Tax rules continue to shift, and the latest changes are already influencing how families think about estate and long-term care planning. Whether you are preparing for retirement, making gifts to loved ones, or weighing how to handle future care costs, these changes can affect your decisions. They may create new opportunities, but they also pose risks if plans remain outdated. Taking time to understand how the law applies to your goals is the first step toward creating a plan that truly protects your future.
Federal Estate and Gift Tax Updates
Congress passed significant adjustments in 2025 that affect estate planning. Here’s what families should know:
- Lifetime exemption. For 2025, the federal estate and gift tax exemption is $13.99 million per person. On January 1, 2026, it will rise to $15 million per person, and then increase annually with inflation. Spousal portability rules remain in place, so many couples can shield double that amount.
- Annual exclusion. In 2025, you can give up to $19,000 per recipient without using your lifetime exemption. Married couples can combine their exclusions, allowing larger tax-free transfers.
- Generation-skipping transfers. The exemption for generation-skipping transfers aligns with the estate and gift tax exemption, giving families greater flexibility when planning for grandchildren or future generations.
These changes provide more room for lifetime giving and legacy planning. Instead of facing a reduced exemption in 2026, families now have additional space to structure gifts and trusts.
Additional Tax Benefits for Seniors
Alongside estate rules, Congress introduced an incentive aimed at older Americans. From 2025 through 2028, individuals age 65 and older may claim an additional $6,000 deduction, subject to income-based phaseouts. For those balancing retirement income with rising health or care expenses, this deduction can help reduce taxable income during critical years.
New Jersey Considerations
While New Jersey does not impose a state estate tax on deaths after January 1, 2018, the inheritance tax is still in effect. This tax applies to certain beneficiaries who are not direct descendants or spouses. For example, gifts to siblings, nieces, or friends may trigger inheritance tax, even if federal estate taxes are not an issue. We can help you structure gifts and bequests to minimize unexpected tax burdens under New Jersey law.
Long-Term Care Planning and Medicaid Changes
Long-term care planning is closely tied to both federal tax law and Medicaid eligibility. One of the most important changes concerns the treatment of home equity. Right now, New Jersey uses the maximum federal allowance, which is $1,097,000 in 2025. Beginning in 2028, however, that figure will drop to a flat $1 million nationwide, with no adjustments for inflation. For families whose homes may exceed that amount, planning ahead is essential to avoid potential eligibility issues.
Practical Steps Families Can Take
Given the updates, New Jersey families may want to:
- Review wills, trusts, and beneficiary designations to reflect the new federal thresholds.
- Make use of the $19,000 annual exclusion to reduce future taxable estates.
- Coordinate retirement withdrawals with the senior deduction to reduce taxable income.
- Explore irrevocable trusts or long-term care insurance as ways to prepare for the 2028 Medicaid home equity cap.
- Structure gifts and bequests with New Jersey’s inheritance tax classes in mind.
How E.A. Goodman Law Can Support You
At E.A. Goodman Law, LLC, we stay ahead of tax and policy changes so you don’t have to. Whether you need to update a trust, rethink your gifting strategy, or build a long-term care plan that accounts for Medicaid rules, we will help you create a plan tailored to your goals and family needs.
Protecting Your Family’s Future
The new tax rules provide opportunities to protect wealth, reduce taxes, and prepare for long-term care. The best way to benefit from them is by reviewing your plan now and keeping it current. At E.A. Goodman Law, LLC, we will help you protect your assets, support your loved ones, and prepare for future care needs. Contact us today to schedule a consultation.
Frequently Asked Questions
Do I need an estate plan if my assets are below the federal exemption?
Yes. Even if your estate is under the federal limit, an estate plan helps avoid probate, ensures your wishes are honored, and can address long-term care planning.
How does New Jersey’s inheritance tax affect families?
New Jersey’s inheritance tax depends on the relationship of the beneficiary to the deceased. Transfers to spouses and children are exempt, but other relatives or non-relatives may face tax.
Can home equity affect Medicaid eligibility if I plan to stay in my house?
Yes. While your primary residence may be exempt if you live in it, Medicaid does impose equity limits. Planning ahead helps protect your eligibility if your home value is high.
What is one simple step I can take now?
Review your beneficiary designations on retirement accounts and life insurance policies. These often pass outside of a will or trust and should be kept current.
Posted in: Estate Planning, Long Term Care Planning