The estate planning landscape has undergone a seismic shift that directly impacts affluent families throughout Stuart, Florida, and beyond. With the passage of the One Big Beautiful Bill Act (OBBBA), comprehensive estate planning services now require a complete strategic overhaul to capitalize on unprecedented opportunities while avoiding costly missteps.
Starting January 1, 2026: just weeks away: the federal estate and gift tax exemption will permanently increase to $15 million per individual, effectively doubling the previous $12.92 million limit for 2025. For married couples, this translates to a combined $30 million exemption, representing the most substantial estate tax relief in decades.
Unlike previous legislation that included sunset provisions, this change is permanent and will be adjusted annually for inflation beginning in 2027. This permanence eliminates the urgent "use it or lose it" pressure that characterized estate planning throughout 2025, but it also creates new planning opportunities that require immediate attention.
Understanding the Magnitude of Change
The timing couldn't be more critical for high-net-worth families who were preparing for the previously scheduled reduction to approximately $7 million per person in 2026. Instead of facing a nearly 50% reduction in exemption amounts, families now benefit from a 16% increase that's locked in permanently.
This dramatic reversal affects not only estate taxes but also generation-skipping transfer taxes, which carry the same $15 million exemption. The federal estate tax rate remains at 40% for amounts exceeding the exemption, making strategic planning essential for estates significantly above the threshold.
Step 1: Conduct an Immediate Trust Structure Review
Your existing trust arrangements likely require comprehensive evaluation and potential restructuring. Many affluent families established irrevocable trusts in recent years specifically to lock in higher exemption amounts before an expected reduction. With the permanent $15 million baseline, these structures may no longer serve their intended purposes.
Grantor retained annuity trusts (GRATs), charitable lead annuity trusts (CLATs), and other sophisticated vehicles created under the assumption of lower future exemptions should be reviewed with your estate planning attorney. In some cases, you might benefit from unwinding certain trust structures, while others may provide valuable non-tax benefits like asset protection and family governance that justify their continuation.
Dynasty trusts established in states without rule against perpetuities may now offer enhanced value given the higher exemption amounts. These vehicles can transfer significantly more wealth to future generations without triggering generation-skipping transfer taxes, making them particularly attractive for multi-generational wealth preservation strategies.
Step 2: Recalibrate Your Lifetime Gifting Strategy
The permanent nature of the $15 million exemption fundamentally changes optimal gifting timing. Large lifetime gifts accelerated into 2025 to beat an expected exemption reduction may now be reconsidered or modified to maximize tax efficiency.
Annual exclusion gifting remains unchanged at $18,000 per recipient for 2025 (with inflation adjustments expected for 2026), but your overall gifting strategy should align with the new permanent exemption structure. Consider spreading large gifts across multiple years to optimize income tax benefits and maintain greater control over assets during your lifetime.
For business owners approaching liquidity events, the higher exemption creates opportunities for more substantial pre-transaction gifting through techniques like sales to intentionally defective grantor trusts (IDGTs) or gifts of discounted minority interests. These strategies can remove significant appreciation from your taxable estate while utilizing the enhanced exemption capacity.
Step 3: Update Estate Plan Formulas and Documentation
Estate planning documents frequently contain formula clauses that reference specific exemption amounts or create automatic distributions based on tax calculations. These formulas, drafted under previous exemption levels, may now produce unintended consequences.
Review beneficiary designation forms, trust distribution provisions, and charitable giving formulas that might trigger different outcomes under the new exemption structure. For example, formula clauses designed to maximize the use of available exemptions may now allocate more assets to bypass trusts than originally intended, potentially affecting spousal support provisions.
Pay particular attention to A-B trust arrangements and other structures that automatically allocate assets based on exemption amounts. The increased exemption might leave surviving spouses with insufficient assets in the marital trust, creating income security concerns that require immediate correction.
Step 4: Optimize Portability Elections and Spousal Planning
While portability rules remain unchanged, their importance has amplified given the higher exemption amounts. The ability for surviving spouses to utilize their deceased spouse's unused exemption: now potentially worth up to $15 million: represents a significant planning opportunity that cannot be overlooked.
Ensure your estate plan documentation clearly instructs executors to file Form 706 within nine months of death (or 15 months with extensions) to elect portability, even when the estate falls below filing thresholds. Failure to make this election results in permanent loss of the unused exemption amount, representing potentially millions in lost tax savings.
Consider advanced portability planning techniques for couples with combined estates approaching or exceeding $30 million. Strategic disclaimer planning allows surviving spouses flexibility in directing assets to bypass trusts versus utilizing portability, optimizing for changed circumstances or tax law modifications.
For couples considering Florida residency: whether as new transplants or seasonal residents: verify that your estate planning documents properly address multi-state issues and ensure portability elections remain valid across different jurisdictions.
Step 5: Implement Sophisticated Planning for Substantial Wealth
Families with net worth significantly exceeding $30 million should explore advanced strategies that capitalize on the enhanced exemption while providing additional tax benefits. These techniques become particularly valuable when combined with the increased exemption capacity.
Charitable lead trusts can now transfer substantially more wealth to family members while providing immediate income tax deductions and reducing gift tax exposure. The higher exemption allows for larger initial gifts to these trusts, amplifying their effectiveness for multi-generational wealth transfer.
Private placement life insurance within irrevocable life insurance trusts offers enhanced value given the increased exemption amounts. These structures can now accommodate larger premium gifts without depleting exemption capacity, providing significant estate tax leverage for high-net-worth families.
For families with closely held businesses, consider implementing employee stock ownership plans (ESOPs) or other succession planning strategies that utilize the enhanced exemption to transfer ownership interests while providing liquidity and diversification benefits.
State-Level Considerations for Florida Residents
Florida's favorable tax environment becomes even more attractive under the new federal exemption structure. With no state estate tax and the enhanced federal exemption, Florida residents can potentially shield up to $30 million per married couple from all transfer taxes.
However, families maintaining ties to other states should carefully review potential exposure to state-level estate taxes. States like New York, Connecticut, and Massachusetts maintain their own estate taxes with lower exemption thresholds, making domicile planning crucial for maximizing tax benefits.
Professional Guidance and Implementation Timeline
Given the complexity and permanence of these changes, working with qualified professionals becomes essential. Estate planning attorneys, tax advisors, and fee-only financial advisors must coordinate to ensure your strategy aligns with both current law and your family's evolving needs.
At Davies Wealth Management, we regularly discuss these evolving strategies on our podcast at www.1715tcf.com, providing ongoing insights for affluent families navigating complex financial decisions.
The window for implementing changes before 2026 is narrowing rapidly. While the permanent nature of the new exemption reduces some time pressure, optimal strategies often require months to properly structure and implement.
Taking Action
The estate tax changes in 2026 represent the most significant shift in transfer tax policy in decades. For affluent families, these changes create unprecedented opportunities for wealth preservation and multi-generational planning that extend far beyond simple tax savings.
However, realizing these benefits requires immediate action to review, update, and optimize your existing estate plan. The five steps outlined above provide a framework for capitalizing on these changes while avoiding potential pitfalls that could cost your family millions in unnecessary taxes.
To explore how these changes specifically impact your family's situation, consider utilizing our comprehensive estate planning resources at https://estateplanning.tdwealth.net/auth/entry/start?ep=register&pc=636cde49-3a35-4e52-9895-091bf5a0d5ab. This platform provides personalized analysis and implementation guidance tailored to your unique circumstances.
The next few weeks represent a critical transition period. Families who act decisively to align their estate plans with the new permanent exemption structure will be positioned to preserve substantially more wealth for future generations while maintaining greater flexibility and control during their lifetimes.
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