Estate Planning and Asset Protection Strategies for Real Estate Professionals and Investors in 2025

May 6, 2025

The main takeaways:

  • Assess Your Current Estate and Business Structure: After taking stock of current estate tax laws, you should identify potential estate tax exposure and asset protection needs in your estate plan.
  • Engage with Professionals Early: Work with estate attorneys, CPAs, and financial advisors to create a long-term estate planning and wealth transfer strategy.
  • Utilize Trusts and Business Entities: Implement appropriate estate and tax structures to maximize tax efficiency and asset protection goals.
  • Educate and Communicate with Beneficiaries: Make sure your heirs understand their roles and responsibilities to prevent conflicts and ensure a smooth transition.

The full story:

A sophisticated estate planning and asset protection strategy is critical for real estate professionals and owners looking to safeguard their wealth and assure smooth transitions across generations.

In a recent webinar, subject matter experts from Aprio’s Real Estate and Private Client Services teams discussed the evolving estate tax landscape, asset protection strategies, and succession planning tips for real estate owners and professionals.

Here are some important highlights from the discussion:

Understand current estate tax laws

The first step toward creating a solid estate and asset protection plan is to keep a pulse on estate tax law changes. Currently, the estate tax exemption in the U.S. stands at $13.99 million per individual ($27.98 million for married couples).  However, these exemptions are set to be halved on January 1, 2026, unless Congress extends them through legislative action.

No matter what happens to the current estate tax provisions, proactive planning remains crucial. If you wait until the last minute to establish or update your estate and wealth transfer plan, you may miss lucrative wealth-growth opportunities or be subjected to increased costs. At Aprio, we recommend that real estate owners and professionals take advantage of available estate tax exemptions now, as future legislative changes remain uncertain.

Estate planning opportunities for real estate owners and professionals

There are four key factors all real estate owners and professionals should consider as they embark on estate planning.  It is important that each of the factors are considered when developing a customized estate plan.

  • Step-up in Basis: When assets transfer upon death, their tax basis is generally adjusted to current market value, reducing future capital gains taxes and potentially allowing for additional depreciation deductions
  • Non-Passive Income Considerations: Real estate professionals, as defined by tax Internal Revenue Code, qualify for exemptions from the 3.8% net investment income tax.  This is an important consideration when transferring real estate assets to certain types of trusts.
  • Valuation Discounts: Closely held business owners can benefit from valuation discounts on their real estate assets, which allows them to further optimize their wealth transfer strategies.
  • Estate Tax Deferrals: Section 6166 of the Internal Revenue Code allows real estate owners and professionals, and other closely held business owners, to potentially defer estate tax payments over a 15-year period, helping to prevent forced sales of assets to pay estate taxes.

Overcoming common barriers to estate planning

Many real estate owners and professionals delay estate planning due to uncertainty, fear of losing control, or concerns about bank covenants and partner agreements. However, it’s important to understand that early planning can provide greater flexibility, allowing owners and professionals to adjust their strategies as tax laws evolve. Here are key tactics to consider:

  • Utilize irrevocable trusts (such as Spousal Lifetime Access Trusts) to transfer wealth while maintaining some level of indirect access.
  • Implement voting and non-voting share structures.
  • Establish domestic asset protection trusts to shield assets from potential creditors or lawsuits.

Get started.  Estate planning is a process that can be addressed in phases, rather than all at once.

The role of succession planning in real estate

For many real estate owners and professionals, estate planning is directly tied to business succession. Whether you plan on passing your real estate business to your children, selling it to your partners, or establishing a management transition plan, your process should integrate a wide range of estate planning objectives and options, including:

  • Creating trust structures that allow management teams to continue operations while preserving generational wealth.
  • Establishing buy-sell agreements to facilitate smooth business ownership transitions.
  • Utilizing generation skipping trusts to pass wealth to the next generation.

Impact of interest rates and legislative changes on estate planning

The current high-interest rate environment affects estate planning across the board. While it may reduce the effectiveness of some techniques (such as intra-family loans and grantor trust sales), the current environment enhances opportunities for using:

  • Charitable remainder trusts, which can provide charitable deductions and a deferral of capital gains.
  • Qualified personal residence trusts (QPRTs), which allow residential real estate owners to transfer property at reduced values.

Additionally, legislative discussions surrounding carried interest taxation and bonus depreciation could impact real estate owners and professionals significantly. While these proposals remain uncertain, it’s important to stay informed and prepared for potential changes if or when they arise.

The bottom line

Throughout the webinar, our panelists emphasized that estate planning is an ongoing process — not a one-time event. At Aprio, we recommend our clients review their estate plans every five years to adjust for changes in tax laws, asset valuations, and family circumstances.

Regardless of what happens in the legislative and economic realms in 2025, real estate owners and professionals face a complex yet navigable estate planning landscape. By staying informed, proactively structuring your assets, and leveraging relevant professional guidance, you can successfully protect your assets, minimize taxes, and secure your legacy for future generations.

If you haven’t started the estate planning process yet, now is the time to act. We encourage you to schedule a consultation with Aprio’s Estate Planning and Real Estate teams to take the appropriate next steps. We are here to help you navigate changes that could affect your estate plan and help you achieve your long-term legacy goals.

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