The 2024 U.S. presidential election is poised to influence policies across a wide array of sectors, from economic regulations to international relations. Estate planning is one area where certain election outcomes might have an impact, particularly regarding tax policies and the federal estate tax exemption. However, it's essential to remember that estate planning is much more than a response to changes in tax law. In fact, 90% of what estate planning accomplishes has little to do with taxes. This article will break down the potential effects of the 2024 election on estate planning and, more importantly, why proactive estate planning should be a priority regardless of who is in office.

Post-2024: Republican Majorities and Tax Policy Prospects

Following the 2024 election, anticipated Republican majorities in Congress may bring potential shifts in tax policy, with a focus on maintaining a favorable environment for wealth preservation and growth. Historically, Republican-led majorities have aimed to limit estate taxes or protect wealth transfers, which suggests that tax reform favorable to estate holders may be likely.

A significant topic in estate planning today is the federal estate tax exemption, which allows estates under a certain threshold to pass to heirs tax-free. In 2024, the exemption is set at $13.71 million per individual. Unless changed, this exemption is expected to sunset at the end of 2025, reducing the exemption to pre-2017 Tax Relief Act levels. However, President-Elect Trump has expressed intentions to extend the current exemption threshold beyond its current expiration. With Republican support, this tax relief is more likely to remain intact, giving estate holders greater flexibility in planning without immediate tax burdens.

Tax Implications vs. the Fundamentals of Estate Planning

Estate planning is fundamentally about creating a comprehensive plan that protects your assets, takes care of you and your loved ones, and ensures your legacy is passed down in the way you wish. While the federal estate tax exemption and other tax policies are important factors in estate planning, they're just one piece of a much larger puzzle.

Most people don't have estates large enough to trigger estate taxes under the current exemption thresholds. Yet, they still need an estate plan that covers various aspects of personal and financial security, including:

• Protecting Minors and Dependents: Guardianship provisions and trusts for minors ensure that children or other dependents are provided for if the unthinkable happens.
• Asset Protection: Safeguarding wealth for beneficiaries can prevent assets from being mismanaged, used irresponsibly, or lost to creditors.
• Avoiding Probate: Establishing a well-organized estate plan can avoid lengthy and public probate proceedings, allowing assets to transfer seamlessly.

By focusing on these broader aspects, estate planning serves as a safety net that can endure beyond any shifts in tax laws.

The Best Time for Estate Planning Is Always “Now”

Waiting to see what happens with the federal estate tax exemption in 2025 is not a wise approach for estate planning. Circumstances in life change constantly—marriages, divorces, births, and health issues can all impact your estate plan. Keeping your plan up-to-date ensures it reflects your current wishes and family situation.

Setting up an estate plan or updating an existing one is beneficial not just for the here and now, but also as a way to prepare for the future. Regardless of policy changes, estate planning helps ensure that your wealth and legacy are protected and managed according to your wishes. Plus, the process of reviewing your plan often highlights other areas of your financial life that may need attention, helping you make well-rounded financial decisions.

Preparing for 2025 and Beyond

Now is the time to look ahead to 2025 and consider the long-term future. Creating a strong estate plan today means that you're prepared to adapt, no matter what political or economic changes lie ahead. Even if the federal estate tax exemption remains high, other financial factors could affect your assets and how they are distributed. By taking control of your estate plan now, you are investing in peace of mind for the years ahead.

The 2024 presidential election and its aftermath may influence some aspects of estate planning, but they are unlikely to change the core reasons for having a well-crafted plan in place. Estate planning is not simply a response to tax law shifts; it is a proactive approach to safeguarding your life's work, protecting your loved ones, and ensuring your wishes are honored. The best time to plan is always now, and the value of an up-to-date estate plan goes far beyond taxes.