Last week, we explored seven ways to show your finances and your family some love with smart, tax-advantaged financial tips for 2025:
- Make a Qualified Charitable Distribution (QCD)
- Front-load Your 401(k) Contributions
- Set Up an IRA for a Child
- Make Donations During Spring Cleaning
- Give the Gift of Appreciated Stock Shares
- Establish a 529 College Plan
- Make a Roth Conversion
If you missed it, check out Part 1 here. This week, we’re continuing the financial love with seven more tips to benefit your family this month and throughout the year.
8 | Spread the Love with the Annual Gift Exclusion
Don’t underestimate the power of financial generosity. In 2025, you can gift up to $19,000 per person to an unlimited number of people without triggering federal gift taxes. In addition to the annual gift exclusion, you can gift an unlimited amount to your loved ones if you help with educational or medical expenses, as long as you pay the institution directly. Yet, whether you’re helping your loved ones get some financial freedom, pay down debts, supporting a dream vacation, or simply offering a financial boost to their savings, these gifts strengthen relationships while reducing your taxable estate.
With estate tax exemption changes potentially expected at the end of 2025, now is the time to plan. Not to mention, our estate tax exemption (death tax limit) in Illinois is $4 million. So, this is often a great strategy for Illinois retirees teetering around that amount to spread the love to their loved ones while they’re alive and they can enjoy the spoils with them, and avoid paying taxes by instituting an annual gifting strategy to diminish their taxable estate. This is serious business because estate tax exemptions in Illinois are often wasted and go unused amongst married couples. More importantly, no one wants to pay unnecessary and voluntary taxes that could have been easily avoided with a little guidance and professional advice. For example, if you left everything to your surviving spouse (house, retirement accounts, life insurance, etc.) and they passed away with an estate valued at $5 million, it would result in Illinois estate taxes of $285,714. No one wants this result and to pay unnecessary taxes that could easily be avoided, so start planning today.
Contact us to discuss all of your strategic gifting options beyond outright transfers to avoid the Illinois estate tax.
9 | Use Your Federal Lifetime Gift Tax Exemption
Your lifetime gift tax exemption for the federal government — currently $13.99 million per person — allows you to make substantial tax-free gifts during your lifetime. This is a powerful way to reduce estate taxes while supporting loved ones. If your estate exceeds $7 million, acting before the exemption is reduced in 2026 is crucial.
According to Merrill Lynch:
“With a key exemption scheduled to be sharply cut after 2025, the window to make large gifts to your heirs may close soon. Now’s the time to review your plans and ensure that your wealth stays in the family.
Although it went relatively unnoticed at the time, one provision of the landmark Tax Cuts and Jobs Act of 2017 has had a profound impact on many people who may have a taxable estate in the future. This law more than doubled the maximum that families can give their beneficiaries — either during their lifetime or as part of their estate — without incurring federal gift or estate taxes. In addition, the amount is indexed for inflation. The lifetime gift/estate tax exemption is $13.99 million in 2025. Couples making joint gifts can double that amount.
This exemption has helped affluent families pass along substantial gifts tax-free. But the time for taking advantage of this benefit may be drawing short — it remains in effect only through the end of 2025. After that, the amounts are scheduled to return to 2017 levels in 2026. Adjusted for inflation, the single taxpayer limit would drop back to an estimated $7 million.”
If this is something that affects your family and you’d like to learn more, please reach out to us now, as this planning takes time to execute effectively.
10 | Allocate More Funds to the Generation-Skipping Transfer (GST) Tax Exemption
Planning for future generations ensures your family’s financial security. By leveraging your $13 million GST tax exemption, you can pass wealth to grandchildren or other beneficiaries without incurring additional estate taxes. This strategy helps preserve your legacy and ensures your hard-earned assets benefit your family for generations to come. Setting your family up for success and creating generational wealth for your loved ones is something that must be done strategically and with great care and attention.
11 | Make an Extra Mortgage Payment
Your home is both a personal haven and a valuable asset. Making an extra mortgage payment reduces the principal faster, saves on interest, and may increase mortgage interest deductions on your tax return. This simple move can accelerate homeownership and enhance your long-term financial stability.
When I bought my first condo in Chicago, after 7 years I was amazed that I had barely paid down any principal. It was disappointing and deflating when I went to sell, but when I bought it I was young, naive, it was 2007, and apparently predatory balloon payments were all the rage. I take full responsibility and made a horrible financial mistake by not paying attention or educating myself. Ever since, I have rounded up my mortgage payment to the nearest thousand when I had the opportunity to. Just by rounding up my payment and chipping away, little by little, with an extra few hundred dollars a month, I am proud to say that I have shaved years of interest and principal off my mortgage.
12 | Complete Repairs on Rental Property
If you are lucky (and smart) enough to own a rental property, investing in your rental property in 2025 by making repairs not only enhances its value, but also offers tax benefits. Repairs completed on rental properties can offset taxable rental income, lowering your tax burden, while providing better accommodations for tenants. It’s a win-win situation that not only improves your property’s profitability, maximizes your investment, but also strengthens your relationship with your renters and will attract quality tennats for years to come.
Just remember to maintain good records, keep a running spreadsheet, save your receipts, and take your deductions for any reasonable expenses associated with a rental property. For instance, do you know that you can deduct your travel to and from the property? Here’s a list of 10 Tax Deductions often overlooked by rental property owners. Not to mention, by keeping good records, you can also track any expenses that would increase your basis in the property, so that when you go to sell it – your capital gains will be reduced significantly as a result of all of the repairs and improvements that you’ve made over the years.
13 | Create a Lifetime Asset Protection Trust
Protecting your assets is one of the most loving financial decisions you can make. A Lifetime Asset Protection Trust ensures that what you leave for your children is protected from future risks such as lawsuits, divorces, and creditors. This tool provides financial security and peace of mind, ensuring your wealth benefits your family for years to come.
To provide a bit more context, do you know that you can leave your children’s inheritance to a trust where they can manage all of the property that is held within that trust, but that the money is still protected from lawsuits, their creditors, bankruptcy and divorce. This planning tool is something we highly recommend to our clients because if something should unfortunately happen to them, they get to choose a trusted advisor or loved one to oversee these funds, guide and steward their children’s financial well-being until they attain a certain age. When they do, they will be allowed to act as a co-trustee and learn the ropes of how to manage their trust until they are given the right to solely take over the management of their assets. Then, they can appoint their best friend to serve as the “distribution trustee,” while enjoying the benefits of air-tight asset protection – a gift that they cannot give to themselves.
If you’re interested in learning more, please reach out and we’d be happy to discuss this amazing planning option with Illinois’ parents.
14 | Create Your Estate Plan
Finalizing your estate plan is an essential act of love. A well-crafted plan includes a Will, Revocable Trust, Power of Attorney, and Advance Medical Directive to safeguard your wishes and protect your loved ones in case of incapacity or death. Estate planning isn’t just about documents—it’s about making intentional decisions for your life and legacy.
Show Your Love Where It Matters Most
The month of love may be over, but it’s never too late to make thoughtful financial decisions for yourself and your family. At Family Wealth & Legacy Legal Solutions (FWLLS), we understand that planning for the future means securing your life today while ensuring your legacy lasts for generations.
Schedule a complimentary 15-minute Family Wealth Strategy Session to learn how we can help you create a plan that takes care of everyone and everything you love.
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This article is a service of Family Wealth & Legacy Legal Solutions (FWLLS). At FWLLS, we do not just draft documents; we ensure you make educated, informed and empowered decisions for yourself and the people you love. That’s why we offer a Family Wealth & Legacy Strategy Session™, during which you will get educated and begin to prepare to avoid life’s most common legal problems and get a plan in place to make the best possible choices for the people you love. You can begin by calling our office today to schedule a Family Wealth & Legacy Strategy Session and mention this article to find out how to get this $900 session at a significantly discounted rate, or even for free.