The 2017 Tax Cuts and Jobs Act is changing many things in 2026 and one of those affects Estate Planning.
The Tax Cuts and Jobs Act of 2017 (TCJA) effectively doubled the gift and estate tax exclusion and the generation-skipping transfer tax limits. The TCJA will sunset on December 31, 2025. In 2023, the exclusion amount is $12.92 million per person and $25.84 million for married couples. This amount is subject to adjustment for inflation and should increase through 2025. Assuming nothing changes, starting January 1, 2026, the exclusion will decrease to $5.25 million, indexed for inflation (projected to be about $6.4 million at that time).
Therefore, assume you have an estate worth $25 million, you could gift to your children a significant portion now for example $20 million and minimize the estate tax on $5 million. If you wait $20 million will be subject to estate tax. Ouch!
Those are large numbers. However, if your estate is close to $5 million and you thought you were well below the 12.92 million, you will not be in 2026 but right at the taxable limit.
If you have some significant assets, now is the time to do estate tax planning.