Estate Planning Alert: Why the $13.6 Million Exemption Won't Last (And What to Do Before 2026)

Table of Contents

1. The Big News: Your Exemption Is Actually Growing
2. What Was Originally Supposed to Happen
3. The OBBBA Game-Changer
4. 2026 Numbers and Beyond
5. What This Means for Your Estate Planning Strategy
6. Florida-Specific Considerations
7. Action Items for Wealth Management

The Big News: Your Exemption Is Actually Growing

Here's something that might surprise you: the federal estate tax exemption isn't disappearing in 2026, it's actually increasing to $15 million per person and becoming permanent. If you've been rushing to implement complex estate planning strategies based on the old "sunset" deadline, you need to understand how the One Big Beautiful Bill Act (OBBBA) completely changed the game.

The current 2025 exemption of $13.99 million (close to the $13.6 million figure many planners reference) was originally set to drop to approximately $7 million on January 1, 2026. Instead, it's jumping to $15 million, and staying there permanently with annual inflation adjustments.

What Was Originally Supposed to Happen

When the Tax Cuts and Jobs Act (TCJA) doubled the estate tax exemption from $5 million to roughly $10 million in 2017, it came with a critical catch: the increase was temporary. The law included a "sunset provision" that would have automatically reverted the exemption to its pre-2017 level (approximately $7 million, adjusted for inflation) on January 1, 2026.

This created what many financial advisors near me and across the country called a "use it or lose it" scenario. Wealthy families scrambled to take advantage of the higher exemption through aggressive gifting strategies, complex trust structures, and sophisticated tax efficient investing approaches, all designed to lock in the benefits before they disappeared.

The urgency was real. For a married couple, the difference between a $28 million combined exemption and a $14 million exemption represented $14 million in potential estate tax savings at the 40% federal rate, roughly $5.6 million in taxes that could be avoided through proper planning.

The OBBBA Game-Changer

The One Big Beautiful Bill Act fundamentally rewrote the estate tax landscape. Rather than allowing the exemption to decrease, Congress permanently raised the baseline exemption to $15 million per person, effective January 1, 2026. Critically, this increase has no sunset provision, it's designed to be permanent with annual inflation adjustments going forward.

This represents a massive shift in estate planning services strategy. What was once a race against time has become a more measured opportunity to optimize long-term wealth transfer strategies with greater certainty about the regulatory environment.

For context, the Florida Bar's estate planning resources emphasize that federal law changes like this require careful reevaluation of existing plans, particularly for high-net-worth individuals who may have implemented complex structures based on the old sunset timeline.

2026 Numbers and Beyond

Here's how the numbers break down:

Category	2025	2026 & Beyond
Individual Exemption	$13.99 million	$15 million
Married Couple Combined	$27.98 million	$30 million
Federal Tax Rate (above exemption)	40%	40%
Annual Inflation Adjustments	Yes	Yes
Sunset Provision	Originally yes	None

The generation-skipping transfer (GST) tax exemption also increases to $15 million, maintaining alignment with the estate and gift tax exemptions. This simplifies multi-generational wealth management planning significantly.

What remains unchanged is the 40% federal estate tax rate for amounts exceeding the exemption. Additionally, portability rules for married couples continue to apply: meaning surviving spouses can use any unused portion of their deceased spouse's exemption, but only if an estate tax return is filed to elect portability.

What This Means for Your Estate Planning Strategy

Reduced Urgency, Increased Opportunity

The elimination of the sunset provision removes much of the time pressure that has driven estate planning decisions over the past few years. However, this doesn't mean you should ignore estate planning: quite the opposite. The increased exemptions and permanent status create new opportunities for strategic wealth transfer.

Existing Plans Need Review

If you implemented complex gifting strategies or trust structures specifically to beat the 2026 deadline, those plans should be reviewed. While they may still be beneficial, the underlying assumptions about future tax law have changed dramatically.

Focus Shifts to Optimization

With $15 million in permanent federal exemption space, the focus shifts from emergency tax avoidance to long-term optimization. This might include:

• Restructuring existing trusts for better income tax efficiency
• Implementing generation-skipping strategies with the aligned GST exemption
• Coordinating federal planning with state-level tax considerations
• Optimizing charitable giving strategies within the new framework

Florida-Specific Considerations

As a Florida resident, you benefit from the state's lack of state estate tax. However, this advantage becomes even more pronounced when combined with the increased federal exemptions. Florida's estate planning services landscape allows you to focus purely on federal tax optimization and family wealth transfer goals without the complexity of state-level estate taxes that burden residents of states like New York or California.

For insights on how these changes affect Florida families specifically, our discussions on the 1715 TCF podcast at www.1715tcf.com regularly address state-specific planning considerations that complement federal law changes.

This is particularly relevant for retirees and high-net-worth individuals who chose Florida specifically for its tax advantages. The combination of no state income tax, no state estate tax, and now permanently higher federal exemptions creates an exceptionally favorable environment for wealth accumulation and transfer.

Action Items for Wealth Management

Immediate Steps

1. Review Existing Plans: Work with qualified estate planning services to evaluate whether your current structures still align with your goals under the new permanent exemption framework.

2. Reassess Portability Elections: Ensure surviving spouses understand the continued importance of filing estate tax returns to elect portability, even with higher exemptions.

3. State Tax Analysis: While federal exemptions have increased, verify your exposure to state-level estate or inheritance taxes if you have property or beneficiaries in other states.

Long-Term Considerations

The permanent nature of the $15 million exemption allows for more strategic, long-term approaches to wealth transfer. Consider how this affects:

• Tax efficient investing strategies within trust structures
• Timing of major gifts or charitable contributions
• Business succession planning with increased exemption space
• Education funding strategies for grandchildren using GST exemptions

Professional Guidance

The complexity of coordinating these changes with your overall financial strategy makes professional guidance essential. At Davies Wealth Management, we help clients navigate these evolving regulations while maintaining focus on their broader wealth management objectives.

Our comprehensive approach to estate planning services includes regular plan reviews to ensure your strategies remain optimal as tax laws evolve. Whether you're dealing with business succession, charitable giving, or multi-generational wealth transfer, the new permanent exemption framework provides opportunities that weren't available under the old sunset system.

The bottom line: rather than racing against a 2026 deadline, you now have the luxury of thoughtful, strategic planning with permanent federal exemptions of $15 million per person. However, this increased flexibility makes it even more important to work with experienced professionals who can help you optimize these opportunities within your overall wealth management strategy.

For more detailed analysis of how these changes might affect your specific situation, consider scheduling a consultation to review your current estate planning approach against this new permanent framework.