Why Lifetime Wealth Transfer Planning is Critical: Maximizing the Estate Tax Exemption
Lifetime wealth transfer planning is a crucial strategy for high-net-worth families and business owners to preserve wealth across generations. With today’s federal estate and gift tax exemptions at historically favorable levels, the time to act is now. Here’s why leveraging these opportunities today is vital—and how to do it effectively.
Under the One Big Beautiful Bill Act (OBBBA), the federal estate, gift, and generation-skipping transfer (GST) tax exemption is now at $15 million per individual ($30 million for married couples), effective January 1, 2026, with inflation indexing beginning in 2027. This change supersedes the previous sunset cliff that would have reduced the exemption to approximately $7 million per individual. For planning in 2025, the applicable exemption remains $13.99 million per individual ($27.98 million for married couples), available for lifetime gifts and at death.
For families with significant estates, this exemption provides an expanded and lasting opportunity to transfer wealth tax-efficiently. By planning now, you can leverage current exemptions while protecting your legacy from potential future tax liability.
Benefits of Lifetime Wealth Transfers
- Tax Efficiency: Transferring assets during your lifetime reduces the taxable value of your estate, potentially saving millions in future taxes.
- Asset Growth Outside Your Estate: Assets transferred today can grow outside of your estate, amplifying tax savings over time.
- Control and Flexibility: Many strategies allow you to maintain some control or access while ensuring future growth benefits your heirs.
Effective Strategies for Lifetime Wealth Transfers
- Annual Gifting: The annual gift tax exclusion for 2025 is $19,000 per recipient ($38,000 for married couples). Gifts up to this level per individual recipient generally do not reduce your lifetime gifting or estate tax exemption.
- Irrevocable Trusts:
- Spousal Lifetime Access Trusts (SLATs): Enables one spouse to gift assets to the other in a trust, offering income access and asset protection.
- Dynasty Trusts: Preserves wealth for multiple generations while avoiding estate taxes at each level.
- Intentionally Defective Grantor Trusts (IDGTs): Freezes the value of appreciating assets, shifting future growth to heirs tax-free.
- Family Limited Partnerships (FLPs): Transfer business or investment interests at a discount, reducing taxable estate value while retaining control.
- 529 College Savings Plans: Superfunding a plan with up to five years of gift exclusions allows you to remove significant amounts from your estate upfront while supporting education goals. If you die before the five years, that portion goes back into your estate.
- Grantor Retained Annuity Trusts (GRATs): Lets you transfer appreciating assets to heirs with minimal tax implications by receiving annuity payments over a set term.
Why Act Now?
The current exemption level of $13.99 million (per individual) combined with advanced planning tools such as SLATs, GRATs, and dynasty trusts makes lifetime wealth transfers especially powerful in 2025. Taking action now allows high-net-worth individuals and families to lock in favorable tax treatment, shield significant assets, and lay the groundwork for a more secure financial legacy.
At the same time, the $15M / $30M exemption under OBBBA provides an additional strategic horizon. Even if exemptions are not used fully in 2025, they can be preserved and utilized in future planning, offering flexibility and continuity across generations.
Next Steps
Every family’s financial situation is unique. Our team specializes in crafting customized strategies that align wealth transfer plans with your broader goals.
Contact us today to learn how to take advantage of this historic opportunity at 561-361-8140 or email lew@lawlessedwardswarren.com
Acknowledgement
Representatives of AIC/AAS do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Representatives offer products and services using the following business names: Lawless, Edwards & Warren – insurance and financial services | Ameritas Investment Company, LLC (AIC), Member FINRA/SIPC – securities and investments | Ameritas Advisory Services, LLC (AAS) – investment advisory services. AIC and AAS are not affiliated with Lawless, Edwards, & Warren.