The $7M Estate Tax Cliff: Survival Guide for Martin County Families Before the Sunset

Table of Contents

1. The Cliff That Never Came
2. What Martin County Families Need to Know Now
3. The New Math: $15M vs. $7M
4. Strategic Shifts for Stuart and Jupiter Island Estates
5. When You Still Need to Worry
6. The Step-Up Basis Game-Changer
7. Action Items for Q1 2026

The Cliff That Never Came

Here's the thing about estate planning in 2026: everyone was bracing for impact, and then the rules changed mid-flight.

For the past two years, estate attorneys across Martin County have been working overtime. The story was simple and terrifying: the Tax Cuts and Jobs Act (TCJA) exemptions were set to sunset on December 31, 2025. Your federal estate tax exemption? About to drop from $13.99 million per person to roughly $7 million. For married couples, that meant falling from nearly $28 million to around $14 million.

The pressure was real. Families with significant wealth were scrambling to gift assets, establish trusts, and execute complex strategies to "use it or lose it" before the deadline.

Then January 1, 2026 arrived with a plot twist.

Instead of dropping to $7 million, the federal estate tax exemption increased to $15 million per individual and $30 million for married couples. The sunset provision was removed permanently, and these new thresholds will be indexed for inflation going forward.

If you spent 2025 stress-planning for a cliff that never materialized, you're not alone. But here's what matters now: understanding how this changes your strategy for the decade ahead.

What Martin County Families Need to Know Now

Martin County sits in a unique position. We've got Jupiter Island estates, waterfront Stuart properties, and a concentration of high-net-worth retirees who've spent years optimizing their financial lives. The original $7 million threshold would have caught a significant number of local families: especially when you factor in real estate appreciation, business valuations, and investment portfolios.

The new $15 million per person exemption changes the urgency equation dramatically.

For most families, federal estate tax is no longer an immediate concern. Even affluent households with substantial assets often fall below the $30 million threshold when you're looking at a couple's combined exemption.

But: and this is important: this doesn't mean estate planning is irrelevant. It means the strategy shifts from aggressive avoidance tactics to thoughtful optimization.

The New Math: $15M vs. $7M

Let's run some real numbers that matter to Martin County families.

Scenario 1: The Stuart Couple

• Combined net worth: $18 million
• Primary residence in Stuart: $3.2 million
• Brokerage accounts: $8.5 million
• Retirement accounts: $4.8 million
• Business interest: $1.5 million

Under the old sunset rules (the $7M cliff), they would have had $4 million of exposure to the 40% federal estate tax: potentially costing their heirs $1.6 million.

Under the new permanent $15M exemption? Zero federal estate tax liability. They're $12 million under the threshold.

Scenario 2: The Jupiter Island Estate

• Combined net worth: $42 million
• Oceanfront property: $12 million
• Investment portfolio: $26 million
• Art collection: $4 million

Even at the higher exemption, this family still has $12 million of exposure ($42M – $30M). At a 40% rate, that's $4.8 million in potential federal estate tax.

For this family, estate planning still matters: a lot. But the strategies look different than they would have under the $7M scenario.

Strategic Shifts for Stuart and Jupiter Island Estates

Here's where estate planning gets interesting in 2026. The higher exemption doesn't just reduce your tax bill: it fundamentally changes how you should approach wealth transfer.

The Old Playbook (2024-2025):

• Gift aggressively to use exemptions before sunset
• Establish irrevocable trusts to remove assets from your estate
• Accept the loss of step-up basis on gifted assets
• Prioritize estate tax savings over income tax efficiency

The New Playbook (2026 and Beyond):

• Keep appreciating assets in your estate to capture step-up basis at death
• Use annual exclusion gifts ($19,000 per person, $38,000 for couples) for strategic transfers
• Focus on income tax planning rather than estate tax avoidance
• Reserve complex gifting strategies for estates genuinely exceeding $30M

For families below the threshold, the step-up basis consideration now outweighs estate tax concerns. This is a massive shift that many people haven't fully processed yet.

We cover these strategic pivots regularly on our podcast at 1715tcf.com: it's worth a listen if you're rethinking your 2026 estate approach.

When You Still Need to Worry

Let's be clear: if your combined estate is approaching or exceeding $30 million, you still have real exposure to the 40% federal estate tax. That's not going away.

High-risk categories for Martin County families:

• Business owners with significant equity (tech exits, medical practices, marine industry companies)
• Real estate investors with multiple waterfront properties
• Executives with substantial stock compensation and deferred comp balances
• Families with inherited wealth plus career earnings

For these households, sophisticated estate planning remains critical. You're looking at strategies like:

• Grantor Retained Annuity Trusts (GRATs)
• Spousal Lifetime Access Trusts (SLATs)
• Charitable Remainder Trusts
• Family Limited Partnerships
• Dynasty trusts for multi-generational wealth transfer

But here's the key: you now have breathing room to implement these strategies thoughtfully rather than rushing to beat an artificial deadline.

The Step-Up Basis Game-Changer

This might be the most underappreciated aspect of the new exemption levels.

When you gift assets during your lifetime, your heirs inherit your cost basis. If you bought stock at $50 and it's worth $500 when you gift it, they'll owe capital gains tax on $450 of appreciation when they eventually sell.

When you hold assets until death, your heirs receive a step-up in basis to the fair market value at your death. That same stock bought at $50 and worth $500 at your death? Your heirs can sell immediately with zero capital gains tax.

For a Martin County family with a $5 million brokerage account that's appreciated significantly over decades, the step-up basis could save heirs hundreds of thousands in capital gains taxes.

Under the old $7M exemption, many families had to gift these assets despite the basis penalty: the estate tax savings justified the capital gains cost. Under the new $15M exemption, keeping the assets and preserving step-up often produces better overall tax results.

This changes the entire risk-reward calculation for wealth transfer planning. For more on optimizing tax strategies in this new environment, check out our guide on tax-loss harvesting and portfolio management.

Action Items for Q1 2026

So what should Martin County families actually do with this information?

1. Update your estate plan review timeline
If you rushed through estate planning in late 2025 to beat the sunset, schedule a Q1 2026 review with your attorney. Some of those aggressive strategies may no longer serve your best interests.

2. Recalculate your estate tax exposure
Use the new $15M/$30M thresholds. Be honest about current valuations: real estate, business interests, and investment portfolios. If you're genuinely over the limit, maintain your sophisticated planning. If you're under, consider simplifying.

3. Evaluate recent large gifts
If you made substantial gifts in 2025 specifically for estate tax purposes, analyze whether you'd make the same decision today. In some cases, you might want to restructure or adjust future gifting strategies.

4. Focus on income tax efficiency
With estate tax pressure reduced, shift your attention to strategies that minimize income taxes for you and your heirs. This includes Roth conversions, tax-loss harvesting, and strategic asset location.

5. Don't abandon planning altogether
Higher exemptions don't eliminate the need for wills, trusts, powers of attorney, and healthcare directives. You still need the foundational documents that ensure your wishes are followed and your family is protected.

6. Plan for uncertainty
While the new exemption is designated as permanent, tax laws can always change with future administrations and congressional action. Build flexibility into your estate plan rather than assuming today's rules will last forever.

For comprehensive wealth management guidance tailored to high-net-worth Martin County families, visit tdwealth.net or reach out directly.

The estate tax landscape just shifted dramatically in your favor. The families who thrive will be the ones who adjust their strategies accordingly( not the ones still fighting yesterday's battles.)