Since 2017, estate planning attorneys have seen a steadily increasing exemption amount and an environment where an increasing number of clients are engaging in long-term, generation-skipping planning. However, we are seemingly again headed for a planning “cliff” on Dec. 31, 2025. The scheduled changes to the current tax laws and the potential for tax law changes prior to the cliff, as was attempted last year by the Biden administration, create ambiguities for clients and challenges for practitioners. Despite this uncertainty, there are planning opportunities for clients in the right situations.

Leverage child IRAs to maximize CRUT investments. The Secure Act, passed in 2019, and the Secure Act 2.0, passed in 2022, made a variety of changes to the rules that apply to Individual Retirement Accounts (IRA). I think it is safe to say that neither the Secure Act nor the Secure Act 2.0 made planning with IRAs any less complicated. One of the most significant changes is that in most instances, children will need to withdraw an inherited IRA over a 10-year period instead of the child’s life expectancy. This accelerated pay-out rate makes planning with accumulation trusts more challenging due to the acceleration of the recognition of taxable income by a beneficiary who benefits from a conduit trust or who directly inherits the IRA.