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Ideas to guide you from the UBS Advanced Planning Group
Today’s tax landscape is complex, with new laws being enacted and old laws phasing out. How can you best navigate this landscape as you pursue your goals and objectives? Here are top ideas to keep in mind over the coming year.
The Corporate Transparency Act (CTA) created new reporting requirements that will affect many family businesses and other entities that families use.1 Under the act, many family-controlled companies and other companies must provide information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).2
A beneficial owner generally is any individual who (directly or indirectly) exercises substantial control over the reporting company or (directly or indirectly) owns or controls 25% or more of the reporting company’s ownership interests.
The CTA originally was to take effect on January 1, 2025.3 However, the CTA was challenged in court4 and FinCEN released a statement on January 24, 2025, stating that reporting companies are not currently required to file beneficial ownership information with FinCEN. Reporting companies may, however, continue to voluntarily submit beneficial ownership information reports.
Given the on again, off again application of the CTA, the filing deadlines have been extended. If the CTA ultimately is permitted, there likely will be new filing deadlines.
It is important to periodically review your estate plan to ensure that it reflects your current wishes and objectives, especially if there has been a significant life event—such as a marriage, divorce, birth or death—or a significant change in financial circumstances. A core estate plan generally includes:
How your assets are titled (legally owned) is a critical but often overlooked component of financial and estate planning. Even the most sophisticated and well thought out plan can be put in jeopardy if asset titling is not examined, both at the time the estate plan is implemented and periodically thereafter.
Reviewing beneficiary designations is also critical to your estate plan. Generally, retirement accounts (e.g., IRA, 401(k)), life insurance, and transfer on death (TOD) accounts will pass according to the beneficiary designation and bypass the Will and revocable trust.
Many of the provisions of the Tax Cuts and Jobs Act (TCJA) will sunset at the end of 2025. Although Congress may act to extend some or all of them, it is important to know which provisions are expiring, so you can be prepared to maximize your tax savings in case the provisions sunset as currently scheduled. Two of the important income tax provisions that may change include:
Individual tax rates: The TCJA lowered income tax rates, with the top rate decreased to 37% from 39.6%. Starting January 1, 2026, the top tax rate will revert to 39.6%.5
Standard deduction: The TCJA also nearly doubled the standard deduction for all filing statuses.6 As a result, many taxpayers have not itemized deductions. Starting January 1, 2026, the standard deduction will be about half of what it is currently, adjusted for inflation.
In light of the upcoming expiration of TCJA tax cuts, you should consider whether to accelerate or defer income, deductions and credits based on your particular tax situation. There are limitations on the extent to which an individual can accelerate and defer these items and, of course, you should consider the potential impact on state and local taxes, as well as federal taxes.
Understanding how these gains and losses work is an important factor in this decision. It is important to net gains and losses because they carry important tax implications. For example, a net capital gain can be taxed at a more preferential rate than ordinary income.
In some situations, you might consider converting a traditional IRA to a Roth IRA. A Roth IRA potentially offers significant benefits, most notably tax-free growth of assets, tax-free distributions, and no RMDs during the individual’s life.7
When converting from a traditional IRA to a Roth IRA, the converted amount is taxable to the IRA owner as ordinary income in the year in which the conversion occurs.8 When deciding whether to make a conversion, you should consider potential changes to the income tax rates that may occur over your life.
Under current law, federal gift, estate and generation-skipping transfer (GST) tax exemptions all have a base of $10 million, adjusted for inflation since 2011. The 2025 inflation adjusted amount is $13.99 million per person and $27.98 million for married couples, meaning these amounts can pass transfer tax free to a taxpayer’s designated beneficiaries.9
Unless Congress takes action this year, the existing gift and estate tax laws under the TCJA will expire on January 1, 2026,10 cutting the exemption roughly in half. A taxpayer who gifts during their lifetime or at death an amount greater than the gift/estate tax exemption may be subject to a federal tax rate of up to 40% on the value over the exemption.
There are significant benefits to making lifetime gifts of assets that are likely to appreciate in value, especially as we face a potential estate tax exemption decrease. You may want to consider various estate planning strategies using the gift and estate tax exemption to move assets outside of your taxable estate.
For example, a spousal lifetime access trust (SLAT) may enable a married individual to take advantage of the current lifetime gift tax exemption while maintaining indirect access to the assets.
Upstream planning refers to estate planning in favor of senior generations rather than the typical downstream planning for children, grandchildren and more remote descendants.
Under current law, the estate tax exemption is higher than ever before (as stated earlier, $13.99 million in 2025, or $27.98 million for a married couple). Individuals with estates that exceed the exemption may want to consider transferring assets to senior family members who may not have large estates.
At death, appreciated assets that are included in an individual’s estate for estate tax purposes generally receive a step-up in basis to fair market value, eliminating any capital gain for the beneficiary.11 Assets that are not part of the decedent’s estate, such as assets gifted during lifetime, do not receive a step-up at the donor’s death.12
While the step-up in basis can lead to significant federal and state income tax savings, there is potential estate tax exposure. Often the estate tax savings by gifting during lifetime will outweigh the benefit of the step-up. You may want to consider techniques that can help achieve a step-up in basis, even for assets gifted during lifetime.
The GST tax is a tax incurred when assets are transferred to a “skip person”—someone who is two or more generations below the donor. If a skip person is the beneficiary of a trust, distributions to the beneficiary may trigger the GST tax at a rate of 40%—the highest estate tax rate.
The GST tax exemption is $13.99 million for 2025. Allocating the GST exemption to a trust can shield that trust from the GST tax, so that distributions to grandchildren or more remote descendants do not trigger the tax.
If you are looking to transfer the future appreciation of assets outside of your taxable estate to others, one option is a Grantor Retained Annuity Trust, or GRAT. A GRAT initially is funded with assets that are expected to increase in value and is set up for a specified term.
Each year of the GRAT term, a specific dollar amount (the annuity) is distributed to the grantor of the GRAT. At the conclusion of the GRAT term, any remaining trust property is distributed to the grantor’s designated beneficiaries or held in trust for their benefit.
If you are interested in minimizing transfer taxes associated with the gift of a primary residence or vacation home, one option is a Qualified Personal Residence Trust (QPRT). As the grantor, you make a gift of the residence to the QPRT and retain the right to occupy the home for a set period of time. The value of the taxable gift of the residence is reduced by the present value of the retained occupancy right.
See the complete whitepaper, Top Planning Topics for 2025, for a detailed analysis of all ideas plus additional resources.
For more comprehensive information, please see our 2025 Planning Guide. To discuss tax efficient planning ideas and strategies for your particular circumstances, please reach out to a UBS Financial Advisor.
The Advanced Planning Group consists of former practicing estate planning and tax attorneys with extensive private practice experience and diverse areas of specialization, including estate planning strategies, income and transfer tax planning, family office structuring, business succession planning, charitable planning and family governance.
There is a trend towards company-specific ESG requirements. Daniel Ammon, UBS Institutional Client Coverage CH, Nino Colesanto, UBS Global Insurance Coverage and Hubert Zeller, UBS White Labelling Solutions CH in “Finanz und Wirtschaft”
Purpose of this material.
The information on this page and in the attached document is provided for informational and educational purposes only. It should be used solely for the purposes of discussion with your UBS Financial Advisor and your independent consideration. UBS does not intend this to be fiduciary or best interest investment advice or a recommendation that you take a particular course of action.
No tax or legal advice.
UBS Financial Services Inc., its affiliates and its employees do not provide tax or legal advice. You should consult with your personal tax and/or legal advisors regarding your particular situation.
