Taxes & Estate Planning

With taxes top of mind this time of year, I thought I would post some information regarding taxes and estate planning.

Of course, a tax advisor is best able to discuss these strategies and should be your go-to resource for any questions, but I did want to share a basic overview of a few key considerations:

1. Reviewing Asset Valuation and Capital Gains – Many people overlook the impact of capital gains taxes on inherited assets. If assets like property or stocks are part of your estate, they may be subject to a “step-up” in basis, meaning the value is reset to what it was on the date of the original owner’s death. This adjustment can significantly reduce the capital gains taxes owed if the heirs later decide to sell the assets.
2. Lifetime Gift Tax Exemptions – The IRS allows you to give a certain amount each year — currently $19,000 per recipient in 2025 — without incurring a gift tax. Making annual gifts can be a way to transfer wealth without affecting your estate tax exemption limit.
3. IRA and 401(k) Beneficiary Designations – Tax-deferred accounts like IRAs and 401(k)s can be passed on to beneficiaries but may trigger tax implications depending on who inherits them. Spouses have unique options, such as rolling over accounts into their own IRAs, while non-spousal beneficiaries often need to withdraw funds within a specific timeframe.
4. Charitable Contributions and Trusts – Charitable donations can reduce taxable income, and setting up a charitable remainder trust allows for both immediate tax benefits and a lasting legacy. This option might make sense for those wanting to support charitable causes while minimizing estate tax.

I hope tax season goes smoothly for you! If you have any estate planning needs in the coming months, don’t hesitate to reach out.

Best regards,