Read more about the article Estate Planning Impact of the “One Big Beautiful Bill Act”

Estate Planning Impact of the “One Big Beautiful Bill Act”

On July 3, 2025, Congress passed a major taxation and spending bill commonly known as the “One Big Beautiful Bill Act“. The following provisions of the Act may be of interest to estate planning clients:

1. Increased Estate and Gift Tax Exemption. The federal estate, gift, and generation-skipping tax exemption amounts permanently increase to $15 million per person effective January 1, 2026, and will be adjusted for inflation in future years. The current exemption is $13.99 million per person.

2. Higher SALT Deduction Cap. The individual state and local tax deduction limitation (SALT limitation) increases to $40,000 and is indexed for inflation through tax year 2029, after which the cap reverts to $10,000. The cap is phased down for taxpayers with modified adjusted gross incomes over $500,000. For tax years after 2029, the cap returns to $10,000.

3. Expanded QSBS (Qualified Small Business Stock) Benefits. The Act enhances the tax exclusion under Section 1202 for QSBS as follows:

  • Provides a tiered gain exclusion for QSBS, permitting a 50% exclusion for shares held more than three years, a 75% exclusion for shares held more than four years, and a 100% exclusion for shares held more than five years.
  • Increases the per-issuer dollar cap from $10 million to $15 million (indexed to inflation beginning in 2027).
  • Raises the corporate-level gross assets ceiling from $50 million to $75 million (indexed to inflation beginning in 2027).

If you have questions about how these changes may affect your estate plan or business holdings, please do not hesitate to contact an attorney at Sims & Campbell to discuss any questions you may have regarding the “One Big Beautiful Bill Act”.

Read more about the article How to Incorporate Gifting into Estate Planning

How to Incorporate Gifting into Estate Planning

There are several ways to decrease the size of a taxable estate, all while minimizing taxes to your estate and heirs. A recent article from Investopedia, “Tax-Smart Giving: How to Gift $1M Without the IRS Calling,” says the federal gift tax is applied when one individual transfers property to another and doesn’t receive anything in return.

A gift can be any transfer of funds, property, or assets, including cash gifts, loan forgiveness, or the sale of real estate for less than its market value. You may also be able to make an interest-free loan as a gift. An important note: check with your estate planning attorney to be sure any gifts align with your overall estate plan.

Who pays taxes on a gift? The federal gift tax is paid by the person giving the gift, aka the donor, and not the recipient. A portion of the value of all gifts is tax-free. In 2025, the exclusion is generous—$19,000 per person per year. A gift can be made to as many people as you want to give a gift to. Married couples may make a gift of up to $38,000 tax-free in 2025.

Unless your estate is worth more than $13.99 million in 2025, chances are you don’t have to worry about gift taxes. Annual gifts made during your lifetime are worth more than the exclusion for the applicable year, allowing for even more generosity. The gifts can be carried over to the value of your estate, making your entire lifetime gift and estate tax exclusion $13.99 million.

One caveat: the IRS should be advised annually of any non-exempt portion being carried forward, using IRS Form 709. File the form even if you don’t owe any gift taxes. This includes making gifts with a spouse, making a gift to a non-U.S. citizen spouse, or making a gift of future interests. Some people prefer to file a Form 709 to help them track their gifting, while others consider the form a minor detail to prevent unanticipated issues. If you need assistance, you can retain our firm to file this form for you.

For tax planning, you may want to give as much as possible before December 2025 ends. Some spouses give the same individual $19,000 on December 31 for one year, then make the same amount almost immediately after New Year’s Day. This is a per-year limit, making it possible for a married couple to gift $76,000 without carrying any portion over to the following year.

There’s another reason to use the lifetime exclusion.  A portability provision allows married couples to transfer any unused portions of the $13.99 million lifetime gift and estate tax exclusion to a surviving spouse.

Keep in mind that some gifts are not considered gifts. If you are writing checks for tuition or medical care, those are not considered gifts. The only way around this would be to write checks to the family members and have them use the money for tuition or medical care.

The current federal tax rate on gifts and estates is 40% in 2025. If you neglect to fill out a Form 709 and exceed the limit, you’ll have to make a sizable gift to the IRS.

Speak with your estate planning attorney and CPA about how to use these various limits to minimize your tax liability and enhance a legacy for loved ones.

Reference: Investopedia (June 1, 2025) “Tax-Smart Giving: How to Gift $1M Without the IRS Calling”

Read more about the article Do I Need an Estate Planning Attorney? Annapolis and Towson Estate Planning

Do I Need an Estate Planning Attorney? Annapolis and Towson Estate Planning

Sound estate planning can help minimize taxes and expenses associated with transferring your assets and property after your death, says Urban Asia’s recent article entitled “Why Is It Important To Hire An Estate Planning Attorney.”

An experienced estate planning attorney can help you with your estate planning goals efficiently, avoiding legal processes that can be time-consuming and costly. Estate planning through an attorney can help you, and your loved ones avoid legal complications or unwanted delays.

What are the benefits of hiring an experienced estate planning attorney?

  • Legal expertise: They have specialized knowledge of the laws and regulations governing probate and estates. They can advise you on the best plan to suit the utilization of your assets and needs, and make sure that your estate planning complies with all applicable laws.
  • Tax implications: Estates can have tax implications. An experienced estate planning attorney can advise you on how to structure your estate plan to minimize taxes and maximize the benefits for your beneficiaries.
  • Customization: They can help customize your estate plan to suit your individual needs and goals.
  • Protection of beneficiaries: Estate planning attorneys can help protect your heirs’ interests by ensuring that your will and trust are administered correctly. They can help assure that all your assets are protected from creditors and other legal claims.
  • Charitable giving: An estate planning attorney can advise you on how to make philanthropic gifts, either during your lifetime or at death, through charitable trusts or other charitable giving vehicles.
  • Incapacity planning: They can help you plan for incapacity by creating a power of attorney or living will to let you specify how your assets and property should be managed, if you are unable to decide for yourself.

Finding the right attorney for estate planning can be a challenging task. Estate planning can be complex, and selecting an attorney with experience and expertise in this discipline is essential. Therefore, look for an attorney with plenty of experience in estate planning.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Urban Asia (Jan. 22, 2023) “Why Is It Important To Hire An Estate Planning Attorney”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article What Is an Estate Planning Checkup? Annapolis and Towson Estate Planning

What Is an Estate Planning Checkup? Annapolis and Towson Estate Planning

The start of the year is the time to review and revisit your estate plan. Just like going to the doctor and dentist for regular exams, it’s basic self-care. A recent article from Kiplinger, “Need an Estate Planning Checkup? Now is the Perfect Time,” advises having an annual checkup with your estate planning attorney before anything goes wrong.

Estate planning is about people. It ensures that loved ones will be protected when we are no longer here. It names someone we trust to administer our estate and follow our wishes. It also ensures that no one is left out or no one is wrongfully included.

After the holiday season of family gatherings is a good time to review the family situation. Children have grown into adulthood. Perhaps they’ve married and had children. What we planned to leave for them as minors may be different now. If your family suffered a loss last year, it may be time to reallocate funds or change beneficiaries.

This is the time to evaluate who you have named as an executor or entrusted with powers of attorney. They may have had their own health issues, suffered memory loss, or undergone their own life changes. These should also be reviewed when creating a new will or trust.

Property values have probably changed over the years. Real estate acquired decades ago may have appreciated far more than anticipated. If the intent is to leave equal shares of assets to beneficiaries, the new value of the property needs to be considered.

Depending on your assets, you may need to engage an expert to provide current valuations for real property, artwork and any other high-value assets. If you expect to see significant changes in the coming year, from selling property or making other adjustments, don’t wait until next year to order a new valuation. The more current your numbers, the better your estate plan.

Tax laws have changed a great deal in recent years. An experienced estate planning attorney will allow you to maximize the estate that you leave. Estate tax and gift taxes have been adjusted for inflation, so you may be able to leave larger gifts to children and grandchildren.

Your estate plan checkup should include a review of recent tax law changes, and a look at the legal environment for the coming year. Discuss how aggressive you want to be with your estate planning. The same goes for life changes which may have legal consequences. All of this needs to be discussed in a candid manner with your estate planning attorney.

You may leave your meeting with a to-do list, or you may find your estate plan still works. Either way, you’ll feel better after your estate plan checkup.

Contact us to review your estate plans with one of our experienced estate planning attorneys.

Reference: Kiplinger (Jan. 30, 2023) “Need an Estate Planning Checkup? Now is the Perfect Time”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Giving to My Favorite Charity in Estate Plan – Annapolis and Towson Estate Planning

Giving to My Favorite Charity in Estate Plan – Annapolis and Towson Estate Planning

If you’d like to leave some or all of your money to a charity, Go Banking Rates’ recent article entitled “How To Leave Your Inheritance to an Organization” provides what you need to know about charitable giving as part of your estate plan.

  1. Make Sure the Organization Accepts Donations. Unless you have a formal agreement with the charity stating they’ll accept the inheritance, the confirmation isn’t a binding commitment. As a result, you should ask the organization if there’s any form language that they may want you to add to your will or trust as part of a specific bequest. If the charity isn’t currently able to accept this kind of donation, look at what they will accept or if other charities with a similar mission will accept it.
  2. Set the Amount You Want the Charity To Receive. Some people want to leave the estate tax exemption — the maximum amount that can pass without tax — to individuals and leave the rest to charity. Because the estate tax exemption is subject to change and the value of your assets will change, the amount the charity will get will probably change from when the planning is completed.
  3. Have a Plan B in the Event that the Charity Doesn’t Exist After Your Death. Meet with your estate planning attorney and decide what happens to the bequest if the organization you’re donating to no longer exists. You may plan ahead to pass along the inheritance to another organization and make sure it receives the funds. You could also have the inheritance go back into the general distributions in your will.
  4. State How You Want Your Gift to Be Used. If there is a certain way that you’d like the charity to use the inheritance, you can certainly inquire with the organization and learn more. Find out if the charity accepts this type of restriction, how long it may last and what happens if the charity no longer uses it for this purpose.

As you draft charitable planning provisions, make sure you do so alongside an experienced estate planning attorney.

The provisions in your will should be specific about your desires and provide enough flexibility to your personal representative, executor, or trustee to be modified based on the conditions at the time of your death.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Go Banking Rates (August 26, 2022) “How To Leave Your Inheritance to an Organization”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article What’s a Bequest? Annapolis and Towson Estate Planning

What’s a Bequest? Annapolis and Towson Estate Planning

 

Yahoo’s recent article entitled “Bequests vs. Gifts: Which One Do I Need?” explains that a bequest is the personal property given to beneficiaries through the terms of a will when the original owner dies. A bequest can be cash, stocks, bonds, art, jewelry, or other personal items. However, it can’t be real estate: when real estate is given to another person through a will or trust, it’s known as a devise.

There are four distinct types of bequests: specific, general, demonstrative and residuary. A specific bequest is the transfer of a particular asset, like jewelry, artwork, or automobiles, to a specific person. A general bequest is a gift, typically money, given from the person’s general assets (rather than from a specific asset). A demonstrative bequest is a gift that comes from a stated source like a bank account or retirement fund. Finally, a residuary bequest is a gift made after all debts are paid by the estate and other bequests are made.

You can also direct assets to be left to a nonprofit organization, like a religious or educational institution, as a charitable bequest. Charitable bequests can be specific, general, demonstrative, or residuary.

What distinguishes a bequest from a gift is when and how it’s given. While a bequest is property a person leaves to a beneficiary through a will following their death, a gift is given when someone is still alive.

When a person dies, their estate may be subject to one or more taxes called “death taxes.” These include the federal estate tax, state estate taxes and state inheritance taxes. However, most Americans don’t have to worry about paying federal estate taxes because they only apply to estates worth more than $12.92 million per individual ($25.84 million for married couples). Estates below this are exempt from this tax. Estates that exceed the exemption limit are taxed based on how far over the cap they go.

In addition to the federal taxes, some states charge their own estate taxes with separate exemption limits and rates. These states are Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington and the District of Columbia.

Finally, a few states have inheritance taxes, which are paid by beneficiaries who inherit property. This is different from estate taxes, which are paid by the estates themselves before property is transferred to beneficiaries. The states with inheritance taxes are Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. The Iowa state legislature voted to repeal its inheritance tax in 2021, and the tax will be gradually phased out until it is fully repealed in 2025.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo (Jan. 16, 2023) “Bequests vs. Gifts: Which One Do I Need?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

How to Plan in a Time of Uncertainty – Annapolis and Towson Estate Planning

There’s a saying in estate planning circles that the only people who pay estate taxes are those who don’t plan not to pay estate taxes. While this does not cover every situation, there is a lot of truth to it. A recent article from Financial Advisor entitled “Estate Planning In This Particular Time of Uncertainty” offers strategies and estate planning techniques to be considered during these volatile times.

Gifting Assets into Irrevocable Trusts to Benefit Family Members. If done correctly, this serves to remove the current value and all future appreciation of these assets from your estate. With the federal estate tax exemption ending at the end of 2025, the exemption will drop from $12.06 million per person to nearly half that amount.

Combine this with a time of volatile asset prices and it becomes fairly obvious: this would be a good time to take investments with a lowered value out of the individual owner’s hands and gift them into an irrevocable trust. The lower the value of the asset at the time of the gift, the less the amount of the lifetime exemption that needs to be used. If assets are expected to recover and appreciate, this strategy makes even more sense.

Spousal Limited Access Trust (SLAT). This may be a good time for a related technique, the SLAT, an irrevocable trust created by one spouse to benefit the other and often, the couple’s children. Access to income and principal is created during the spouse’s lifetime. It can even be drafted as a dynasty trust. Assets can be gifted out of the estate to the trust and while the grantor (the person creating the trust) cannot be a beneficiary, their family can. Couples may also create reciprocating SLATs, where each is the beneficiary of the other’s trust, as long as they are careful not to create duplicate trusts, which have been found invalid by courts. Talk with an experienced estate planning attorney about how a SLAT may work for you and your spouse.

What about interest rates? A Grantor Retained Annuity Trust (GRAT), where the grantor contributes assets and enjoys a fixed annuity stream for the life of the trust, may be advantageous now. At the end of the trust term, remaining assets are distributed to family members or a trust for their benefit. To avoid a gift tax on the calculated remainder, due when the trust is created, most GRATs are “zeroed out,” that is, the present value of the annuity stream to the grantor is equal to the amount of the initial funding of the trust. Since you get back what’s been put in, no taxable gift occurs. The lower the interest rate, the higher the value of the income stream. The grantor can take a lower annuity amount and with decent appreciation of assets in the trust, there will be a larger amount as a remainder for heirs. Interest rates need to be considered when looking into GRATs.

Qualified Personal Residence Trust (QPRT) is a trust used to transfer a primary residence to beneficiaries with minimal gift tax consequences. The grantor retains the right to live in the house at no charge for a certain period of time. After the time period ends, the property and any appreciation in value passes to beneficiaries. The valuation for the value of the initial transfer into the trust for gift tax purposes is determined by a calculation relying heavily on interest rates. In this case, a higher interest rate results in a lower present value of the remainder and a lower gift value when the trust is created.

Reference: Financial Advisor (July 8, 2022) “Estate Planning In This Particular Time of Uncertainty”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

When Should I Hire an Estate Planning Attorney? – Annapolis and Towson Estate Planning

Kiplinger’s recent article entitled “Should I Hire an Estate Planning Attorney Now That I Am a Widow?” describes some situations where an experienced estate planning attorney is really required:

Estates with many types of complicated assets. Hiring an experienced estate planning attorney is a must for more complicated estates. These are estates with multiple investments, numerous assets, cryptocurrency, hedge funds, private equity, or a business. Some estates also include significant real estate, including vacation homes, commercial properties and timeshares. Managing, appraising and selling a business, real estate and complex investments are all jobs that require some expertise and experience. In addition, valuing private equity investments and certain hedge funds is also not straightforward and can require the services of an expert.

The estate might owe federal or state estate tax. In some estates, there are time-sensitive decisions that require somewhat immediate attention. Even if all assets were held jointly and court involvement is unnecessary, hiring a knowledgeable trust and estate lawyer may have real tax benefits. There are many planning strategies from which testators and their heirs can benefit. For example, the will or an estate tax return may need to be filed to transfer the deceased spouse’s unused Federal Estate Unified Tax Credit to the surviving spouse. The decision whether to transfer to an unused unified tax credit to the surviving spouse is not obvious and requires guidance from an experienced estate planning attorney.

Many states also impose their own estate taxes, and many of these states impose taxes on an estate valued at $1 million or more. Therefore, when you add the value of a home, investments and life insurance proceeds, many Americans will find themselves on the wrong side of the state exemption and owe estate taxes.

The family is fighting. Family disputes often emerge after the death of a parent. It is stressful, and emotions run high. No one is really operating at their best. If unhappy family members want to contest the will or are threatening a lawsuit, you will also need guidance from an experienced estate planning attorney. These fights can result in time-intensive and costly lawsuits. The sooner you get legal advice from a probate attorney, the better chance you have of avoiding this.

Complicated beneficiary plans. Some wills have tricky beneficiary designations that leave assets to one child but nothing to another. Others could include charitable bequests or leave assets to many beneficiaries.

Talk to an experienced attorney, whose primary focus is estate and trust law.

Reference: Kiplinger (July 5, 2022) “Should I Hire an Estate Planning Attorney Now That I Am a Widow?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What’s Involved with Being a Trustee? – Annapolis and Towson Estate Planning

There is an old saying that the two best days in a boat owner’s life are the day they buy their boat and the day they sell it.

Forbes’ recent article entitled “How To Be An Effective Trustee” says that a similar notion applies to being a trustee – it is an honor to be named and then a huge relief when it is over. That is because being a trustee is difficult.

Remember that a trust is a fiduciary relationship in which one party (the trustor) gives another party (the trustee) the right to hold title to property or assets for the benefit of a third party (the beneficiary). Trusts are created to provide legal protection for the trustor’s assets, to make certain those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.

Being a trustee requires knowledge about a wide range of topics, including:

  • The trustee’s fiduciary duties, which include loyalty, impartiality, duty of care, protection of trust property, enforcement of claims and the duty to inform and account to beneficiaries, among others (violation of these duties exposes the trustee to liability).
  • Understanding the details of the trust, like the specifics of the distribution instructions.
  • Investments and the ability to engage and monitor investment managers.
  • Administrative matters, such as record keeping and principal and income accounting.
  • Estate planning, trusts and the basics of the estate, gift and generation skipping taxes.
  • Income tax, including how trusts are taxed both by the federal government and the state.

A trustee must also be able to productively communicate and work with the beneficiaries on their financial wellness and distribution needs, which is an area that can be full of conflict.

It is a daunting list. Talk with an experienced estate planning attorney to discuss your situation in detail.

Reference: Forbes (May 31, 2022) “How To Be An Effective Trustee”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Is Your Estate Plan Ready for Tax Changes? – Annapolis and Towson Estate Planning

After December 1, 2025, the federal estate tax exemption will fall back to $5 million (indexed for inflation) from the current $12 million level. Now is the time to use available estate planning strategies and ensure that your plan factors in changes in tax law, advises a recent article titled “Are Clients’ Current Estate Plans Soundproof for the Future?” from Financial Advisor.

For many families, structured and leveraged gifting is one of the most useful wealth transfer vehicles. A parent could use their GST and gift tax exemptions to make gifts to children, grandchildren and other family members before this tax law changes.

Here is an example, using a high-net-worth family. Bill and Sue are married, so they can make combined lifetime gifts of $24,120,000. They own a family business worth $10 million in equal shares. They transfer 20% of the business to their children. This is a minority stake, meaning the minority owners have no right to make relevant business decisions and vote on important issues. As a result, the minority stake is discounted and worth $1.3 million instead of $2 million for gift and estate tax purposes and Bill and Sue retain $700,000 more of their allotted exemption.

For lifetime transfers, the valuation date is the date of the gifting, but for transfers at death, the valuation date is the date of death. By using this valuation discount while they are living, Bill and Sue have reduced the value of their company for estate tax purposes, giving their children a percentage of the company in a manner costing less in terms of transfer tax.

By making these gifts in 2022, Bill and Sue have removed $24,120,000 from their estate tax free. They have also removed the appreciation on the assets gifted away from their estate. However—if the gift is not made and the federal estate tax exemption reduces to $6 million per person before their deaths in 2040, then when the second spouse dies, heirs or beneficiaries will receive significantly less than what they would have received if the gift was made prior to the reduction of the federal exemption.

There was concern about tax outcomes if the taxpayer makes gifts now and the exemptions are reduced sooner. However, the IRS Treasury Decision 9884 confirms there will be no claw backs under these circumstances.

If the parents are concerned about making outright gifts to chosen beneficiaries who are too young, immature, or vulnerable to creditors, other strategies can be used to allow them to maintain control, while protecting assets and locking in these estate and gift tax advantages. The grantor can execute a plan ensuring that the donor receives an income from the transferred asset and/or maintaining access to principal.

Speak with an experienced estate planning attorney to learn what strategies are available now to prevent overly burdensome estate taxes in the future. After all, 2025 is not as far away as it seems.

Reference: Financial Advisor (June 8, 2022) “Are Clients’ Current Estate Plans Soundproof for the Future?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys