2024/2025 Legislative, Case Law, and Related Updates and How They May Impact Your Estate Plan

Year-End Client Newsletter 2024/2025

By Barry A. Nelson, Jennifer E. Okcular, and Cassandra S. Nelson

As published in: LISI Estate Planning Email Newsletter #3162 (December 2, 2024)
www.leimbergservices.com

In our firm’s 2024/2025 client update letter, we discuss a number of legislative, case law, and related estate planning and asset protection developments that we believe are most relevant to our clients.

Barry A. Nelson, Jennifer E. Okcular and Cassandra S. Nelson share with LISI members their year-end client newsletter that they recently sent to their clients.

About the Authors

Barry A. Nelson

Barry A. Nelson is a Florida Bar Board Certified Tax and Wills, Trusts and Estates Attorney and author of Estate Planning and Asset Protection in Florida: A Plan to Survive Unexpected Financial Threats. He is a shareholder in the law firm of Nelson & Nelson, P.A. in North Miami Beach, Florida. Barry practices in the areas of tax, estate planning, asset protection planning, probate, partnerships and business law.

In September 2024, Barry received the Activated Professional Impact Award from the Miami Foundation. He also received the Distinguished Planner Award 2021 from the Estate Planning Council of Greater Miami. Barry is a Fellow of the American College of Trust and Estate Counsel and served as Chairman of its Asset Protection Committee (2009–2012). He has been named a Tier 1 leading estate planning attorney in Florida by Chambers USA High Net Worth Guide since 2016 and listed in Best Lawyers in America® since 1995 in the areas of Trusts and Estates and Tax Law. He is also a Martindale-Hubbell AV Preeminent® Rated Lawyer.

Barry is co-founder and board co-chairman of The Victory Center for Autism and Behavioral Challenges. In May 2024, Binghamton University awarded Barry and his wife Judi the Edward Weisband Distinguished Alumni Award for Public Service.

Jennifer E. Okcular

Jennifer E. Okcular is a shareholder at Nelson & Nelson, P.A., practicing in tax, estate planning, asset protection planning, and probate administration. She is Board Certified in Wills, Trusts and Estates by the Florida Bar and currently serves on the Board Certification Committee of the Real Property, Probate and Trust Law Section of the Florida Bar. She is also an Associate Trusts and Estates Article Editor of the ABA Probate and Property Magazine.

Jennifer graduated first in her class from Stetson University College of Law in 2004 and earned her LLM in Taxation from the University of Florida. She is a Class II graduate of the Florida Fellows Institute of ACTEC. She has been recognized in Best Lawyers in America® since 2019 for Tax Law and since 2022 for Trusts and Estates. She received her first “Up and Coming” recognition by Chambers USA High Net Worth Guide in 2024 and has been named a top-rated estate planning and probate attorney by Florida Super Lawyers Magazine since 2017.

Cassandra S. Nelson

Cassandra S. Nelson is a shareholder at Nelson & Nelson, P.A. She focuses her practice on estate planning, asset protection, tax law, special needs trusts, guardianships, and probate administration. Cassandra holds degrees from the University of Miami and Emory University School of Law and is pursuing an Executive LLM in Taxation at NYU.

Cassandra has been recognized by Best Lawyers: Ones to Watch® in America (since 2022), Chambers USA High Net Worth Guide (2024) as an “Associates to Watch,” and is a Class IV graduate of the Florida Fellows Institute of ACTEC. She has co-authored articles and chapters in publications including Trust & Estates, ActionLine, and LISI. She co-authored Chapter 5 of Asset Protection in Florida and has contributed to her father Barry Nelson’s treatise on estate planning in Florida.

Her advocacy for special needs planning is deeply personal—Cassandra’s brother has severe autism. Her work with The Victory Center and her commitment to helping families plan for children with disabilities is both personal and professional.

I. Increases in Estate, Gift, and GST Exemptions and Exclusions for 2025

The IRS released the 2025 inflation-adjusted exemptions and exclusions for estate, gift, and GST tax in Rev. Proc. 2024-40 as follows:

• The estate and gift exemption amount (currently $13.61 million) will increase to $13.99 million for 2025 ($27.98 million per couple). The GST exemption will likewise increase by the same amount.
• The annual gift tax exclusion will increase from the current $18,000 up to $19,000 in 2025.
• The gift tax exclusion amount that can be given annually to a non-citizen spouse is increasing from $185,000 up to $190,000 next year.

II. December 3, 2024 Injunction Enjoining Enforcement of the Corporate Transparency Act

In our October 2024 newsletter, which can be found at: estatetaxlawyers.com/boi-filing-2024, we advised our clients of important upcoming Corporate Transparency Act (“CTA”) deadlines and information about filing the Beneficial Ownership Information (“BOI”) report, including the potential for significant penalties if the filing requirements are not satisfied. The October 2024 newsletter was also sent via email to our clients.

However, on December 3, 2024, a Federal District Court in Texas issued a nationwide preliminary injunction enjoining enforcement of the CTA pending further proceedings. This means that the reporting requirements under the CTA are, for the time being, put on hold, although it is important to note that this is not a final ruling. The case is Texas Top Cop Shop, Inc. et al. v. Garland (U.S. Attorney General), Case No. 4:24-cv-00478, for the Eastern District of Texas.

On December 5, 2024, the United States Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) filed a notice of appeal to the 5th Circuit Court of Appeals.

Perfect Form, a vendor we recommend to our clients to assist with BOI reports, is continuing filings at this time only as requested by their clients. If onboarding directly through their website, you will find the latest updates on the legal status of the CTA and can choose to either proceed with filing or wait. It is up to each company whether to file now or hold off until the legal process concludes. In either case, Perfect Form recommends that companies continue collecting applicable entity and beneficial owner/company applicant information so filings can be completed promptly if required.

If the injunction is lifted and CTA reporting requirements are reinstated, clients should be aware of an additional update. Due to Hurricane Milton, FinCEN will provide a six-month extension (until as late as June 1, 2025) for companies whose principal place of business is located in designated counties affected by the storm. The extension applies to all BOI reports, including updates and corrections, required under the CTA. To qualify, both of the following conditions must be met:

1. The deadline for the company to file an initial or updated BOI report must fall between October 4, 2024, and January 2, 2025.
2. The company’s principal place of business must be in a county designated by both FEMA (for disaster assistance) and the IRS (for tax filing relief) due to Hurricane Milton.

The qualifying Florida counties include: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Madison, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union, and Volusia.

If clients have already filed BOI reports, no further action is required at this time. Clients who have started but not submitted their filings may choose to complete them or pause until further guidance is issued by the courts or FinCEN.

It is also possible that Congress may delay or repeal CTA filing deadlines depending on outcomes following the November 2024 elections.

II. December 3, 2024 Injunction Enjoining Enforcement of the Corporate Transparency Act

In our October 2024 newsletter, which can be found at: estatetaxlawyers.com/boi-filing-2024, we advised our clients of important upcoming Corporate Transparency Act (“CTA”) deadlines and information about filing the Beneficial Ownership Information (“BOI”) report, including the potential for significant penalties if the filing requirements are not satisfied. The October 2024 newsletter was also sent via email to our clients.

However, on December 3, 2024, a Federal District Court in Texas issued a nationwide preliminary injunction enjoining enforcement of the CTA pending further proceedings. This means that the reporting requirements under the CTA are, for the time being, put on hold, although it is important to note that this is not a final ruling. The case is Texas Top Cop Shop, Inc. et al. v. Garland (U.S. Attorney General), Case No. 4:24-cv-00478, for the Eastern District of Texas.

On December 5, 2024, the United States Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) filed a notice of appeal to the 5th Circuit Court of Appeals.

Perfect Form, a vendor we recommend to our clients to assist with BOI reports, is continuing filings at this time only as requested by their clients. If onboarding directly through their website, you will find the latest updates on the legal status of the CTA and can choose to either proceed with filing or wait. It is up to each company whether to file now or hold off until the legal process concludes. In either case, Perfect Form recommends that companies continue collecting applicable entity and beneficial owner/company applicant information so filings can be completed promptly if required.

If the injunction is lifted and CTA reporting requirements are reinstated, clients should be aware of an additional update. Due to Hurricane Milton, FinCEN will provide a six-month extension (until as late as June 1, 2025) for companies whose principal place of business is located in designated counties affected by the storm. The extension applies to all BOI reports, including updates and corrections, required under the CTA. To qualify, both of the following conditions must be met:

1. The deadline for the company to file an initial or updated BOI report must fall between October 4, 2024, and January 2, 2025.
2. The company’s principal place of business must be in a county designated by both FEMA (for disaster assistance) and the IRS (for tax filing relief) due to Hurricane Milton.

The qualifying Florida counties include: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Madison, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union, and Volusia.

If clients have already filed BOI reports, no further action is required at this time. Clients who have started but not submitted their filings may choose to complete them or pause until further guidance is issued by the courts or FinCEN.

It is also possible that Congress may delay or repeal CTA filing deadlines depending on outcomes following the November 2024 elections.

III. IRS Final Regulations Issued July 19, 2024 Impact Retirement Plan Assets

On July 19, 2024, the IRS issued final regulations under the SECURE Act relating to retirement plan assets. The final regulations are effective September 17, 2024, and generally apply to retirement plan distributions made on or after January 1, 2025.

Our office has updated our master documents to comply with these final regulations, which provide maximum flexibility to the beneficiaries of our clients’ retirement plan assets—particularly when those assets will be held in trust. Clients with existing estate planning documents should consider amending their documents to ensure compliance with these new SECURE Act provisions if any retirement plan assets will (or may) be held in trust for beneficiaries.

The final regulations can be found at:
govinfo.gov/content/pkg/FR-2024-07-19/pdf/2024-14542.pdf

We recommend that clients with significant retirement plan assets review their current estate planning documents in light of these changes. A few of the key provisions in the final regulations are summarized in Section VII of this letter.

IV. Reduction in Current $13.99 Million Estate Tax Exemption on January 1, 2026

In March 2024, we sent a letter to our clients reminding them that, unless Congress extends the expiring estate and gift tax exemptions, the current estate and gift tax exemption (in 2025, $13.99 million per person or $27.98 million per married couple, reduced by prior taxable gifts) is scheduled to decrease on January 1, 2026, to approximately $7 million per person or $14 million for a married couple.

Whether tax legislation will maintain the current exemption levels—or increase, reduce, or repeal them—will depend on the Republican-controlled House and Senate and President-elect Trump. As reflected in our March 2024 client update letter (available at: estatetaxlawyers.com/cta-client-update-2024-03), significant planning opportunities exist for clients to use the current gift tax exemption before January 1, 2026, and avoid a 40% gift tax on the transfer.

Even with expectations that the exemptions may be extended, we advise clients to begin planning early. It is possible to create or fund trusts before the sunset date that benefit chosen beneficiaries in a tax-efficient manner. These trusts may also offer protection from future creditors (e.g., a child’s divorcing spouse) and allow some flexibility for the client or their spouse to access funds if needed later.

We anticipate that our firm may face capacity limitations near the end of 2025. Clients are encouraged to begin the planning process early—even if trusts remain unfunded until more is known about the law’s future. We believe this planning is most appropriate for clients with estates exceeding $20 million, although clients with smaller estates may benefit as well, depending on their specific circumstances.

V. Durable Power of Attorney Risks

Our office was recently informed of a situation in which a “trusted” family member gained access to copies of a client’s estate planning documents while the client was ill. The individual used a copy of the client’s Durable Power of Attorney (DPOA)—which was not intended to be provided unless the client became incapacitated or authorized it—to make unauthorized transfers and obtain a credit card in the name of the Attorney in Fact.

The DPOA included expanded powers under Florida Statutes Section 709.2208, and both financial institutions involved acted on a copy of the DPOA without verifying its legitimacy or contacting the client. Florida Statutes Section 709.2106(5) provides that, unless otherwise stated, a photocopy or electronic copy of a DPOA has the same effect as the original, except for transfers of real property, which may require the original for recording.

Many clients have executed DPOAs with the originals held in escrow by our firm. These documents are not released unless the client explicitly instructs us or certain conditions—such as incapacity—are met. However, clients should understand that financial institutions may still accept copies of a DPOA, which can lead to unauthorized access if such copies are not properly secured.

In light of this situation, we strongly recommend the following:

• Remove copies of your DPOA from your estate planning binder (except for the first page) and shred them.
• Delete digital copies from personal devices that others may access.
• If you choose to retain copies, store them securely—such as in a safe—to prevent unauthorized use.

Clients may also wish to contact their financial advisors to confirm that no individuals named in their DPOAs—past or present—have been added to their accounts without their knowledge or consent. Clients should review their credit card statements to check for unauthorized cards or charges.

These types of risks tend to increase with age, as children, caretakers, or advisors gain access to important documents. Proactive monitoring of account statements remains the most effective way to detect unauthorized financial activity.

Important Note: A Durable Power of Attorney does not control assets titled in the name of a Revocable Trust. Trustees manage those assets as outlined in the trust agreement. The trust designates the acting and successor trustees and outlines the process for succession.

We also recommend clients complete a Trusted Contact Person form with their financial institutions. This allows an advisor to contact someone you designate if financial exploitation is suspected. A Trusted Contact Person cannot withdraw funds but can be alerted to help intervene if needed.

VI. Other Important Considerations for Clients

Planning Opportunities That Could Be Taken Away by Statute

Numerous estate and gift tax planning techniques remain under scrutiny in proposed legislation. Clients considering sales or gifts of discounted stock, partnership or LLC interests, or fractional real estate interests to grantor trusts (such as SLATs, GRATs, or generation-skipping transfer tax trusts) may wish to proceed before these strategies are curtailed. Although the November 2024 elections have reduced the likelihood of immediate restrictions, techniques like inter vivos QTIP trusts and SLATs still offer valuable asset protection and planning benefits regardless of tax outcomes.

Donor Advised Funds (DAFs)

Clients with DAFs—or those considering one—should read Barry and Cassandra’s article: estatetaxlawyers.com/2023-11-lisi330-donor-advised-funds. DAF agreements must clearly name successor advisors (e.g., children, voting by majority) and define default charitable beneficiaries. Otherwise, sponsoring organizations may redirect funds to their own causes rather than the donor’s intent.

Owners of Golf Carts, E-Bikes, Scooters, Micromobility Devices, and Watercraft

Clients should review Barry and Cassandra’s article on golf cart liability: Florida Golf Cart Owners Should Beware of Liability. In a 2023 case, the owner of a golf cart was held liable for $50+ million in damages even though they weren’t the driver. Similar liability may arise from other personal-use vehicles. We recommend periodic liability insurance reviews and confirming that all recreational “toys” are properly insured.

Revocable Trust Funding

Clients not holding property jointly with a spouse should ensure their Revocable Trust is properly funded (excluding retirement assets, annuities, and life insurance). Revocable Trusts avoid probate, easing administration after death. For clients who have executed a trust but not yet transferred title of assets into it, we recommend reviewing our trust funding memorandum and discussing with counsel or advisors.

For Florida homestead property, we generally recommend married clients keep title jointly as tenants by the entirety—especially when a prenuptial agreement or homestead waiver exists. Clients who wish to transfer homestead into a Revocable Trust should consult a real estate attorney first to avoid adverse tax consequences or issues with insurance or mortgage acceleration.

Community Property Trust for Married Clients

Under Florida’s Community Property Trust Act (effective July 1, 2021), a married couple may transfer their homestead into a Community Property Trust. This may allow a full step-up in basis at the first spouse’s death, potentially eliminating capital gains tax on prior appreciation. While this technique is promising, clients should weigh IRS audit risk and transaction costs. We recommend only placing homestead property—not securities or other assets—into these trusts, due to asset protection concerns.

Before transferring a homestead with mortgage debt, consult your attorney and lender to ensure there is no loan acceleration or loss of tax exemptions.

Tangible Personal Property

To avoid family conflict, clients should create detailed written directions for gifting tangible personal property (e.g., jewelry, handbags, vehicles). Include descriptions and photos. Those at risk of elder exploitation may wish to make these gifts while living or place items in a secure location.

Beneficiaries in High-Income Tax States

Clients with beneficiaries residing in high-income tax jurisdictions may want to consider advance planning to mitigate future income tax burdens.

VII. Final SECURE Regulations

The final SECURE regulations clarify several provisions from the SECURE Act and SECURE 2.0. A key update relates to Required Minimum Distributions (RMDs):

If a beneficiary (who is not a surviving spouse or disabled individual—i.e., not an “eligible designated beneficiary”) inherits retirement plan assets, they must take annual RMDs during the first nine years and cannot defer all distributions until the end of the tenth year.

This clarification settles previous debate about whether annual distributions were required. The final rule confirms that deferral of all RMDs to year 10 is not allowed for non-eligible designated beneficiaries.

Other Provisions in the Final Regulations Include:

• Participants in multiple plans: RMD requirements must be satisfied separately for each plan. They may not be aggregated.
• Distributions during a participant’s lifetime: The Required Beginning Date (RBD) is based on the participant’s applicable age:
  • Age 70½ – for those born before July 1, 1949
  • Age 73 – for those born after January 1, 1951, but before January 1, 1959
  • Age 75 – for those born after January 1, 1959
• Eligible Designated Beneficiary (EDB):
  • The IRS adopted the definition from Code §152(f)(1), which includes stepchildren, adopted children, and foster children.
  • If one of multiple designated beneficiaries is not an EDB, then none of the beneficiaries will be treated as EDBs.
  • Clarified rules on how beneficiaries are determined and when someone can be disregarded.
• Age of Majority: A child reaches majority on their 21st birthday for purposes of determining EDB status.
• Disabled or Chronically Ill Beneficiaries:
  • Final rules adopt proposed documentation requirements.
  • Plan administrators must receive documentation, but this is not required for IRA custodians or trustees.

These provisions are complex. We recommend that clients consult with their retirement plan administrators, CPAs, or financial advisors to determine if changes to existing estate planning documents are warranted to ensure compliance with the final SECURE Act regulations.