Estate Tax Exemption Increased to $15 Million with No Sunset Provision

Creating a comprehensive estate plan is an important responsibility for any adult. A knowledgeable lawyer can prepare a will or trust that ensures your property is distributed in accordance with your intentions. However, you still should pay attention to estate-related concerns even after you have a plan in place. Shifts in financial circumstances and familial relationships might warrant adjustments to your legal instruments. Furthermore, laws can change that could drastically alter the effectiveness of your plan. 

Until the passage of what was termed “One Big Beautiful Bill,” the federal estate and gift tax exemption was set to drop by approximately half at the end of 2025. However, enactment of the law means that the individual exemption will increase from the current figure of $13.99 million to $15 million starting in 2026. Importantly, unlike the previous law, there is no sunset provision, confirming that this exemption level will remain in place indefinitely, barring future legislative changes.

The exemption represents the amount an individual can transfer upon their death without incurring federal estate taxes. Similarly, the gift tax exemption allows individuals to transfer a certain amount of assets to others during their lifetime without triggering federal gift taxes. The gifting mechanism is particularly advantageous as it enables wealth transfer incrementally over the years, reducing someone’s taxable estate upon death. High net worth individuals and families who might have hesitated to utilize the higher exemption for fear that it would expire in 2025 can now move forward with confidence. 

Like the previous rule, the exemption will be modified annually to reflect inflation. It is also important for married couples to remember that portability allows spouses to double the exemption, so as much as $30 million could pass to the next generation without taxation. 

Even if your estate likely wont rise to the level that would be subject to federal taxation, it’s important to consult an experienced attorney when you’re looking to draft or revise a will or trust. With personalized legal guidance, you can gain the security of knowing that your wishes will be honored and your loved ones can enjoy what you left them without undue cost, delay or hassle. 

McManaway Law, LLC in Greenville assists Upstate South Carolina clients with the development of wills, trusts and other estate planning instruments. Please call 864-428-8912 or contact me online to discuss your particular situation and goals.