Issues Family Business Owners Should Plan for in 2025

April 29, 2025

Running a family business means balancing personal relationships with long-term goals, all while adapting to changing economic and legal landscapes. There are some issues family business owners should plan for in 2025, including reassessing their succession plans, tax strategies and internal structures to maintain a strong and future-ready operation.

2025 brings fresh challenges—from potential tax law shifts to generational transitions and evolving workforce expectations. Without careful planning, even a thriving family business can stumble. That’s why addressing these key issues now can prevent costly problems later.

Preparing for Business Ownership Transitions

One of the most pressing issues for family businesses is succession planning. As the founding generation retires, many companies face uncertainty about who will take over leadership. Some family members may not be interested in the business, while others may lack experience.

To avoid conflict or operational gaps, business owners should create a written succession plan. This plan should identify future leaders, outline roles and responsibilities and include a timeline for the transition. It should also include mentorship and training periods to ensure that the next generation is fully prepared.

For those without a family successor, alternative options such as selling the business, bringing in outside management, or transitioning to employee ownership should be explored. These decisions take time to implement and benefit from legal guidance.

Navigating Tax Planning and Valuation

Tax planning remains an ongoing concern, particularly as family businesses look to transfer ownership or restructure in response to upcoming changes in the tax code. A major consideration for 2025 is the scheduled sunset of provisions under the Tax Cuts and Jobs Act, which may significantly lower the lifetime estate and gift tax exemption.

If those changes occur, the ability to pass on ownership or make large gifts to family members could become more costly. Business owners should assess whether to accelerate transfers now, while current exemptions are still in place.

An accurate business valuation is essential when making these decisions. Valuation impacts everything from estate planning to buy-sell agreements and tax reporting. A qualified valuation professional can help ensure that the business is appraised fairly and that transfers are structured to minimize tax burdens.

Managing Family Dynamics

Even the strongest family businesses can suffer from unresolved personal tensions. Disagreements over roles, compensation, or long-term vision can stall growth or lead to litigation. Establishing clear governance structures—such as regular board meetings, family councils, or shareholder agreements—helps create transparency and shared expectations.

Implementing formal communication and conflict-resolution processes also strengthens trust and ensures that decisions are based on business needs rather than personal emotions. These systems can be especially helpful when younger generations begin taking more active roles.

Adapting to a Changing Workforce

The modern workforce continues to evolve. Family businesses must adapt to new employee expectations around flexibility, remote work and corporate culture. Those who embrace change can attract top talent and position themselves for innovation and growth.

Creating competitive compensation packages and offering professional development opportunities can help family businesses remain competitive with larger corporations. Technology adoption and digital infrastructure updates are also important as customers and employees increasingly expect seamless digital experiences.

Work with a Business Law Attorney to Strategize Structures and Asset Protection

Issues family business owners should plan for in 2025 include outdated legal structures that no longer accurately reflect their current size, scope, or risk exposure. Reviewing partnership agreements, operating agreements and shareholder documents ensures that the business is protected from internal disputes or external threats.

Asset protection strategies—such as trusts or holding companies—may be appropriate to safeguard family wealth and minimize liability. A business law attorney can evaluate current documents, identify weaknesses and recommend updates based on recent legal developments. If you would like to learn more about planning challenges business owners face, please visit our previous posts.

Reference: The National Law Review (March 13, 2025) “The Big Six Items Family Offices Need to Consider in 2025”

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The Estate of The Union Season 4|Episode 2 is out now!

April 10, 2025

The Estate of The Union Season 4|Episode 2 is out now! In this episode of the ESTATE OF THE UNION, Brad Wiewel is going to discuss gifting to grandchildren – is it a blessing or a curse?

As a great general rule, people who have grandchildren are entranced by them! They typically have plenty of photographs to share and stories to tell. These kids are perfect and always will be – right?

In this edition of the Estate of the Union bought to you by Texas Trust Law, Brad Wiewel has some advice for grandparents which may seem to be contrary to the general idea that making substantial gifts to those adorable grandkids is always the right and proper thing to do. Maybe Brad is getting a little bit jaded as he ages, or maybe his advice is worth considering – you get to decide! Is gifting to grandchildren a blessing or a curse?

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 4|Episode 2 is out now! The episode can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the links to listen to or watch the new installment of The Estate of The Union podcast. We hope you enjoy it.

Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. We provide estate planning services, asset protection planning, business planning, and retirement exit strategies.

Managing Inherited Property can be Complicated

April 1, 2025

When a loved one passes away, their home is often one of the most significant assets left behind. However, managing an inherited property can be complicated, involving legal procedures, financial obligations and potential family conflicts.

Knowing what steps to take can help heirs navigate the probate process, handle property expenses and decide whether to sell, rent, or keep the home.

Understanding Probate and Property Transfers

1. Determining Ownership and Title

Before making any decisions, confirming who legally owns the property is essential. Ownership depends on:

Whether the deceased had a will or trust specifying beneficiaries
The state’s inheritance laws if no will exists (intestate succession)
Whether the home was jointly owned by a surviving spouse or co-owner

If the property is included in a will, it must go through probate before transferring it to heirs. However, probate may not be necessary if it was placed in a living trust or owned jointly with survivorship rights.

2. Navigating the Probate Process

If the home is subject to probate, the executor of the estate is responsible for:

Filing legal documents to initiate probate
Paying outstanding debts and property taxes before distributing assets
Determining if the house must be sold to settle debts or be transferred to heirs

Probate can take months or even years, depending on the complexity of the estate. If multiple heirs inherit the home, they must agree on how to proceed with the property.

Financial Responsibilities of Inheriting a Home

1. Covering Mortgage and Property Expenses

If the home still has a mortgage, the heir must continue making payments or risk foreclosure. Other financial obligations include:

Property taxes and homeowner’s insurance
Utility bills and maintenance costs
Homeowners’ association (HOA) fees, if applicable

If the deceased had a reverse mortgage, the estate may need to sell the home or pay off the loan before inheriting it.

2. Selling vs. Keeping the Home

Once ownership is settled, heirs must decide whether to:

Keep the home – Ideal if a family member plans to live in it or use it as an investment.
Sell the property – A common choice to divide assets among heirs and cover expenses.
Rent the home – Provides an income stream but requires property management.

A legal dispute may arise if multiple heirs inherit the home but disagree on what to do. Having a clear estate plan can help prevent these conflicts.

Steps to Take When Managing an Inherited Home

Secure the Property – Change locks, check for damages and notify homeowners insurance of the owner’s passing.
Review Debts and Expenses – Determine if the home has outstanding loans, unpaid taxes, or liens.
Get a Home Appraisal – Assess the market value to guide selling, renting, or estate distribution decisions.
Settle Ownership and Probate Issues – Work with an attorney to transfer the title to heirs or sell the property.
Decide on Next Steps – Weigh financial and personal factors before keeping, selling, or renting the home.

Get Legal Guidance for Managing an Inherited Home

Managing an inherited property can be complicated, requiring careful legal and financial planning. Whether you need to navigate probate, resolve title issues, or explore selling options, and experienced estate planning law firm can help ensure a smooth transition. Id you would like to learn more about inherited property, please visit our previous posts.

Reference: AllLaw (Aug. 03, 2022) “Transferring Real Estate After Death”

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Understanding the Downsides of Inheriting a Timeshare

March 24, 2025

Timeshares are often marketed as affordable vacation ownership. However, what happens when they become part of an estate? Many heirs are surprised to learn that timeshares do not function like traditional real estate assets—instead of inheriting a valuable investment, they may be left with ongoing maintenance fees, restrictions on resale and unexpected legal obligations. Understanding the downsides of inheriting a timeshare can help beneficiaries decide whether to keep, sell, or disclaim the property.

The Hidden Costs of Inheriting a Timeshare

Unlike traditional real estate, timeshares come with mandatory fees and restrictions, making them a financial liability rather than a valuable inheritance.

1. Ongoing Maintenance Fees

One of the most significant downsides of inheriting a timeshare is the never-ending maintenance fees, which must be paid whether you use the property. These fees:

Increase annually, often outpacing inflation
Can amount to thousands of dollars per year
Must be paid even if the timeshare goes unused

Failure to pay can result in collections, credit damage, or even foreclosure.

2. Difficulty Selling or Transferring Ownership

Many assume they can sell an inherited timeshare. However, resale is notoriously difficult. Timeshares:

Depreciate quickly and often have little to no market value
Have limited buyer demand, even for desirable locations
May include contract clauses that restrict resale or transfer options

Some heirs spend years trying to offload an unwanted timeshare, only to realize they are stuck paying fees indefinitely.

3. Potential Legal Liabilities

If a timeshare is deeded property, heirs become legally responsible for all associated costs. This means:

The management company can take legal action to collect unpaid fees
Inheritance laws may force multiple heirs to share financial obligations
Some contracts bind heirs indefinitely, making it hard to walk away

Even if a timeshare seems appealing initially, the long-term costs and restrictions can outweigh any perceived benefits.

How to Avoid Inheriting a Timeshare

1. Disclaiming the Inheritance

Heirs are not required to accept a timeshare inheritance. If an estate includes an unwanted timeshare, beneficiaries can legally disclaim it by filing a formal refusal with the probate court before taking ownership.

However, disclaiming must be done before using the timeshare or making any payments, as this can be seen as accepting ownership.

2. Negotiating a Deed-Back with the Resort

Some resorts allow heirs to return the timeshare through a “deed-back” program. This involves:

Contacting the timeshare company to check eligibility
Submitting necessary paperwork to relinquish ownership
Paying any final fees required to exit the contract

Not all resorts offer this option; some may charge a fee for releasing ownership.

3. Seeking Legal Assistance to Exit a Timeshare

If a resort refuses to take back the timeshare, an estate planning attorney can help explore other legal options. This may include:

Reviewing the contract for loopholes
Negotiating with the management company
Exploring legal exit strategies that protect the estate from liability

Many families assume they must accept an inherited timeshare. However, it may be possible to legally remove this financial burden with the right approach.

Should You Keep an Inherited Timeshare?

While most heirs choose to avoid inheriting a timeshare, some may find value in keeping one under the right conditions. It may be worth keeping if:

The location is desirable and frequently used by family members
The maintenance fees are affordable compared to rental costs
The contract allows for flexibility in usage and resale

However, long-term costs and restrictions should be carefully evaluated before deciding. Understanding the downsides of inheriting a timeshare can help you avoid a potentially costly and difficult headache. If you would like to learn more about managing inherited property, please visit our previous posts.

Reference: Yahoo Finance (Aug. 16, 2024) “Inheriting a timeshare can be bad news. Here’s why, and how to avoid it”

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Estate Planning Can Bridge the Gap Between Generational Wealth

March 19, 2025

Building wealth is only half the battle—ensuring that it lasts for future generations requires careful estate planning and strategic wealth management. Many families fail to implement a structured plan, leading to lost assets, unnecessary taxes and family disputes. Without the proper legal and financial strategies, even substantial inheritances can be squandered within a generation. Estate planning can bridge the gap between generational wealth; ensuring that wealth is protected, distributed according to the family’s wishes, and sustained for years to come.

Why Generational Wealth Often Fails to Last

Studies show that 70% of wealthy families lose their wealth by the second generation and 90% by the third. The primary causes include:

Lack of financial literacy – Heirs often receive wealth without a plan for responsible management.
Estate tax burdens – Without proper planning, substantial portions of an estate may be lost to federal and state taxes.
Legal disputes – Poorly structured wills and trusts often lead to costly inheritance battles.
Failure to adapt to changing financial laws – Inheritance laws, tax regulations and trust structures evolve over time.

Estate planning provides legal structures and safeguards to prevent these issues and ensure that family wealth remains intact.

How Estate Planning Protects Generational Wealth

Structuring Trusts for Long-Term Asset Protection:

Trusts are among the most effective tools for protecting wealth and ensuring that assets are passed down responsibly. Unlike a will, which simply distributes assets, trusts provide ongoing management and protection.

Common trust structures include:

Revocable Living Trusts – Allow individuals to control assets during their lifetime, while avoiding probate upon death.
Irrevocable Trusts – Provide stronger asset protection and tax advantages by permanently removing assets from the grantor’s estate.
Generation-Skipping Trusts (GSTs) – Allow assets to bypass one generation, reducing estate tax liability for grandchildren.

Trusts also allow customized inheritance distribution, such as delayed payouts, financial milestones, or incentives for responsible wealth management.

Minimizing Estate Taxes and Legal Fees:

High-net-worth individuals face significant estate tax challenges if wealth is not structured correctly. An estate planning attorney helps reduce tax exposure through:

Gifting strategies – Annual tax-free gifts to heirs reduce taxable estate size.
Charitable giving – Donating assets through charitable remainder trusts or donor-advised funds offers tax deductions while benefiting causes.
Family Limited Partnerships (FLPs) – These allow wealth to be transferred gradually, minimizing tax burdens.

Without tax planning, heirs may be forced to sell assets or businesses to cover tax liabilities.

Preventing Family Disputes Over Inheritance:

Even well-meaning families can experience conflict over wealth distribution. An estate planning attorney helps prevent disputes by:

Creating straightforward wills and trust agreements that specify asset distribution.
Including business succession plans to ensure seamless leadership transitions in family businesses.
Establishing conflict resolution mechanisms like mediation clauses to settle disputes outside of court.

A structured estate plan ensures that inheritance disagreements do not escalate into costly legal battles.

Teaching Financial Responsibility to Heirs:

Wealth transfer is more effective when heirs understand how to manage their inheritance. Estate planning attorneys work with families to:

Educate younger generations on financial management and investment strategies.
Introduce heirs to financial advisors who can help them navigate wealth preservation.
Incorporate inheritance incentives that promote responsible spending and investment.

Without financial education, even a well-structured estate plan can fail to maintain generational wealth.

Estate Planning for Business Owners

Family businesses require careful succession planning to ensure stability after the founder’s passing. An estate planning attorney helps:

Identify and prepare successors for leadership transitions.
Establish buy-sell agreements to ensure smooth ownership transfers.
Structure ownership in trusts or LLCs to provide financial protection.

Companies often struggle to survive past the first generation without a business succession plan.

Secure Your Family’s Financial Legacy

Estate planning can bridge the gap between generational wealth. It will give you the confidence that your assets are preserved, managed wisely and passed down without unnecessary financial losses. if you would like to learn more about managing generational wealth, please visit our previous posts.

References: J.P. Morgan (Nov. 18, 2024) “We Need to Talk: Communicating Your Estate Plan With Your Family” and Business Insider (Feb. 9, 2025) “Inside the Retreat for Billionaire Heirs Trying to Give Away Their Money”

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Strategic Gifting can Minimize Tax Liabilities for High Net-Worth Families

March 17, 2025

High-net-worth individuals and families often hold stocks, real estate, or other assets that have significantly increased in value over time. Selling these assets outright can trigger capital gains taxes, reducing the asset’s net value. However, strategic gifting—whether to family members or charities—can minimize tax liabilities for high net-worth families, while ensuring that wealth is transferred efficiently.

By understanding gift tax rules, charitable giving strategies and estate planning considerations, individuals can preserve more of their wealth while benefiting loved ones and the causes they care about.

Why Gifting Appreciated Assets Makes Sense

Gifting highly appreciated assets offers several financial advantages:

Reduces estate size – Helps minimize estate taxes by transferring wealth while living.
Avoids or reduces capital gains taxes – Capital gains taxes may be eliminated or deferred if an asset is gifted instead of sold.
Supports charitable causes – Donating appreciated assets directly to charities maximizes deductions, while providing financial support to nonprofits.
Leverages lower tax brackets – Gifting to beneficiaries in lower income tax brackets allows them to sell the asset with reduced capital gains exposure.

Careful planning ensures that these benefits are fully realized while complying with tax laws and avoiding unintended financial consequences.

Understanding Gift Tax Rules and Exemptions

The IRS imposes gift tax rules on high-value asset transfers. However, several exemptions allow for tax-free gifting.

Annual Gift Tax Exclusion

In 2025, individuals can gift up to $19,000 per recipient per year without triggering gift tax reporting. Married couples can combine their exclusions, allowing up to $38,000 per couple annually.

Gifting within these limits enables gradual wealth transfer without reducing the federal lifetime estate and gift tax exemption, which currently stands at $13.61 million per individual (subject to legislative changes).

Lifetime Gift and Estate Tax Exemption

Gifts exceeding the annual limit count toward an individual’s lifetime exemption, reducing the amount that can be passed estate-tax-free upon death. However, gifting assets while living can significantly reduce estate tax liabilities for individuals with estates exceeding the exemption amount.

Step-Up in Basis Consideration

Gifting appreciated assets can result in capital gains tax consequences for the recipient. Unlike assets inherited at death, which receive a step-up based on fair market value, gifted assets retain the donor’s original purchase price (basis).

For example:

If a parent purchased stock at $50,000 and it is now worth $250,000, gifting it to an heir would pass on the original cost basis of $50,000.
If the recipient sells the stock, they will owe capital gains tax on the $200,000 gain.

For individuals concerned about minimizing tax burdens for heirs, gifting certain assets while retaining others for inheritance may be the most tax-efficient strategy.

Charitable Giving Strategies for Appreciated Assets

Donating Stock Instead of Cash

One of the most tax-efficient ways to support a nonprofit is by donating appreciated securities directly. Doing so:

Avoids capital gains taxes that would apply if the stock were sold before donating.
Provides a full charitable deduction for the fair market value of the asset.
Maximizes the impact of donations, as the charity receives the full value without tax deductions.

For example, donating $100,000 in appreciated stock instead of selling it and donating cash could save $20,000 or more in capital gains taxes.

Charitable Remainder Trusts (CRTs)

A Charitable Remainder Trust (CRT) allows individuals to donate highly appreciated assets, while retaining an income stream during their lifetime. This strategy:

Defers capital gains taxes, allowing the trust to reinvest the entire asset value.
Provides a charitable tax deduction based on the present value of the donation.
Supports charities, while ensuring a lifetime income stream for the donor or beneficiaries.

CRTs are ideal for those who wish to benefit from their assets while making a long-term charitable impact.

Donor-Advised Funds (DAFs)

A Donor-Advised Fund (DAF) allows individuals to contribute appreciated assets, receive an immediate tax deduction and distribute funds to charities over time. DAFs provide:

Flexibility in choosing which charities to support over multiple years.
Tax-efficient giving by allowing donations to grow tax-free before distribution.
Simplified record-keeping for those making multiple charitable contributions.

DAFs are effective for individuals who want to maximize tax savings, while maintaining control over charitable donations.

Estate Planning Considerations When Gifting Assets

Gifting appreciated assets plays a key role in estate planning, reducing taxable estate size and ensuring smooth wealth transfer. An estate planning attorney can help:

Structure gifts to minimize tax burdens for both the donor and recipient.
Determine whether assets should be gifted outright or placed in a trust for greater protection.
Balance lifetime gifting with posthumous wealth transfer strategies.

For individuals with high-value estates, integrating gifting into a broader estate plan ensures optimal tax efficiency and legacy preservation.

Optimize Your Gifting Strategy with Estate Planning

Gifting highly appreciated assets requires careful planning to balance tax efficiency, wealth preservation and charitable giving. Whether you are donating assets, transferring wealth to family, or incorporating gifting into your estate plan, strategic gifting can minimize tax liabilities for high net-worth families. If you would like to learn more about gifting, please visit our previous posts.

Reference: Charles Schwab (December 13, 2024) “Tax-Smart Ways to Gift Highly Appreciated Assets”

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A Well-Planned Strategy ensures Families maximize Financial Aid when planning for College

March 13, 2025

Higher education costs continue to rise, making early financial planning essential for families. Whether parents set aside money in a 529 plan, navigating financial aid applications, or managing estate planning alongside college savings, avoiding common mistakes can save thousands of dollars. A well-planned strategy ensures that families maximize financial aid when planning for college.

Many families unknowingly reduce their financial aid eligibility by incorrectly filling out the FAFSA (Free Application for Federal Student Aid) or structuring college savings accounts in ways that negatively impact aid calculations.

Understanding College Savings Options

Several financial tools help families prepare for the high cost of tuition. However, each option affects financial aid differently. Knowing how assets are counted in the FAFSA calculation can help parents avoid decisions that reduce aid eligibility.

529 College Savings Plans

A 529 plan is one of the most popular ways to save for college. These tax-advantaged accounts allow parents, grandparents, or guardians to invest money for education expenses, while benefiting from tax-free withdrawals when funds are used for tuition, books and housing.

While 529 plans offer tax benefits, they also impact financial aid calculations. Assets held in a parent-owned 529 account count as a parental asset on the FAFSA, reducing eligibility for need-based aid. However, the impact is relatively small—about 5.64% of the account’s value is considered in aid calculations, compared to 20% for student-owned assets.

Custodial Accounts (UGMA/UTMA)

Some families use Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts to save for their child’s future. These accounts are considered the student’s assets and carry a much higher financial aid penalty than a 529 plan.

Because the FAFSA formula expects students to contribute 20% of their assets toward tuition, families with large UGMA/UTMA accounts may receive less financial aid than those using a 529 plan.

Trusts and Estate Planning Considerations

Families with substantial assets often use trusts to protect wealth and structure inheritance. While some trusts help secure long-term financial stability, others can unexpectedly reduce financial aid eligibility.

Revocable trusts, where parents maintain control over assets, are counted in the FAFSA calculation as parental assets. Irrevocable trusts, however, may not be considered available for college expenses, depending on how they are structured. Consulting an estate planning attorney can help families balance asset protection with college savings goals.

Common FAFSA Mistakes that Reduce Financial Aid

The FAFSA is the key to unlocking federal financial aid, grants and scholarships. However, errors in the application can reduce assistance or cause costly delays.

Overreporting Retirement Assets

Retirement savings in 401(k)s, IRAs and pension accounts do not need to be reported on the FAFSA. However, many families mistakenly include these figures, inflating reported assets and lowering aid eligibility.

Incorrectly Reporting Parent and Student Income

FAFSA uses tax information from a prior year, meaning financial aid applications for the 2025-26 school year will use 2023 tax data. Families should ensure income and tax figures match IRS records to prevent application errors that could delay aid processing.

Not Using the IRS Data Retrieval Tool (DRT)

The IRS Data Retrieval Tool automatically transfers tax information to the FAFSA, reducing errors and simplifying the application process. Families who manually enter tax data risk inconsistencies that could flag their application for verification, delaying aid decisions.

Failing to Update Household Size or Number of Students in College

Families often overlook changes in household size or the number of children in college, both of which significantly have an impact on aid eligibility. If an older sibling graduates, the remaining student’s aid amount may be lower than in previous years. Keeping this information accurate prevents unexpected reductions in financial aid.

How Estate Planning has an Impact on College Funding

Estate planning ensures financial security for future generations but can also impact how much financial aid a student receives. Families with substantial assets in trusts, large inheritances, or investments should work with an estate planning attorney to:

Minimize FAFSA-reportable assets by structuring trusts appropriately
Use strategic gifting to reduce parental assets while funding education
Ensure inheritance planning does not unintentionally disqualify students from financial aid

Careful coordination between college savings strategies and estate planning ensures that families optimize education funding and long-term wealth protection.

Plan for College and Protect Your Assets

Balancing college savings, estate planning and financial aid eligibility requires careful planning. Whether you are structuring a 529 plan, managing trust assets, or optimizing FAFSA eligibility, a well-planned strategy ensures that families maximize financial aid when planning for college. If you would like to read more about planning for young adult children, please visit our previous posts.

References: Saving for College (Aug. 10, 2023) “FAFSA Errors That Affect the Amount of Financial Aid”

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The Estate of The Union Season 4|Episode 1 is out now!

March 3, 2025

The Estate of The Union Season 4|Episode 1 is out now! In this episode of the ESTATE OF THE UNION, Brad Wiewel is going to share with you how to SUPER STRETCH an IRA!

Here’s some background: Retirement accounts like IRAs, 401ks and 403bs are subject to a myriad of new rules on how fast the money needs to be distributed to a non-spouse beneficiary. While there are exceptions, for the vast majority of beneficiaries, the money must be emptied out in ten years, which means that those funds are going to be subject to taxes more quickly and now they are growing in a “taxable” environment.

Enter the Testamentary Charitable Remainder Trust (weird name, right?). As Brad describes it, this trust which can be part of a revocable living trust or a will, and it allows the ultimate beneficiaries (kids, etc.) to take the retirement account distributions over their LIFETIME (Super Stretch), not just ten years! Brad paints the BIG picture and gives enough details for it to make sense to you.

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 4|Episode 1 is out now! The episode can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the links to listen to or watch the new installment of The Estate of The Union podcast. We hope you enjoy it.

Understanding Gift Tax Rules can help Tax-Efficient Giving

February 12, 2025

Many people give financial gifts to family members, friends, or charities, whether for milestone events, education, or estate planning purposes. While gifting is a generous act, certain gifts may trigger tax obligations. Understanding federal gift tax rules, annual exclusions and lifetime exemptions can help individuals structure their giving in the most tax-efficient manner.

What Is the Gift Tax?

The gift tax is a federal tax imposed on transfers of money or property made without receiving something of equal value in return. The person making the gift, not the recipient, is responsible for paying any applicable gift tax. However, most gifts fall within exemption limits, meaning few individuals owe taxes on their generosity.

How the Gift Tax Exclusion Works

As of 2025, individuals can give up to $19,000 per recipient per year without triggering gift tax reporting requirements. Married couples can combine their exclusions, allowing them to gift $38,000 per recipient tax-free.

For example, if a parent gives their child $19,000 in 2025, the gift is below the annual exclusion and does not need to be reported to the Internal Revenue Service (IRS). However, if the gift is $26,000, the excess $7,000 must be reported, though it may not necessarily result in tax owed.

Lifetime Gift Tax Exemption

In addition to the annual exclusion, individuals have a lifetime gift tax exemption, which allows them to give away a set amount over their lifetime without incurring taxes. In 2025, this exemption is $13.99 million per person (or $27.98 million for married couples).

If a gift exceeds the annual exclusion, the excess amount is deducted from the lifetime exemption. Only gifts that surpass this exemption trigger actual gift tax liability. Most people will never reach this limit, meaning they can give substantial amounts tax-free.

What Types of Gifts are Tax-Exempt?

Certain types of financial gifts are automatically exempt from gift tax rules, including:

Payments for Medical Expenses: Direct payments to medical providers for someone else’s healthcare are not considered taxable gifts.
Educational Tuition Payments: Direct tuition payments to a school or university (not including room and board) are exempt from gift tax.
Gifts to Spouses: Unlimited tax-free transfers can be made to a U.S. citizen spouse. Gifts to a non-citizen spouse have a lower annual exclusion limit ($190,000 in 2025).
Charitable Contributions: Donations to IRS-recognized charities are tax-deductible and do not count toward the gift tax exemption.

Reporting Large Gifts to the IRS

If a financial gift exceeds the annual exclusion, the giver must file IRS Form 709: U.S. Gift (and Generation-Skipping Transfer) Tax Return. Filing does not necessarily mean taxes are owed—it simply records the amount deducted from the lifetime exemption.

For example, if an individual gifts $30,000 to a child in 2025, the excess $11,000 is reported on Form 709. However, it is deducted from their $13.99 million lifetime exemption, leaving them with $13.979 million remaining. Taxes are only due if lifetime gifts surpass the exemption limit.

Tax Planning Strategies for Gifting

To maximize the benefits of financial gifts while minimizing tax exposure, consider these strategies:

Spread gifts over multiple years to take advantage of the annual exclusion each year.
Leverage direct tuition or medical payments to help loved ones without using up gift tax exclusions.
Utilize trusts for structured wealth transfers, such as irrevocable trusts for minor children or special needs beneficiaries.
Coordinate with an estate plan to gradually minimize estate tax liability by gifting assets.

The Role of an Estate Lawyer in Gifting Strategies

An estate planning attorney can help structure financial gifts to align with long-term wealth transfer goals while minimizing potential tax liabilities. Whether incorporating gifting into an estate plan or establishing trusts for heirs, professional guidance ensures compliance with IRS regulations.

Financial gifting allows individuals to share wealth, support loved ones and reduce potential estate taxes. By understanding gift tax rules and planning strategically, you can help structure tax-efficient giving that benefit both the giver and the recipient. If you would like to learn more about the gift tax, please visit our previous posts.

Reference: Kiplinger (Jan. 14th, 2025) “What is the Gift Tax Exclusion for 2024 and 2025?”

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Financial Blunders Grandparents Should Avoid with Grandchildren

February 5, 2025

Grandparents often find immense joy in supporting their grandchildren, whether by funding education, contributing to major milestones, or simply providing for day-to-day needs. While these gestures can create lasting memories, an article from the AARP explains that financial missteps can lead to unintended consequences. Grandparents can balance generosity with financial security by understanding potential pitfalls and adopting thoughtful strategies. There are some common financial blunders grandparents should avoid with grandchildren.

Overextending Finances and Other Common Financial Mistakes Grandparents Make

One of the most common errors grandparents make is giving more than they can afford. This often happens out of a desire to help with significant expenses, like college tuition or housing. While the intention is noble, overcommitting financially can jeopardize retirement savings and long-term stability. Grandparents must evaluate their financial capacity before making significant commitments. Consulting with a financial advisor can clarify how much they can comfortably give without endangering their financial health.

Co-Signing Loans

Co-signing a loan for a grandchild, whether for a car, education, or personal use, can have serious implications. If the grandchild is unable to make payments, the financial burden falls on the grandparent, potentially damaging their credit score or creating unexpected debt. It’s essential to understand the risks before co-signing any financial agreement. Alternatives, such as contributing smaller amounts directly toward the loan, can provide support without the same level of risk.

Giving Unequally Among Grandchildren

Favoritism, whether intentional or perceived, can strain family relationships. For instance, funding one grandchild’s college tuition while offering no support to others can lead to resentment or conflict. To avoid these issues, grandparents should strive for fairness, considering equitable ways to help all grandchildren. Transparency about financial decisions and the reasoning behind them can also reduce misunderstandings.

Ignoring Tax Implications

Generous gifts can sometimes lead to unintended tax consequences. In 2025, the IRS allows individuals to gift up to $19,000 annually per recipient without triggering gift tax reporting requirements. Exceeding this threshold may require filing a gift tax return or result in tax liabilities. Grandparents should understand these limits and plan their giving accordingly. Contributions to 529 college savings plans or medical expenses paid directly to providers are additional tax-efficient options.

Failing to Prioritize Estate Planning

Large gifts made without considering overall estate planning goals can disrupt long-term plans or unintentionally disinherit certain heirs. Without proper documentation, disputes can arise among family members. Grandparents should incorporate financial gifts into their broader estate plans. Working with an estate planning attorney ensures that gifts align with their goals and minimize potential conflicts.

To avoid financial missteps, grandparents can adopt these thoughtful strategies:

Set clear boundaries and determine how much you can give without compromising your financial security.
Plan equitable contributions to ensure fairness among grandchildren, while considering individual needs.
Focus on education by contributing to tax-advantaged accounts, like 529 plans.
Pay for specific expenses directly to avoid triggering gift tax complications.
Work with financial and legal professionals to develop a giving strategy that aligns with long-term goals.

The Importance of Communication

Open communication with family members is key to avoiding misunderstandings or conflicts. Discuss your intentions and limitations with both your children and grandchildren, ensuring that everyone understands your approach to financial support. These conversations can strengthen family bonds and provide clarity about your financial role.

Balancing Generosity with Stability

Supporting grandchildren financially can be one of the most fulfilling aspects of grandparenting. Grandparents can avoid financial blunders with grandchildren by implementing thoughtful strategies that can provide meaningful assistance, while safeguarding their financial future. A balanced approach ensures that your generosity strengthens family ties without creating financial or relational strain. If you would like to learn more about estate planning for older couples, please visit our previous posts.

Reference: AARP (Nov. 11, 2024) “The 5 Worst Mistakes Grandparents Can Make with Money”

Image by Marjon Besteman

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