20 Feb 5 Estate & Tax Planning Topics To Consider for 2025 – Heckerling Institute Conference
Our Chief Planning Officer, Alan Wandalowski, JD, LLM, attended the annual Heckerling conference and wanted to share a few key topics to consider heading into 2025. He sat down with Senior Advisor and Principal, Kevin McDermott, CFP®, and shared the most important ideas that were covered. Below are the highlights and video.
Heckerling Estate Planning Conference 2025 Highlights
Each January, top estate and tax planners gather in Orlando to review developments and discuss strategies. Below are key takeaways from Heckerling 2025 and Kathmere’s insights.
Lifetime Estate Tax Exemption Effective 1/1/2025, the Federal Estate Tax Exemption increased to $13.99M ($27.98M for couples) and is set to sunset in 2026.
- Heckerling: Likely short-term extension (3-4 years) due to federal budget concerns.
- Kathmere’s Take: Rather than speculating, clients should consider using their exemption now to remove future asset appreciation from their taxable estate.
SLATs – Funding Considerations Spousal Limited Access Trusts (SLATs) remain popular, but funding must be handled carefully.
- Heckerling: Avoid direct transfers between spouses before funding SLATs to prevent IRS scrutiny. Ideally, transfer more than the intended SLAT amount and allow time before gifting.
- Kathmere’s Take: We agree and also caution against using personal residences for SLATs due to lease and rent complexities.
QTIP Trusts & Sunset Concerns Many are terminating QTIP Trusts to take advantage of the current exemption before the sunset.
- Heckerling: The IRS challenges this as it circumvents QTIP’s purpose.
- Kathmere’s Take: Instead of termination, consider using life insurance to cover estate tax exposure, possibly funded partially from QTIP assets.
Company-Owned Life Insurance & the Connelly Case A recent Supreme Court ruling found that company-owned life insurance increases a business’s taxable value.
- Heckerling: Consider cross-ownership of policies, an LLC to hold policies, or maintaining company-owned insurance if a small number of owners exist.
- Kathmere’s Take: Cross-ownership works for small groups, but LLC ownership may be better for larger groups. To mitigate risks, business owners should establish an Irrevocable Life Insurance Trust (ILIT) for additional protection.
Secure Act 2.0 Final Regulations Required Minimum Distributions (RMDs) under the 10-year rule take effect in 2025, with no catch-up distributions for prior years.
- Kathmere’s Take: Traditional IRAs are inefficient for estate planning due to double taxation. Many clients are converting IRAs to Roth IRAs or using distributions to fund life insurance policies held outside their taxable estates.
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The opinions expressed herein are those of Kathmere and may not actually come to pass. This information is current as of the date of this presentation and is subject to change at any time, based on market and other conditions.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual.
The flow charts, summaries, and observations are for purposes of illustration only. The information contained herein is not tax or legal advice. Any anticipated or assumed benefit related to the outlined strategy, whether financial or otherwise, is not guaranteed. Any strategies outlined or described should not be implemented without you first discussing with an appropriate professional, including your personal attorney, CPA, or tax professional. The strategies should only be implemented through legal documents prepared by your attorney. The information and assumptions contained in the illustrations is general.
Alan Wandalowski, JD, LLM, is not licensed as an investment adviser representative and does not provide advice related to securities. Advisory services are offered by licensed representatives of Kathmere. Neither Mr. Wandalowski nor Kathmere is engaged in the practice of law or accounting.