Anticipated Changes in Estate Planning for 2025 What Dermatologists Need to Know

With the results of the 2024 election, the Republicans now control Congress and the White House and have promised significant tax changes in their public statements. Of course, no one knows exactly what changes, if any, will be enacted until proposals are officially made, votes are tallied, and the president has signed any new tax rules into law.

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In addition to prospective changes in federal law impacting estate planning, potential modifications in state estate law and the emergence of estate issues around cryptocurrency are important estate planning issues dermatologists should note this year. In this article, we address 4 key issues affecting estate planning in 2025 and beyond.

Sunset of High Federal Estate Tax Exemption

In 2025, the federal estate tax exemption has increased to a historically high $13,990,000 per person, but it is scheduled to drop to about $7 million in 2026 unless a new tax law changes this “sunset.”

What this means for dermatologists: You can now give away almost $14 million (nearly $28 million if married) during life and after death without paying federal gift or estate tax. As of January 1, 2026, you can only give away about $7,000,000 per person, free of gift and estate taxes, during your life or at your death. With the federal gift and estate tax rate at 40%, a decreased exemption could be costly for dermatologists with a significant net worth.

Certainly, the Republicans may extend the high exemption beyond 2025. However, given the political unknowns and trade-offs that affect tax legislation, an extension of the high estate tax exemption is not a foregone conclusion.

Dermatologists affected by these potential changes should speak with their financial advisors or estate attorneys about proactively making gifts that are shielded by the high exemption under the current law in 2025, especially if it looks as though the current exemptions will not be extended. One effective tool for many might be a gift of assets expected to appreciate to an irrevocable trust whose beneficiaries are family members such as a spouse, children, grandchildren, and future descendants. In addition to sheltering the gifted assets and their appreciation from future gift and estate taxes, the trust can provide creditor protection for future generations.

Another essential estate planning tool (applicable under tax law for many years and that should continue without change) is making gifts that do not count against the exemption. These so-called annual exclusion gifts can be made to an unlimited number of individuals, but of an amount not more than $19,000 per individual in 2025.

Proper planning can take time to implement, and unless the law changes, the high exemption is a “use it or lose it” deal.

Required Minimum Distributions from Inherited Retirement Accounts

If you inherited a retirement account in 2020 or later, you may be subject to new required minimum distributions beginning January 1, 2025.

If you are not the spouse or minor child of or less than 10 years younger than the deceased account owner, or if you are not disabled or chronically ill, you must withdraw the entire account within 10 years of the account owner’s death.

As of 2025, a 10-year beneficiary must still withdraw the entire account within 10 years of the death of the deceased account owner. However, if the deceased account owner was required to take distributions annually, the 10-year beneficiary must also withdraw distributions annually. If the account owner was not required to take distributions annually, the annual withdrawal requirement will not apply, and the beneficiary may withdraw from the account at intervals appropriate for the beneficiary, as long as the entire account is withdrawn within 10 years.

The IRS will impose a penalty for failing to take a required annual distribution in 2025 or later, so beneficiaries of inherited retirement accounts should review their distributions and ensure the withdrawal requirements will be met.

Changes To Local “Death Taxes”

The first 2 areas we highlighted impact dermatologists in all 50 states, as they concern changes in federal gift or estate tax law. However, for many dermatologists, state taxes also play a role—either through a state estate or inheritance tax. Generally, states that impose an estate tax charge it to the estate, and those that levy an inheritance tax levy it against the heirs. Some states have neither an estate nor an inheritance tax.

Proposed changes to state estate and inheritance tax rules may significantly impact estate planning strategies and justify making adjustments to existing documents. Dermatologists should check in with their estate attorneys regarding any recent or proposed changes in state estate tax law and adjust strategies to account for potential changes in reliefs or thresholds.

Estate Issues Surrounding Cryptocurrencies

The increase in the number of investors holding digital assets, and the value of those assets, is affecting estate planning. Dermatologists should ensure their estate plans include provisions for cryptocurrencies, online accounts, and digital memorabilia. Be sure the estate plan includes the ability for the executor to log in to digital accounts so they can be efficiently transferred per the estate plan.

Conclusion

The federal and state laws surrounding estate planning may see some significant changes in 2025, creating possible opportunities for dermatologists who take time to educate themselves on current law and understand the impact of proposed modifications. An experienced estate planning adviser can be a valuable resource to help physicians and other individuals of high net worth minimize the tax burden on their estates and future heirs.

David B. Mandell, JD, MBA, is an attorney and author of more than a dozen books for doctors. He is a partner in the wealth management firm OJM Group (www.ojmgroup.com).

Carole C. Foos, CPA, is a partner and tax consultant. They can be reached at 877-656-4362 or mandell@ojmgroup.com.

Disclosure:

OJM Group, LLC (“OJM”) is an SEC-registered investment adviser with its principal place of business in the State of Ohio. SEC registration does not constitute an endorsement of OJM by the SEC nor does it indicate that OJM has attained a particular level of skill or ability. OJM and its representatives are in compliance with the current notice filing and registration requirements imposed upon registered investment advisers by those states in which OJM maintains clients. OJM may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. For information about OJM, please visit https://adviserinfo.sec.gov/ or contact us at (877) 656-4362.

This article contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized legal or tax advice, or as a recommendation of any particular security or strategy. Investment involves risk and possible loss of principal capital. There is no guarantee that the views and opinions expressed in this article will be appropriate for your particular circumstances. Tax law changes frequently, accordingly information presented herein is subject to change without notice. You should seek professional tax and legal advice before implementing any strategy discussed herein.