Don’t Be Tempted By Pop-Up Estate Planning Schemes

Stick with the basics when preparing for the high exemption sunset.

As an estate planning professional, I’m concerned about the upcoming decrease in the estate tax exemption at the end of 2025. I strongly advise my clients against using questionable shortcuts or complex schemes in their rush to beat the deadline. Instead, I recommend sticking to proven strategies. While time is indeed limited, I’ve seen rushed planning lead to costly mistakes and potential issues with the IRS, which is why I stress the importance of thoughtful, timely action.

In my practice, I often discuss Spousal Lifetime Access Trusts (SLATs) as a popular estate planning tool. These trusts allow my clients to transfer assets out of their estate while still providing access to their spouse. However, I always make sure to point out several drawbacks, including lack of flexibility, loss of control, and risks associated with divorce or the spouse’s death. In some cases, I suggest considering traditional defective trusts as an alternative.

I’ve been alarmed by various dubious estate planning schemes that have emerged recently. These include questionable charitable giving arrangements involving yachts or jets, mineral rights investments promising inflated tax deductions, and trusts claiming to defer capital gains taxes. I always caution my clients that if a strategy seems too good to be true, it likely is. In these uncertain times, I emphasize the importance of focusing on fundamental, proven estate planning techniques rather than chasing after risky, unproven strategies.

Want to read the full article on WealthManagement.com? Pros and Cons of a Living Inheritance