On July 4, 2025, President Trump signed the U.S. administration’s signature tax legislation, the One, Big, Beautiful Bill (OBBB), following narrow passage in both the House and Senate. While the bill contains sweeping tax changes, the estate tax provisions open up additional planning opportunities for wealthy families.
Preparing your family for the transition of wealth in 2026
With new tax legislation taking effect, it’s even more pertinent to take appropriate steps to prepare your family for the transition of wealth and leadership. Establishing proper governance structures for financial decision-making, fostering interpersonal communication, and educating the next generation on your family legacy are key elements for success.
How to plan for the updated estate tax exemption
During the first Trump administration, a key provision of the Tax Cuts and Jobs Act of 2017 elevated the federal lifetime and estate tax exemption to an all-time high of $13.99 million per person ($27.98 million for a married couple). The exemption was scheduled to expire at the end of 2025, and without further legislative action by Congress, it would’ve been cut in half to the previous level of roughly $7 million per person ($14 million per married couple) in 2026.
However, effective Jan. 1, 2026, with the recent passage of the OBBB, not only will the exemption not be decreasing, but has increased to $15 million per taxpayer as of Jan. 1, 2026 ($30 million per married couple). In addition, the new exemption provision is permanent, and the amount will be adjusted for inflation in future years.
What does this mean for your wealth transfer strategy and planning?
- Estates equal to or less than $15 million per taxpayer are exempt from the federal tax rate.
- Estates larger than $15 million per taxpayer are taxed on any amount exceeding the threshold.
As a result, your wealth transfer strategy will look different depending on whether your estate falls above or below the threshold.
Even though the exemption is “permanent,” it could always be changed by future legislation and the favorable conditions for wealth transfer eroded — an important consideration in multigenerational estate planning.
Asset transfers: Why act sooner rather than later?
Alongside estate tax exemptions, it’s important to consider other time-dependent lifetime wealth transfer opportunities. Why? The assets you hold today will likely appreciate, and transferring them out of your estate now can leverage their lower current value and shift appreciation outside the reach of future estate taxes.
For example, an asset worth $5 million today may be valued at $10 million or more in a decade. Transferring its value today ensures the appreciation remains unaffected by current estate taxes, thus amplifying the wealth passed on to beneficiaries. In other words, by transferring the asset now, you essentially gift the appreciated value tax-free, maximizing the benefits of current laws and exemptions.
The effect of estate tax exemptions can also be amplified by applying valuation discounts or incorporating life insurance, helping to ensure capital is managed optimally and tax liabilities are minimized. Furthermore, by transferring assets to a vehicle such as a grantor trust, assets can grow free of income taxes while your taxable estate absorbs the income tax liability. This strategy helps in cushioning your estate from immediate tax charges, preserving wealth in the long term.
How to preserve your wealth with tailored estate tax planning
Mitigating estate taxes, particularly with a complex portfolio of investments, real estate, and closely held assets, requires more than running financial projections: sound estate tax planning is an art, not merely a number-crunching exercise. You need to interpret complex legal landscapes that can change unexpectedly and align your assets with current tax laws while balancing personal objectives. Vigilance and periodic adjustments are key. Therefore, it’s important to regularly update your balance sheet and adjust your strategies over time. Here are some examples of tailored estate tax planning strategies to consider across varying circumstances:
- Reduce taxable estates with timely transfers. If your family’s net worth consistently exceeds the estate tax limit, consider timely transfers to benefit from exemptions; taking advantage of these exemptions sooner allows longer-term tax reduction benefits.
- Consider partial transfers to balance spending constraints with long-term goals. If your required level of spending constrains your ability to use full exemptions, partial transfers might strike a balance. Running financial independence projections can highlight any excess capital available to transfer. In some cases, strategies such as spousal lifetime access trusts can offer a safety net that can retain access to transferred funds.
- Monitoring gifting practices using annual exclusion limits. If your net worth currently falls under the estate tax limit but your estate later faces an estate tax liability due to policy changes, a careful approach is warranted. Transferring assets during life can deprive you of a basis step-up upon passing, potentially decreasing the net inheritance benefits without estate tax offsets. In this situation, monitor your gifting practices using annual exclusion limits and assess when advanced planning techniques could be appropriate.
The estate tax environment has seldom offered such favorable conditions for wealth transfer. Elevated exemptions and relatively low interest rates present an ideal backdrop for transferring assets. And while there are currently no legislative changes on the horizon that target longstanding estate tax reduction strategies such as grantor retained annuity trusts, dynasty trusts, and valuation discounts, this should be periodically reviewed as the horizon may not always remain clear. Political efforts could push for reduced exemptions or even higher rates, along with the introduction of taxes that could erode these strategies.
Beyond taxes: Other benefits of lifetime transfers
While tax considerations often dominate wealth transfer discussions, numerous nontax factors should shape decisions as well:
- Asset protection. Transferring wealth during your lifetime often improves asset protection, offering a safeguarded layer against creditors, divorce, or other external threats.
- Income tax planning. Preemptive transfers can align with a broader income tax strategy, potentially mitigating liabilities and enhancing net fiscal positions.
- Educating family members. Asset transfers often provide the opportunity to educate inheritors on wealth management, cultivating financial literacy, and fostering responsible stewardship.
- Ensuring continuity. Prudent wealth transfer ensures continuity of asset management, reducing the risks associated with sudden transitions upon one’s passing.
An example that commonly utilizes these benefits is the family that leverages their exemptions by making substantial lifetime gifts to their children and establishing a family foundation. Not only does this enable significant tax savings, but it also empowers the next generation to steward these funds and maintain the family’s philanthropic legacy. This foresight illustrates how timely action coupled with strategic planning results in profound multigenerational benefits.
Looking ahead: Staying ahead of estate planning changes
Proactive wealth planning is all about understanding your financial situation, marshaling the resources to guide you through the legal framework around asset transfer and estate planning, and acting accordingly. Having a long-term, forward-looking strategy is crucial in staying ahead of potential legislative and administrative shifts. Today more than ever, it pays to be vigilant, informed, and ready to act — not just for potential tax savings, but for the enduring legacy you wish to create.
Key takeaways
- Prepare family members early by pairing governance with education, not just documents. Effective wealth and leadership transition goes beyond documenting estate plans. Families should establish clear governance structures, encourage open communication, and intentionally educate the next generation about family values, stewardship expectations, and decision-making responsibilities.
- Use sophisticated lifetime transfer strategies to lock in continuity under favorable laws. With the OBBB permanently raising the federal estate and lifetime exemption to $15 million per taxpayer starting Jan. 1, 2026, wealthy families can implement advanced strategies — such as grantor trusts, dynasty trusts, valuation discounts, and life insurance planning — to shift growth out of taxable estates while preserving control and multigenerational continuity.
- Act early on appreciating assets to mitigate estate taxes across complex portfolios. Transferring complex assets now, such as real estate, private investments, and closely held interests, allows families to remove future appreciation from their taxable estate. Techniques like full or partial transfers and strategic use of annual exclusions can balance liquidity needs, income tax considerations, and estate tax efficiency.
- Build flexibility into your strategy despite “permanent” exemptions. While the higher exemption is now permanent and indexed for inflation, future legislative risk remains. Wealth transfer strategies should be reviewed regularly, with updated balance sheets and scenario modeling, to ensure resilience if exemptions are reduced or new taxes arise.
