Summer is an ideal time to discuss your intentions with family members and ensure everyone understands your goals, helping to prevent misunderstandings down the road.
Big changes are coming to estate and gift taxes in 2026 after the entry into law of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025. Prior to its entry, the federal estate and gift tax exemption amount ($13.99 million per person) was slated to sunset to 2018 levels, subject to inflation, under the 2017 Tax Cuts and Jobs Act (TCJA). Most people familiar with TCJA and its sunsetting expected the federal estate and gift tax exemption amount to be around $7.2 million per person as of January 1, 2026. As a result of the OBBBA, however, the federal estate and gift tax exemption amount will increase to $15 million per person as of January 1, 2026. For future years, that figure will be $15 million with an adjustment for inflation. What’s important to note is that this increase is permanent, subject to the whims of a new administration and/or Congress.
For most people, this change will have no impact on how they choose to gift assets during their lifetimes or via their estate planning on death. For those with significant assets, however, this change in the law opens the door to sheltering more assets from federal estate and gift tax now and in the future. Given the unpopularity of this section of the OBBBA (due to lost tax revenue), those with significant assets should capitalize on the increase to protect against the possibility of the law being modified in the future.
Regardless of your asset levels, the summer is a great time to reevaluate your estate plan – the pace at work tends to be a little slower, vacation time picks up, and you have a little more time to discuss the future.
Here’s What You Can Do This Year to Get Ahead
Review and Update Your Estate Plan
While you may not have federal estate and gift tax issue looming in your future, you may have other concerns you want to address to protect assets and provide for your family and others. Regardless of whether you have a will and trust in place already, now is a great time to review or create your estate plan. Life changes – such as marriage, divorce, children, disability, relocation, or the death of a loved one – can all affect your estate plan. Every plan should reflect both your wishes and current legal rules, while factoring in the possibility of changes in the future.
Consider Making Gifts
Making lifetime gifts now locks in the higher exemption amount and removes future asset appreciation from your estate. You can give away property, investments, or interests in a business before they increase in value, helping to reduce the size of your taxable estate in the future. These gifts can go directly to family or be placed in a trust to allow more control and protection.
In addition to gifts designed to utilize the high exemption amount, you can also make annual gifts utilizing the annual gift tax exemption. Gifts in the latter category are a great way to move assets out of your estate without requiring the filing of a gift tax return (provided they are below the annual gift tax exemption amount which is currently $19,000 per beneficiary). Examples of this type of gift include contributing to a 529 plan, helping a grandchild buy a vehicle, or creating a legacy for the next generation by gifting into an irrevocable trust.
Plan for the Next Generation
While the federal and estate tax exemption amount remains this high, you may also want to consider establishing multigenerational trusts, gifting directly to charities or establishing trusts that have a charitable component, or establishing family foundations that reflect your values. Trusts are a great tool and can be tailored to meet your specific goals – whether that’s education, housing, charitable giving, or multigenerational wealth transfers.
Talk with Your Family
Estate planning doesn’t just happen on paper – it also involves meaningful conversations with your family members. Summer is an ideal time to discuss your intentions with family members and ensure everyone understands your goals, helping to prevent misunderstandings down the road.
Final Thoughts
While it might be tempting to put off estate planning for yet another year, I encourage you to be proactive this summer. To ensure you create an effective estate plan, be sure to consult with an experienced estate planning attorney to avoid missteps.
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