Navigating Estate Planning for Fiserv Employees: Adapting to Federal and State Tax Changes

'Fiserv employees must remain proactive in updating their estate plans to reflect the evolving tax landscape, ensuring their financial legacy is preserved despite anticipated changes to exemption limits and estate tax regulations.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'Fiserv employees should consider adjusting their estate plans now to take advantage of current exemption limits before the anticipated reductions in 2026, ensuring that their assets are protected and efficiently passed on to future generations.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

1. Upcoming Changes to Estate Tax Exemptions  — How the reduction of the federal gift and estate tax exemption in 2026 may impact Fiserv employees' estate plans.

2. Strategies for Managing Different Asset Types  — The tax implications of retirement accounts, taxable accounts, and real estate when structuring an estate plan.

3. The Role of Life Insurance in Estate Planning  — How irrevocable life insurance trusts can help mitigate estate tax burdens and facilitate a smooth transfer of wealth.

Estate planning remains a complicated area of financial management for Fiserv employees. With major changes to federal tax regulations expected by the end of 2025, employees should consider adjusting their estate plans to accommodate possible changes.

1. Modifications to Exemption Limits' Effects.

At USD 13.99 million per person, the federal gift and estate tax lifetime exemption is currently USD 13.99 million. This exemption is expected to drop to around USD 7 million post-2025. This change creates concern among users of the existing higher gifting limits. But Treasury Department regulations from November 2019 say gifts made between 2018 and 2025 under the higher exemption amounts will not be affected even if the exemption amounts decrease after 2025. Source: Treasury Department:

2. Considered Aspects for Different Account Types.

The federal estate tax affects all account types differently - and that includes employees of Fiserv companies - because assets at death are taxable at the full market value. Assets in retirement accounts like traditional IRAs or 401(k)s are subject to income taxes and possible penalties if passed before death. Alternatively, assets in taxable accounts like real estate or brokerage accounts might be better suited to lifetime gifting strategies. Roth conversions may also improve tax efficiency on large assets in retirement accounts.

3. Considerations Regarding Real Estate and Estate Taxes.

Estate planning for real estate involves considering the property's value at death because it directly affects estate tax, whether the heirs plan to sell or keep the property. States such as Nebraska and Pennsylvania tax the heirs on inheritances. Fiserv employees planning their estates should structure plans that provide enough liquidity to cover estate taxes and other costs without having to liquidate large assets like real estate or family businesses, especially since estate tax exemptions could decrease in 2026.

4. Life Insurance & Estate Planning.

Life insurance proceeds are included in the estate's gross value. But the proceeds of a policy owned by an irrevocable trust are not included in the estate and are exempt from estate taxes. This setup allows structured planning using annual exclusion gifts to fund life insurance premiums through trusts - a useful tool for tax-advantaged wealth transfer - especially with estates that may be over federal exemption limits.

5. Reviewing Your Estate Plan

Fiserv employees should review and update their estate plans every three to five years or at the time of a major life event like marriage, the birth of a child, or a significant change in net worth. State or federal tax laws also should cause an evaluation of estate plans. Some whose plans might not reflect new laws or personal circumstances should consult an estate planning attorney, especially with tax changes coming soon.

Final Thoughts

Fiserv employees should take proactive estate planning steps to protect their legacy amid possible federal tax law changes. This means understanding how different asset types affect estate taxes, using trusts for life insurance, and maintaining estate liquidity to service tax obligations. Such strategies match financial planning to laws of today and tomorrow, preserving wealth for future generations.

Like navigating changing waters, Fiserv employees should update their estate plans to reflect changing tax landscapes. Actively preserving financial legacies through lifetime gifting or asset restructuring may help them weather changes in federal tax exemptions. A bit like a captain in shifting seas, careful preparation may lead an estate to its destination.

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Source:

1. 'Understanding the 2026 Changes to the Estate, Gift, and Generation-Skipping Tax Exemptions.'  Husch Blackwell , June 2024,  www.huschblackwell.com .

2. 'Estate Planning Considerations for Highly Appreciated Assets.'  McLane Middleton , September 2024,  www.mclane.com .

3. 'Estate Planning Now and for the 2026 'Double Exemption' Sunset.'  Eide Bailly , July 2023,  www.eidebailly.com .

4. 'Make Estate Planning More Tax Efficient By NOT Splitting Assets Evenly.'  Michael Kitces , August 2024,  www.kitces.com .

5. 'Estate Tax Exemption Sunset 2026: Key Questions Answered.'  Merrill Lynch Wealth Management , March 2024, pbig.ml.com.