As proposed changes to federal estate tax laws gain momentum, individuals and families across New Jersey may be left wondering: Will my current estate plan still do what I intended it to do? For those with significant assets or multi-generational planning goals, the answer could be more complicated than expected.
At Cohler Law, we help clients across South Jersey stay one step ahead of legal uncertainty. Understanding how potential estate tax shifts might affect your will, trust, or overall planning strategy is essential – especially when the laws are still evolving.
Here’s a closer look at what’s changing, why it matters, and how to protect your legacy no matter what comes next.
Lower Exemption Limits May Catch More Estates in the Tax Net
Right now, individuals can pass on up to $13.61 million in 2024 and a projected $13.99 million in 2025 (or $27.22 million for married couples) without triggering federal estate taxes. But under current law, this historically high exemption is scheduled to drop dramatically – potentially back to around $5 million per person – on January 1, 2026, unless Congress acts to extend it. Additional proposals could accelerate or deepen that reduction.
What This Means for You:
If your estate approaches or exceeds the future threshold, you could face estate tax liability even if you're currently in the clear. Now is the time to review your will and trust and consider strategies like lifetime gifting or irrevocable trusts to reduce your taxable estate.
Planning Around Legislative Uncertainty
No one has a crystal ball – especially when it comes to Congress. Several competing proposals are on the table, and while some may never become law, others could pass with little notice. For individuals waiting to act, the cost of delay could be steep.
What This Means for You:
Rather than postponing updates until the dust settles, you may benefit from drafting a flexible estate plan that can adapt as laws shift. Tools like disclaimer trusts, powers of appointment, and trust protectors can allow your plan to respond to future developments without requiring a complete overhaul.
Now Is the Time for Strategic Lifetime Gifting
For high-net-worth families, one of the most effective ways to reduce estate tax exposure is by making tax-free gifts while today’s higher exemption is still in place. These gifts can take many forms – cash, stock, real estate, or interests in a closely held business.
What This Means for You:
Lifetime gifting can be a powerful tool, but it must be done carefully. There are annual and lifetime limits to consider, as well as complex rules about valuation and reporting. Work with your estate planning attorney to structure gifts that align with your financial goals and IRS regulations.
The Potential Repeal of Step-Up in Basis
Current tax rules allow heirs to receive a “step-up in basis” for inherited assets – essentially wiping out capital gains that accrued during the decedent’s lifetime. However, some proposals suggest eliminating or curtailing this benefit, which could dramatically increase tax exposure for beneficiaries.
What This Means for You:
Losing the step-up could create unexpected burdens for your heirs. For example, they may owe capital gains tax if they sell inherited property – even if it’s sold shortly after your death. Your estate plan should account for this possibility and explore strategies to mitigate future tax liabilities.
Your Will and Trust Should Be Living Documents
An estate plan isn’t something you “set and forget.” Especially during times of legal change, reviewing your will, trust, and beneficiary designations is vital to ensuring your wishes are carried out exactly as you intend.
What This Means for You:
If your documents were drafted before the current proposals were introduced (or before major life events like marriage, divorce, or the birth of a child) it may be time for a full review. Small updates now can prevent costly surprises later.
Don’t Wait for Certainty – Plan for Possibility
Many individuals hesitate to act until the laws are final. But by then, the window for tax-saving strategies may have closed. The most resilient estate plans are those designed with flexibility and foresight.
What This Means for You:
Meeting with your estate planning attorney now – while you still have options under current law – can help preserve generational wealth and avoid last-minute scrambles if changes are enacted quickly.
Common Estate Planning Pitfalls to Avoid
Even a well-designed estate plan can fall short if it’s not kept current. Failing to update beneficiaries, overlooking tax implications of new assets, or relying on outdated documents can derail your intentions.
What This Means for You:
A proactive estate planning review can catch issues before they become problems. At Cohler Law, we take the time to walk through your entire estate picture to ensure nothing is overlooked – from digital assets to out-of-state property.
New Jersey Still Imposes Inheritance Tax
Although New Jersey repealed its estate tax in 2018, it still imposes an inheritance tax on certain transfers, depending on your relationship to the beneficiary.
Federal changes won’t eliminate this obligation – and for some families, it can be significant.
What This Means for You:
Don’t overlook the state-level tax impact. We’ll help you understand how your New Jersey inheritance tax exposure fits into your overall plan and explore strategies to minimize its effect on your beneficiaries.
Bottom Line: Act Now to Stay in Control
Federal estate tax laws are on the cusp of significant change – and while no one can predict exactly what will happen, the consequences of inaction could be costly.
The good news? You don’t have to navigate it alone.
Secure Your Legacy With Help From Cohler Law
At Cohler Law, we offer clear, compassionate guidance tailored to your unique situation. Whether you’re reviewing an existing plan or building one from scratch, our team is here to help you secure your legacy with confidence.
We proudly serve individuals and families in Marlton, Cherry Hill, Mount Laurel, Moorestown, and throughout South Jersey. Contact us today to schedule a consultation and protect what matters most – now and in the future.
Disclaimer: This blog is intended for general informational purposes only and should not be taken as legal advice. Estate planning laws are complex and subject to change. Individual circumstances vary, so it's important to speak with a qualified attorney about your specific situation. Reading this blog does not establish an attorney-client relationship with Cohler Law.