The $15 Million Estate Exemption Is Permanent. Here Is What Still Needs Planning

Key takeaways

The exemption is $15 million per person and $30 million per couple with portability in 2026, indexed for inflation, with no scheduled reduction.
Fewer than one estate in a thousand will owe federal estate tax; Florida has none.
For everyone else, the priorities are step-up in basis, the income tax on inherited retirement accounts, avoiding probate, and protecting the people involved.
Portability still requires filing an estate tax return at the first death, even when no tax is due.

For most of the last decade, estate planning conversations had a deadline in them. The 2017 tax law had doubled the exemption temporarily, with a scheduled cut in half at the end of 2025, and families with $10 million to $25 million spent years deciding whether to make large gifts before the window closed. The One Big Beautiful Bill Act, signed in July 2025, ended that. The exemption is now $15 million per person for 2026, indexed for inflation after that, with no sunset.

Good news for the families who were racing the clock. It also changes what estate planning is for.

Who still pays estate tax

Federal estate tax applies to the value of everything you own at death above the exemption: investments, retirement accounts, real estate, business interests, and life insurance you own on your own life. With a $15 million exemption per person, and $30 million for a married couple who use portability, the tax reaches a very small number of estates. Before the 2017 changes, roughly two estates in a thousand owed tax. The number is smaller now.

Florida has no estate tax and no inheritance tax, so residents here only face the federal question. Families with a home in another state should check, because more than a dozen states still impose their own estate or inheritance taxes, some with exemptions as low as $1 million.

The rate above the exemption is 40%, which is why the families it does reach still plan carefully. Irrevocable trusts, lifetime gifting, charitable strategies, and life insurance in trust all still matter for them. For everyone else, those tools are usually the wrong thing to be focused on.

What actually needs planning now

With the tax mostly off the table, four things carry the weight.

Step-up in basis. Assets held until death get a new cost basis equal to their market value, and the capital gain that built up during life disappears. A stock bought for $50,000 and worth $500,000 at death passes to heirs who can sell it the next day with no gain. So "which assets to spend and which to hold" becomes a real estate planning decision, and some gifts during life turn out to be mistakes, because gifted assets carry the donor's basis. Our guide to step-up in basis covers the strategy.

The income tax on retirement accounts. A traditional IRA gets no step-up. Whoever inherits it pays ordinary income tax on every dollar, and most non-spouse beneficiaries have to empty it within ten years. For a family whose largest asset is a $2 million IRA, this is the real estate tax: a third or more of the account going to income tax in the children's highest-earning years. The remedies are Roth conversions during the parents' lives, naming charities as IRA beneficiaries, and thinking about which child gets which asset. See the 10-year rule.

Probate. Florida probate is a court process with statutory attorney fees, public filings, and a timeline measured in months. A revocable living trust, properly funded, avoids it for the assets it holds; beneficiary designations and transfer-on-death registrations avoid it for the rest. The question of revocable trust or will in Florida is really a question about probate.

People. Who manages money for minor children, and until what age. How a surviving spouse is protected in a second marriage while children from the first marriage are provided for. Whether an adult child with creditor, addiction, or divorce risk should inherit outright or in trust. What happens to the family business. None of this has anything to do with the exemption. All of it is what estate planning was always for.

Portability isn't automatic

A married couple's combined $30 million exemption depends on an election. When the first spouse dies, the survivor can only use the deceased spouse's unused exemption if an estate tax return (Form 706) is filed for that estate, even though no tax is owed. The deadline is normally nine months after death, with an extension available, and the IRS allows a late election in some cases up to five years. Skipping the filing because "we're nowhere near the limit" has cost families millions when a business or a property later grew. We recommend the filing for any estate above a few million dollars. It's the boring part, and it's worth it.

Gifting without the deadline

The annual exclusion is $19,000 per recipient in 2026, and gifts within it never touch the lifetime exemption. Larger gifts require a gift tax return and reduce the exemption but don't create tax until it's exhausted. With no sunset, there's no longer any reason to rush large gifts to "lock in" the exemption. Gifts should happen because the family wants to help now, because an asset is expected to grow a lot, or because it moves income to a lower bracket, and always with the basis consequences in mind. We cover the practical side in annual gifting in 2026.

The documents still matter

A permanent exemption doesn't shrink the need for a will, a revocable trust where appropriate, durable powers of attorney, health care directives, and correct beneficiary designations on every account. It shifts the emphasis inside those documents from tax minimization to administration, protection, and income tax. Estate plans drafted in the 2010s often contain formula clauses and bypass trusts built for a $5 million exemption. They can produce results nobody intended today, and they're worth a review.

We coordinate this work with each client's estate attorney. We bring the balance sheet, the projection of what the estate will look like, the account-by-account income tax picture, and the beneficiary audit; the attorney drafts. Then we make sure the accounts and designations actually match the documents, which is where most plans quietly fail. That coordination is what estate planning means at a firm that doesn't draft documents.

Frequently asked questions

Will the exemption go back down?

Not under current law. The 2025 act removed the sunset and indexed the $15 million figure for inflation. Congress could change it in the future, but there's no scheduled reduction.

Does the exemption cover gifts and estates together?

Yes. It's a unified exemption. Taxable gifts during life reduce what's available at death. Annual exclusion gifts and direct payments of tuition or medical expenses don't count.

Do I still need an irrevocable trust?

For most families, no, unless there's a non-tax reason: asset protection, a special needs beneficiary, or a specific control goal. Families above or near the exemption still use them. Existing irrevocable trusts should be reviewed rather than assumed necessary.

What about life insurance in the estate?

Life insurance you own is included in your taxable estate. That only matters if the estate exceeds the exemption, in which case an irrevocable life insurance trust removes it. Below the exemption, owning the policy directly is simpler.

Joseph G. Valerio, CFP®, EAFounder and Lead Advisor at Valerio Wealth Management, a fee-only, fiduciary virtual family office in Miami, Florida. One advisor, credentialed in both financial planning and federal tax. About Joseph

This article is general education, not individualized advice, and it is not tax, legal, or accounting advice. Figures reflect federal law for the year stated and can change. Valerio Wealth Management does not prepare or file tax returns. Speak with a qualified professional about your own situation before acting.