Estate Taxes in 2026: What High-Net-Worth Families Should Know

The federal estate tax touches only estates above a multimillion-dollar exemption — [INSERT current per-person federal exemption] per person as of this writing — at a top rate of 40% on the excess, and married couples can effectively combine exemptions through portability if an estate tax return is filed at the first death. Two facts complicate the comfortable "this doesn't apply to me" conclusion: exemption levels are set by legislation and change — families near the line should plan against movement in either direction, not the current number — and a dozen-plus states impose their own estate or inheritance taxes with far lower thresholds, some starting around $1 million, meaning a family comfortably under the federal line can still face a meaningful state bill. [LEGAL REVIEW: current state list.]

What counts toward the line. Everything: real estate, business interests, investment accounts, retirement accounts, and — the one that surprises people — life insurance proceeds from policies you own. A $3M house, $2M in accounts, and a $2M policy is a $7M estate. Insurance is also the classic fix: an irrevocable life insurance trust (ILIT) owns the policy so proceeds fall outside the estate — one of many tools that work only if implemented before the relevant events.

The standard toolkit. Annual-exclusion gifting ([INSERT current annual exclusion] per recipient per year, uncapped by number of recipients) moves wealth tax-free and removes future appreciation; lifetime use of the exemption via trusts locks in today's exemption against future reduction; grantor trusts, GRATs, and family entities shift appreciation at discounted values for larger estates; and charitable structures (remainder trusts, foundations, donor-advised funds) align philanthropy with deduction. Basis matters as much as the tax: assets held until death receive a step-up in basis, erasing capital gains — so the giving-versus-holding decision is a two-tax optimization, not one.

The review cadence. Estate plans age badly across legislative changes, moves between states, liquidity events, and family changes. The professional consensus: a structural review every three to five years, and immediately after any of the above.