Maximize the Current Estate and Gift Tax Exemption Before It Decreases
The estate and gift tax exemption is at an all-time high of $13.99 million per person in 2025 (up from $13.6 million in 2024). However, this generous exemption is set to drop significantly—potentially to $7 to $8 million per person—on January 1, 2026, unless new legislation extends it.
This looming change presents a critical window of opportunity for high-net-worth individuals to take advantage of the current tax structure before it shifts.
Why Does This Matter?
If your estate is worth more than the new lower exemption, anything over the threshold could be taxed at 40%. That means a significant portion of your wealth—assets you intend to pass on to your loved ones—could be lost to estate taxes.
By planning ahead, you can take steps to minimize taxes and ensure more of your wealth stays in your family’s hands.
What Can You Do to Protect Your Estate?
Now is the ideal time to take action. Consider the following estate planning strategies:
Make gifts before the exemption decreases. You can transfer assets now and take advantage of the higher exemption while it lasts.
Set up trusts to protect wealth. Trusts help manage and distribute your assets while reducing estate tax liability.
Utilize valuation discounts. Certain estate planning techniques, like gifting minority interests in a business or family partnership, may allow you to reduce taxable estate values.
Add flexibility to your estate plan. Consider provisions such as disclaimer trusts, Clayton QTIP elections, and lifetime special powers of appointment to allow for adjustments based on future tax laws and family needs.
Why Plan Now?
Although the exemption reduction isn’t happening until 2026, waiting too long can limit your options and increase the risk of higher taxes on your estate. By planning ahead, you can secure tax savings and peace of mind for you and your family.
Need help navigating these changes? Contact Kaminski Law Group at (916) 540-7618 or visit www.californiatrusts.law to discuss how you can maximize your estate planning strategy before the exemption drops.
