Estate planning in 2026: What financial advisors need to know now

Estate planning in 2026: What the OBBBA means for your client conversations

For the better part of two years, estate planning conversations were shaped by a single piece of pending legislation. The federal estate, gift, and generation-skipping transfer tax exemption created by the 2017 Tax Cuts and Jobs Act was set to expire at the end of 2025. Advisors and clients were preparing for the exemption to drop from $13.99 million per person to roughly $7 million. The urgency was real, and the planning that came out of it was sound.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law. The exemption didn't fall. Starting January 1, 2026, it rose to $15 million per person, permanently, with no sunset provision. For married couples, that is $30 million. Beginning in 2027, the amount adjusts for inflation.

The window that drove so much urgency didn't close. It got wider. That changes the conversation, but it doesn't end it.

What did the OBBBA change for estate planning in 2026

The federal estate, gift, and GST exemptions are now set at historically high levels with no scheduled expiration. Assets above the exemption remain subject to a 40% federal transfer tax, layered on top of any applicable state-level estate or inheritance taxes. The GST exemption is aligned with the estate and gift tax threshold, which simplifies multi-generational planning without reducing its complexity.

The relief is real. Far fewer estates will face federal estate tax exposure than they would have under the old scheduled reset. But the OBBBA didn't change what makes an estate plan work. It changed one variable inside it.

What the new framework means for planning strategies

The strategies that held up through two years of uncertainty are the ones worth keeping, not because they were built around a specific exemption number, but because they were built around real goals.

Lifetime gifting still removes future appreciation

The logic behind lifetime gifting doesn't depend on a deadline. Transferring assets now removes not just their current value but all future growth from a taxable estate. Annual exclusion gifts, currently $19,000 per recipient, continue to move value out of an estate without consuming lifetime exemption. That math works at any exemption level.

Trust structures may need a review

Trusts drafted around the anticipated drop may not operate as intended under the new framework. Formula clauses written around a $13.99 million threshold, for example, may behave differently under $15 million than they were designed to. Older trust designs built entirely around avoiding a reset that didn't happen are worth revisiting with an attorney. What matters now is whether the structure still reflects the client's actual goals.

Closely held business interests still carry real risk

A higher exemption doesn't change what a privately held business is worth or how long a thoughtful transfer takes. Valuation discounts related to lack of control or marketability still require time, accurate appraisals, and coordinated planning. Waiting for a triggering event still means fewer options.

Charitable planning serves goals that exist independent of tax law

Donor-advised funds, charitable remainder trusts, and charitable lead trusts aren't products of the sunset conversation. They reduce taxable estates, support philanthropic intent, and in some cases provide income. The right structure depends on the client's timing, asset type, and long-term goals, not on where the exemption sits.

Do state estate taxes change under the new federal exemption

Federal headlines tend to crowd out the state-level picture. That is a problem for clients with meaningful exposure at the state level.

Illinois, Oregon, Washington, Massachusetts, New York, and several other states impose estate or inheritance taxes at thresholds well below the federal exemption. For families with multi-state ties, real estate in more than one state, or residency questions, this requires its own planning. Trust situs selection, residency considerations, and asset repositioning are not clean-up tasks. They require advanced coordination.

What to say to clients who think the work is done

Some clients will look at the new exemption and conclude that estate planning can wait. Some will wonder whether the planning they did over the last two years was necessary at all.

The honest answer is yes. The planning was right. The context changed, not the logic behind the work.

A higher exemption does not fund a trust that was never funded. It does not update a beneficiary designation that still names the wrong person. It does not replace a power of attorney that no longer reflects the client's circumstances or assign an executor who is actually equipped for what the role requires.

Clients who acted under the old urgency have plans that are more current, more intentional, and better aligned than they were two years ago. That is not incidental. That is the point.

What should financial advisors still be asking clients about their estate plan

Whether the exemption is $7 million or $15 million, the questions that matter most remain the same.

• Are the documents current?
• Does the trust hold the assets it was meant to hold? 
• Do the beneficiary designations reflect the actual intent? 
• Are the right people in the right roles, and do they understand what those roles require?

Those questions have nothing to do with Congress. They have everything to do with whether the plan a client has is the plan that will actually work when it needs to.

The context shifted. The work didn't.

Could the estate tax exemption change again

The OBBBA eliminated the TCJA sunset, but it did not eliminate the possibility of future legislative change. A future administration could revisit exemption levels. Advisors who helped clients build flexible, well-structured plans are in the best position to adapt when that happens.

Planning that holds up over time is planning built around the client, not the calendar.

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Legislative note: This article reflects federal law and widely accepted planning guidance as of April 2026. Estate tax law remains subject to future legislative change. Strategies discussed are designed to preserve flexibility rather than rely on a single legislative outcome.

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