How Estate Planning Can Lower Taxes for Future Generations

Estate planning is more than just drafting a will; it’s a strategic approach to preserving your wealth, minimizing tax liabilities, and ensuring your final wishes are honored. In California, where estate values can be substantial, proactive estate planning is essential to protect your assets and provide for your heirs.

Understanding Estate Taxes

While California does not impose a state estate tax, the federal government does. As of 2025, the federal estate tax exemption is $13.99 million per individual, meaning estates valued above this threshold may be subject to federal estate taxes.  It’s important to note that this exemption is set to decrease significantly at the end of 2025, potentially exposing more estates to taxation.

Strategies to Minimize Estate Taxes

Effective estate planning involves various strategies to reduce the taxable value of your estate, ensuring more of your wealth passes to your beneficiaries.

1. Annual Gifting

The IRS allows individuals to gift up to $17,000 per recipient annually without incurring gift taxes. Married couples can combine their exclusions to gift $34,000 per recipient each year. Regular gifting can significantly reduce the size of your taxable estate over time.

2. Irrevocable Trusts

Establishing irrevocable trusts, such as Irrevocable Life Insurance Trusts (ILITs), can remove assets from your taxable estate. An ILIT owns your life insurance policy, ensuring the death benefit is not included in your estate, thereby reducing estate taxes.

3. Charitable Giving

Donating to qualified charities can provide immediate income tax deductions and reduce your estate’s taxable value. Charitable Remainder Trusts (CRTs) allow you to receive income during your lifetime, with the remainder going to charity, offering both tax benefits and philanthropic fulfillment.

4. Family Limited Partnerships

Transferring assets into a Family Limited Partnership (FLP) can provide valuation discounts for lack of marketability and control, effectively reducing the taxable value of your estate. This strategy also facilitates the gradual transfer of wealth to family members.

5. Education and Medical Expenses

Payments made directly to educational institutions or medical providers on behalf of someone else are not subject to gift taxes and do not count against your annual exclusion. This can be an effective way to support loved ones while reducing your estate.

The Importance of Professional Guidance

Navigating the complexities of estate tax laws requires professional expertise. An experienced estate planning attorney can help you develop a comprehensive plan tailored to your unique circumstances, ensuring compliance with current laws and maximizing tax-saving opportunities.

Susan Geffen: Your Partner in Estate Planning

At Susan B. Geffen Law, we specialize in creating customized estate plans that align with your goals and protect your legacy. With a deep understanding of California’s legal landscape and federal tax laws, we are equipped to guide you through the estate planning process, offering peace of mind for you and financial security for your heirs.

Contact us today to schedule a consultation and take the first step toward securing your family’s future.