the first time in 14 years to 45%. This gives wealthy estate owners roughly two years to plan for the anticipated changes.
| 2023 | 2024 | 2025 | 2026 | |
| Federal Estate Tax Exemption | $12.92 million | $13.61 million | $14.4 million | $6.8 million |
| Federal Estate Tax Rate | 40% | 40% | 40% | 45% |
*The federal estate tax exemptions displayed for 2025 and 2026 are projections and are provided for illustrative purposes only.
Why You Should Start Your Estate Planning Now
The existing estate tax laws should stay in place until 2026, but this isn't guaranteed. No one can predict the political landscape in 2024, and there will certainly be a deluge of activity in 2025. The surge may even come sooner depending on the election outlook. So why wait to see what happens?
In 2020, the Democrats were close to doing away with many of the techniques that make this the Platinum Age for Estate Planning. Although their attempts were unsuccessful, the Democratic Party continues to advocate for the elimination of discounts, Grantor Trusts, and perpetual Dynasty Trusts as outlined in their platform.
President Biden's administration has also expressed interest in reducing the federal estate tax exemption to $3.5 million per individual. Additionally, several states including California, have considered the idea of imposing their own estate taxes. However, even if none of these changes occur, there are other advantages to estate planning.
Additional Advantages of Estate Planning
Why else should you start planning now? In addition to tax benefits, it's essential to prepare for unexpected events such as lawsuits and divorce. Estate planning offers immediate advantages, ensuring the protection of your assets from legal claims so you can preserve them for the benefit of your children and grandchildren.
It's vital to note that these protections need to be established before they are needed. Once a lawsuit has been filed, it's too late to take action. A more effective approach is to communicate to the court that your intentions are not solely focused on asset protection but also include tax-related planning.
Individuals with significant assets often find themselves being targeted by legal action. This is evident from numerous past litigation cases involving professionals such as surgeons, real estate developers, and board members.
That is why it's so important to start the conversation about estate planning now. It will allow you to plan your life, manage your wealth effectively, and ensure that the legacy you wish to leave behind aligns with your aspirations. Don't make the mistake of waiting until it's too late to secure the protection you need.
Estate planning attorneys are preparing for a substantial increase in business over the next two years. Providing them with adequate time for effective planning is crucial. When tax changes were anticipated in 2012, appraisers stopped accepting new business in August. Drafting an irrevocable trust and purchasing a life insurance policy to fund it can also take several months.
How We Can Help with Your Estate Planning Needs
Our independent life insurance agency specializes in permanent life insurance plans that are ideal for estate planning. These policies offer level rates and a fixed death benefit until the age of 90, 95, 100, 110, or 121.
No risky investment is required, and your coverage won't change regardless of market conditions. As long as your premiums are paid, your policy will remain active.
Over the last decade we've helped thousands of families and businesses with their life insurance needs, and we work directly with estate planning attorneys to make sure our clients life insurance trusts are set up correctly.
Most importantly, our advice, and comparative shopping services are completely free. We work with 63 top-rated providers to make sure our client's always have the best options to choose from.
If you're unsure where to start, don't worry - we're here to assist you. Feel free to call us today at 855-247-9555 to speak with one of our experts. You can also select your state from the map below to get started. In less than a minute, you can compare coverage options and pricing from dozens of top-rated life insurance providers.
Frequently Asked Questions About Estate Planning
Q. Should life insurance be part of my estate plan?
A. Life insurance is vital for estate planning, especially if you have a trust that needs to be funded. A life insurance policy can also be used to pay for unexpected medical bills, outstanding debt, end of life expenses, or provide financial security for your loved ones.
Q. Do estate planning laws vary from state to state?
A. The Federal Estate Tax exemption is federally mandated so it is uniform in every state. However, some states levy their own inheritance and estate taxes that could increase your estate's liabilities. Here's a complete list of states with estate taxes.
Q. What are the advantages of creating an estate plan?
A. Creating an estate plan allows you to determine how your assets will be divided amongst your loved ones. It can also help your heirs avoid estate taxes on the assets you intend to leave behind.
Q. What happens if I dont have an estate plan?
A. If you pass away without an estate plan, your assets will be subject to probate, and dispersed how the court sees fit. This could cause your loved ones to lose out on the assets you wish to leave them.
Q. Do I need to review my estate plan after it has been established?
A. Major life events like marriage, divorce, birth of a child, or the loss of a loved one can significantly impact your estate planning needs which is why you should review your estate plan annually.
Q. Can I make changes to my estate plan if needed?
A. In the past, it was very difficult to amend the terms of an irrevocable trust, which provides the most estate tax advantages. However, modern irrevocable trust can provide flexibility through the use of powers of appointment.
Q. How does a will differ from a trust?
A. A will outlines how your assets will be divided when you pass away. A trust allows you to manage and distribute your assets while you are still alive.
Louis Lopes, CLU ChFC
Chartered Life Underwriter, Licensed Life and Health Agent
Louis has been in the insurance business for over 30 years. He specializes in “high risk” cases as well as more complex coverages for long term care, disability, and estate planning.
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