If you have built substantial wealth, it is important that you have a plan for future federal estate and gift tax exemptions. Federal law allows you to transfer a significant amount of wealth during your lifetime and at death without incurring estate or gift tax. However, those exemption amounts are not permanent, and major changes are scheduled to take effect in 2026.
You need to understand how the federal exemption works, and our team of attorneys is ready to help. Let the team at Leeson Estate Planning help you prepare for the future before these exemptions shrink.
Overview of Federal Estate and Gift Tax Exemptions
The federal estate tax and gift tax operate as part of a unified system. You receive a lifetime exemption that covers both taxable gifts made during your lifetime and assets transferred at death, which simplifies what could otherwise be an even more complex process.
When you make gifts above the annual exclusion amount, those gifts reduce your lifetime exemption. At the time of your passing, the remaining exemption shields a portion of your estate from federal estate tax, if you owe anything at all. Any value above the exemption may face a federal estate tax rate of up to 40 percent.
For high-net-worth individuals, having a plan for federal estate tax exemptions in place could decide whether millions of dollars remain with their heirs or pass on to the IRS. The same applies to exemptions for your gift tax obligations.
Explanation of 2026 Changes to the Exemption
Under current federal law, the estate and gift tax exemption reached historically high levels due to changes enacted in recent years. However, those expanded exemption amounts were scheduled to sunset at the end of 2025 unless Congress takes action.
Instead, changes in the law at the federal level actually increased the exemption amount. Beginning on January 1, 2026, the exemption is increased to $15 million for individuals and $30 million for married couples. The new law also continues the process of allowing portability of the deceased spouse’s unused exemption. The bottom line: more people than ever are qualifying for exemptions.
Planning Considerations for High-Value Estates
If your net worth approaches or exceeds the projected post-2025 exemption, you need to evaluate your exposure now. It is crucial that you take these changes into account, especially if you are eligible for an exemption now after not qualifying previously.
Planning for federal tax exemptions requires you to think about the future, not just consider what your estate is worth today. Laws can change, and asset values can shift, but our attorneys can ensure that you are prepared for what comes next.
How Can Gifting and Trusts Manage Your Estate Tax Risks?
Gift tax exemption planning plays a central role in reducing the estate tax bill of your heirs after your passing. Strategic lifetime gifting can involve direct transfers to children or grandchildren, but more sophisticated plans often rely on trusts. Irrevocable trusts allow you to shift appreciating assets out of your estate while maintaining certain controls over how beneficiaries receive distributions.
Spousal Lifetime Access Trusts (SLATs), Grantor Retained Annuity Trusts (GRATs), and other advanced planning tools can help you use your exemption efficiently while preserving the kind of flexibility you need to provide for your family.
Gift tax exemption planning also helps you address complicated family dynamics. You can provide for children differently, protect assets in case of divorce, or otherwise use your hard-earned assets in a way you see fit. Every strategy requires coordination with your overall estate plan, and that is where our team comes in. At Leeson Estate Planning, we can keep track of everything from your final wishes to future tax obligations to ensure you get the outcome you deserve.
Importance of Proactive Legal Planning
Federal estate and gift tax rules are constantly evolving, making it difficult to navigate them without the help of a professional. A single misstep can create unintended tax consequences, trigger reporting obligations, or undermine your entire estate plan.
Proactive legal planning also allows you to integrate tax strategy with your broader estate objectives, always ensuring that there is synergy between the two. While reducing the risk of an estate tax obligation is important, these efforts should not interfere with your other priorities. Our attorneys can build an estate plan that meets all of your needs.
When you wait until after the exemption drops or after health concerns arise, the opportunity to take a flexible approach to planning for the future can go away. By coordinating with attorneys who have your best interests in mind, you can prepare for the future and ensure you avoid any unnecessary tax bills along the way.
Talk to Leeson Estate Planning Today
If you have questions about planning for the federal estate and gift tax exemption in 2026 and beyond, now is the right time to ask. Our attorneys are here to help you explore your options and avoid paying more than what you owe. Reach out to Leeson Estate Planning today to get started.
Frequently Asked Questions
What is the current federal estate and gift tax exemption?
The federal estate and gift tax exemption is a unified lifetime amount that allows you to transfer a certain value of assets without incurring federal estate or gift tax. Currently, the exemption is $15 million for individuals and $30 million for couples.
Does Pennsylvania have an estate tax?
Pennsylvania does not impose a separate state estate tax. However, the federal estate tax may still apply if your estate exceeds the federal exemption. Our attorneys can answer your questions about your eligibility.
How does the PA Inheritance Tax differ from the Federal Estate Tax?
The Pennsylvania Inheritance Tax applies to transfers to beneficiaries and depends on the relationship between you and the recipient. Different rates apply to spouses, children, and more distant heirs. The federal estate tax, by contrast, applies to the overall value of your taxable estate and only affects estates that exceed a set amount.
What is “Portability,” and do you need to file for it?
Portability allows a surviving spouse to use a deceased spouse’s unused federal estate tax exemption. To secure portability, the estate of the first spouse to die must file a timely federal estate tax return, even if no tax is owed. You could miss out on this portability if you fail to file.