What changes in 2026 — and why it creates immediate urgency
The Tax Cuts and Jobs Act doubled the federal estate and gift tax exemption in 2018. Those doubled exemptions expire December 31, 2025 — reverting to the pre-TCJA level of approximately $5M per person, adjusted for inflation, estimated at roughly $7M in 2026 dollars. The IRS has confirmed that gifts made before the sunset that use the higher exemption will NOT be clawed back — making 2024 and 2025 the most valuable gifting window in a generation.
For a married couple with a $20M estate: today, they have $27.22M in combined exemptions — no estate tax. After 2026, they have approximately $14M in combined exemptions — potentially $2.4M+ in estate taxes owed at death. Every strategy on this page is designed to permanently remove assets from the taxable estate before that cliff arrives.
| Category | 2024 amount | Post-2026 (estimated) |
|---|---|---|
| Individual exemption | $13,610,000 | ~$7,000,000 |
| Married couple (portability) | $27,220,000 | ~$14,000,000 |
| Annual gift exclusion (per recipient) | $18,000 | Indexed — likely ~$19,000 |
| Estate tax rate above exemption | 40% | 40% |
| Gift tax rate | 40% | 40% |
| Generation-skipping tax rate | 40% | 40% |
Annual gifting — $18,000 per recipient per year
The annual gift tax exclusion allows you to give $18,000 per recipient per year ($36,000 for a married couple splitting gifts) without using any lifetime exemption. Over 10 years, a couple with 3 children and 6 grandchildren can transfer $3.24M out of the estate completely tax-free through annual gifts alone.
SLATs — Spousal Lifetime Access Trusts
Fund a SLAT before 2026 to use the higher exemption and permanently remove assets and all future appreciation from the taxable estate — while retaining indirect access through your spouse beneficiary.
Read: SLATs explained →ILITs — Irrevocable Life Insurance Trusts
Hold life insurance inside an ILIT to remove the death benefit from the taxable estate entirely. Combine with annual gifting to fund premiums. A $5M death benefit held in an ILIT saves $2M in estate taxes compared to personally owned coverage.
Read: ILITs explained →GRATs — Grantor Retained Annuity Trusts
Transfer assets to a trust in exchange for an annuity payment for a fixed term. If the assets appreciate faster than the IRS hurdle rate (7520 rate), the excess passes to heirs gift-tax-free. Particularly effective for appreciating business interests or investment portfolios in a low-rate environment.
Charitable strategies — CRTs and donor-advised funds
Charitable transfers reduce the taxable estate while generating income tax deductions and lifetime income. A properly structured CRT can remove a large appreciated asset from the estate while generating income for life and funding a charitable legacy.
Read: Charitable remainder trusts →Family limited partnerships and LLCs
Transfer business or investment assets to a family limited partnership or LLC, then gift minority interests at a valuation discount — typically 15%–35% below the pro-rata value of the underlying assets. Stretch the lifetime exemption further by transferring discounted interests rather than the assets directly.
Portability — elect the deceased spouse's unused exemption
When the first spouse dies, the surviving spouse can elect to use the deceased spouse's unused exemption amount (DSUE) — effectively combining both exemptions. The portability election must be made on a timely filed estate tax return (Form 706) even if no estate tax is owed. This must be actively elected — it is not automatic.