Estate planning in 2026 feels different — and in the best way possible. After years of uncertainty, shifting laws, and “wait and see” planning, we finally have a more predictable federal landscape. That stability gives families a chance to step back and ask: Does my plan still accomplish what I want it to?
At the federal level, the permanently increased estate, gift, and GST exemptions — $15 million per person, indexed annually — are shaping most of the planning conversations this year. With exemptions this high, families have far more room to make strategic lifetime gifts and reduce future estate exposure in a variety of ways. And just as an important reminder: while the estate and gift exemption can be transferred to a surviving spouse, the GST exemption cannot, so multigenerational planning still needs to be intentional.
Trusts continue to play a major role. They offer structure, protection, and long‑term estate tax planning benefits, and they give families options to tailor how assets are managed and passed down. Some families use grantor trusts, where the grantor pays the income tax and helps the trust grow faster. Others benefit from non‑grantor trusts, which open the door to income‑tax planning opportunities, state tax strategies, and charitable giving flexibility. There is no universally “right” choice — the best structure depends on goals, timing, and each family’s broader financial picture.
Even though the federal rules feel settled, state law still matters. Every state approaches estate and inheritance taxes differently. New York, for example, remains one of the more challenging jurisdictions. Its 2026 estate tax exclusion is $7.35 million, and if an estate exceeds that amount by more than 5%, the entire exclusion disappears — the well‑known “cliff.” New York also has a three‑year gift clawback, which can pull certain lifetime gifts back into the estate if they were made shortly before death.
And for those with Pennsylvania ties: the state doesn’t impose an estate tax, but it does have an inheritance tax. Rates depend on who inherits — spouses are exempt, children and grandchildren pay 4.5%, and more distant heirs may face higher rates. It’s a simple reminder that state‑level rules vary widely, and understanding the differences can make a real impact on how much ultimately passes to your beneficiaries.
New York and Pennsylvania are just two examples. States like Massachusetts, Connecticut, Maryland, Oregon, and Washington each have their own estate or inheritance tax systems with different thresholds and rules. If you don’t live in one of those states but own property there, it’s important to remember that your estate may still face tax in that state — nonresidents can be taxed on real property or tangible assets located within the state, even if their primary residence is elsewhere.
Another shift in 2026 is how closely estate planning now overlaps with income tax planning. The focus isn’t limited to the estate tax anymore. Families are using trusts to manage ongoing tax exposure, coordinate charitable goals, and prepare for long‑term business transitions. The most effective plans now bring income and estate tax considerations together rather than treating them as separate decisions.
All of this makes 2026 a good year to revisit your estate plan. The federal landscape is finally stable, state rules still influence outcomes, and the planning tools available today — especially trusts — offer more flexibility than ever. A thoughtful update can reduce taxes, protect your family, and keep your planning aligned with your goals for the future.
If you need further guidance or have any questions, please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
