Securing Your Legacy: End-of-Year Estate Planning Tips

Estate planning is not just about transferring wealth — it is about making sure your loved ones are cared for, minimizing tax burdens, and aligning your plans with your long-term vision.

Year end is a great time to fine-tune your estate plan, whether it be updating beneficiary designations, maximizing tax-efficient gifting strategies, or revisiting your will and trusts. 

In this blog, JTM Williams Capital Management will explore some key tips and strategies to help you secure your legacy and start the new year with confidence.

Utilize Your Annual Gift Exclusion

The IRS allows you to gift up to $18,000 per recipient annually (in 2024) without triggering gift tax. You can transfer assets to your heirs or others without affecting your lifetime estate tax exemption. Gifts made under this exclusion are not subject to estate taxes and can help reduce the size of your estate, potentially lowering future estate tax liabilities. Utilizing your annual gift exclusion is an effective tool for passing wealth while also reducing the taxable portion of your estate.

Fund Trusts

Funding trusts is a strategy to remove assets from your estate, potentially reducing estate tax exposure. Trusts such as Irrevocable Life Insurance Trusts (ILITs), Grantor Retained Annuity Trusts (GRATs), or Dynasty Trusts can be useful tools for wealth transfer. By placing assets in a trust, you can retain some control during your lifetime while helping your assets to be distributed according to your wishes after death. Funding trusts provide a level of protection from creditors and can offer flexibility for future generations.

Evaluate Tax-Loss Harvesting and Investments

Tax-loss harvesting involves selling investments that have decreased in value to offset gains realized from the sale of other assets, reducing your overall tax liability. This strategy helps you manage taxable income, particularly if you expect to face a high capital gains tax rate. It can also provide the opportunity to rebalance your portfolio, align your investments with your long-term goals, and reduce the tax burden on inherited assets. Be mindful of the wash-sale rule, which disallows a tax deduction if you buy the same or substantially identical securities within 30 days before or after the sale.

Use Charitable Contributions

Charitable giving is a strategy that can reduce your taxable estate while benefiting causes you care about. Donating appreciated assets like stocks or real estate can help reduce capital gains taxes. Establishing a Donor-Advised Fund (DAF) allows you to make contributions to a fund now and distribute donations to charities over time, providing immediate tax benefits. Qualified Charitable Distributions (QCDs), for those 70½ or older, allow IRA owners to donate up to $100,000 directly to a charity without it counting as taxable income. Charitable giving can help reduce your taxable estate and leave a lasting impact.

Review Estate Tax Exemptions

The federal estate tax exemption allows individuals to pass up to $13.6 million (in 2024) without incurring estate taxes, with a higher exemption for married couples. If your estate exceeds this exemption, planning strategies such as gifting, funding trusts, or using life insurance can help reduce the taxable estate. However, the exemption is set to decrease in 2026 unless changes are made by Congress. Planning ahead can lock in the current exemption levels, allowing you to transfer more wealth to heirs without facing estate taxes.

Maximize Retirement Account Contributions

Maximizing contributions to retirement accounts, such as IRAs and 401(k)s, can lower your taxable income for the year, potentially reducing your estate’s tax liability. Maximizing retirement account contributions is especially important if you plan to pass these accounts to heirs, as they will be subject to income tax when withdrawn. Strategies like Roth IRA conversions—which involve paying taxes now in exchange for tax-free withdrawals in the future—can be beneficial. By contributing the maximum allowed, you not only secure your own retirement but also ensure your heirs benefit from tax-efficient distributions.

Plan for Family Business Succession

If you own a business, planning for a clear succession is critical. Your succession plan should identify who will take over the business, how ownership will be transferred, and how the transition will be financed. Business succession planning includes strategies such as using buy-sell agreements, gifting ownership shares, or creating an employee stock ownership plan (ESOP). Planning for business succession can help continuity and reduce the likelihood of disruptions in the event of your passing.

Consult a Financial Advisor for End-of-Year Estate Planning Tips

At JTM Williams Capital Management, we understand the importance of a well-structured estate plan in helping your wealth to be transferred according to your wishes while minimizing tax burdens. 

By working with JTM, we can help you navigate the complexities of estate planning. Our specialized knowledge aligns with your goals, whether that’s maximizing your estate’s value or protecting it for future generations. 

Let us help you streamline the planning process, giving you the peace of mind that your estate will be managed efficiently and in the best interest of your loved ones.