Estate Tax Planning Strategies: How Changing Exemption Rules Affect Your Plan
Why Estate Tax Planning Strategies Need Regular Review
When the rules change, your estate tax planning strategies should change with them. Federal estate tax exemptions have shifted several times over the past decade, and the most recent legislation—the One Big Beautiful Bill Act (OBBBA)—has made a higher exemption amount permanent, prompting many individuals and families to reconsider their approach to estate planning.
Federal Estate Tax Exemption: Current Amounts
- The Tax Cuts and Jobs Act (TCJA) of 2017 raised the federal estate and gift tax exemption to $11.18 million per individual, roughly doubling the prior amount.
- The exemption continued rising with inflation adjustments in the years that followed.
- As of January 1, 2026, the OBBBA permanently set the federal estate and gift tax exemption at $15 million per individual ($30 million for married couples), removing the reduction that had been scheduled to take effect after 2025. The exemption will continue to be adjusted annually for inflation.
This higher exemption means more American households can potentially pass on assets free of federal estate tax—and it’s a good reason to revisit your current estate tax planning strategy with a qualified professional.
Estate Planning After Tax Law Changes: What to Reconsider
Changes in Gift Strategies
One goal of gifting assets during your lifetime is to manage taxation on an estate’s future growth. However, gifting comes at a cost: you lose the step-up in cost basis that inherited assets normally receive.
With a larger share of estates now excluded from federal estate tax, gifting purely for tax-reduction purposes may no longer be necessary for many families.
Key takeaway: For many estates, there may now be little reason to gift assets during your lifetime unless there’s a present financial need with a family member.
Joint Ownership of Assets
Re-titling assets to joint ownership with a spouse is worth considering. This can allow the surviving spouse to benefit from a step-up in cost basis when the first spouse passes away—potentially reducing capital gains taxes if the asset is later sold.
Rethinking Trust Strategies
Because of portability, a surviving spouse can now claim any unused portion of a deceased spouse’s federal estate and gift tax exemption. This means spouses no longer need to create or maintain certain trusts solely to preserve both spousal exemptions.
In some cases, previously established trusts may actually increase future tax bills by missing out on the step-up in cost basis. It’s worth reviewing older trust documents to see whether they still serve their original purpose under current law.
Working With a Fee-Only Fiduciary Estate Planning Professional
Creating or updating an estate tax planning strategy is complex and should involve a qualified tax or legal professional. If you haven’t reviewed your estate plan since exemption amounts changed, now is a good time to do so.
For individuals and families in Fort Myers, FL and throughout Southwest Florida, working with a fee-only fiduciary financial planner can help ensure your estate strategy reflects current federal estate and gift tax exemption rules—rather than outdated assumptions from years past.
Frequently Asked Questions
What is the current federal estate tax exemption?
As of 2026, the federal estate and gift tax exemption is $15 million per individual, or $30 million for married couples, following the One Big Beautiful Bill Act. This amount is permanent and adjusts annually for inflation.
Do I still need to gift assets to reduce estate taxes?
Not necessarily. Because more of an estate is now excluded from federal estate tax, many individuals no longer need to gift assets purely to reduce future estate tax exposure—unless there’s a present need to support a family member.
Should I update my trust after estate and gift tax exemption changes?
It depends on your situation. Portability now allows a surviving spouse to use a deceased spouse’s unused exemption without certain trusts. Some older trusts may unintentionally increase tax liability by missing the step-up in cost basis, so it’s worth having a professional review your documents.
Why should I revisit my estate planning strategies now?
Because exemption amounts and related rules have changed significantly since 2017, strategies built around older assumptions—such as extensive lifetime gifting or specific trust structures—may no longer be the most effective approach for your current situation.
Does the federal estate tax exemption apply the same way in every state?
The federal exemption applies nationwide, but some states impose their own estate or inheritance taxes with lower exemption thresholds. It’s important to confirm how your state’s rules interact with the federal exemption as part of your overall estate tax planning.
Disclosures:
- The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
- Source: Internal Revenue Service; One Big Beautiful Bill Act (OBBBA), effective January 1, 2026.
- Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional familiar with the applicable rules and regulations.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult a legal or tax professional for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
