What the 2026 Estate Tax Changes Could Mean for Your Legacy

[Updated on August 14, 2025.]

If you've taken steps to protect your family's financial future, there's a new development you should know about. A new law now permanently increases the federal estate and gift tax exemption to $15 million per person starting in 2026. Known informally as The One, Big, Beautiful Bill, the legislation includes changes that affect trusts, large gifts, and even introduces a new savings account for children. Here's what the law actually says, and how it might influence your estate plan.

Section 110006: Estate Tax Exemption Increases to $15 Million

At the time of the writing of this article, the estate and lifetime gift tax exemption is $13.61 million per person. It was scheduled to revert to around $6–7 million in 2026.

The new law changes that:

"The basic exclusion amount... shall be $15,000,000 in the case of an individual dying or making a gift after December 31, 2025."
(Section 110006 of The One, Big, Beautiful Bill)

This means that beginning in 2026, individuals could protect up to $15 million, and married couples up to $30 million, from federal estate or gift taxes. This amount will also be adjusted annually for inflation.

What This Means for Your Estate Plan

This change has wide-reaching implications:

• You may want to revisit trusts established to lock in pre-2026 exemption levels.

• Large lifetime gifts planned for 2025 might be delayed to align with the higher limit.

• Estate plan formulas tied to older exemption amounts could need updating.

While the tax benefits may shift, trusts remain a key tool for control, protection, and legacy planning.

Additional Estate Planning Provisions in the Bill

Beyond the headline exemption increase, the bill includes several other elements with estate planning implications:

MAGA Accounts for Children (Sections 110115–110116)

• New tax-advantaged savings accounts for children under 18.

• Annual contribution limit: $5,000 per child, indexed for inflation starting in 2027.

• Contributions are post-tax; growth and qualified withdrawals are tax-free.

• Funds must be used for the benefit of the child; misuse triggers taxes and penalties.

These accounts may offer a simpler alternative to UTMA/UGMA or minor's trusts for small-scale gifting.

Trustee Fee Deduction Eliminated (Section 110010)

• Trustee and investment advisory fees are no longer deductible as itemized deductions.

• This change primarily impacts irrevocable non-grantor trusts and could prompt structural reviews.

Standard Deduction Increase (Section 110002)

• Raises standard deduction to $20,500 (single) and $41,000 (married filing jointly) in 2026.

• With fewer households itemizing, some charitable trust strategies may become less attractive.

Tax-Free Overtime & Tips (Sections 110101–110102)

• Exempts overtime and tip income from federal income tax.

• While indirect, this may increase discretionary income and savings potential, encouraging early estate planning.

Planning Next Steps

Now that the law is in effect, it's a smart time to revisit your estate plan:

• Confirm your trust structure aligns with future tax thresholds.

• Consider MAGA Accounts for minors if you plan on regular gifting.

• Evaluate gifting strategies for 2025 vs. waiting for 2026.

• Remove reliance on deductions that may soon be disallowed.

FAQs

Q: What is the estate tax exemption today?

A: $13.61 million per person (at the time of the writing of this article), adjusted annually for inflation.

Q: What has changed now that the bill is law?

A: The exemption will permanently increase to $15 million starting in 2026, with inflation adjustments.

Q: Are MAGA Accounts like Roth IRAs?

A: They function similarly to 529 plans: post-tax contributions, tax-free growth, and tax-free qualified withdrawals.

Q: Should I cancel my trust now?

A: Not at all. Trusts offer benefits beyond taxes, including control, privacy, and asset protection.

Final Thoughts

Estate planning is about more than taxes—it's about protecting what matters. With this new law in place, it's a valuable moment to check in, reassess, and ensure your legacy is secure.

Trust & Will makes estate planning simple so you can create a customized, state-specific plan from the comfort of your own home. Take our free quiz to discover which estate plan best fits your needs today, to secure your family’s future.

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