Scheduled Significant Limitation of the Federal Unified Gift and Estate Tax Exemption

Calendar 2026

A significant reduction of the Federal Unified Gift and Estate Tax Exemption is scheduled to take effect on 1/1/26.

What You Need to Know

Federal Lifetime Gift & Estate Tax Estimated Exemption (Individual)*

Current (2024)

$13.61

MILLION

Planned

$6.5

MILLION

Change

$7.11

MILLION

*The scheduled change would take effect on 1/1/26. This assumes inaction by Congress between now and then, including after the 2024 election cycle. The timeline could change including possible acceleration by Congress or the President.

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A Monumental Change Affecting Many

Given the significant anticipated reduction to the gift and estate tax exemptions, taxpayers are encouraged to revisit their current estate plans and explore gifting opportunities in advance of the deadline. Inaction risks the possibility of losing a once in a lifetime opportunity to shift significant wealth out of an individual’s taxable estate and allow those assets to continue to appreciate.

This scheduled change may affect many individuals and couples, including business owners and those owning real estate.

Unified Gift and Estate Tax Reduction change
Unified Gift and Estate Tax Reduction change

The Background

In November of 2017, Congress passed the Tax Cuts and Jobs Act and increased the federal unified gift and estate tax exemption from $5.49 million to $11.18 million and provided that the exemption would be adjusted annually for inflation. The 2024 lifetime exemption is $13.61 million, adjusted for inflation. Currently, the federal exemption will return to pre-2018 amounts of ~$6.5 million adjusted for inflation effective January 1,2026. This timeframe assumes inaction by Congress to accelerate a change.

Why Think About This Now?

While the end of 2025 seems like a long way off, the reality is that time goes by quickly.
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It takes time to discuss options, agree on a strategy and, more importantly, to implement the actions to take advantage of the current Federal Unified Gift and Estate Tax exemptions before the exemptions are significantly decreased.
Government
Here is an overview of WCN’s recommended process and the six phases to be completed prior to the scheduled reductions in the Federal Unified Gift and Estate Tax exemption amounts for individuals and couples.
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These phases are provided as a general guideline, each client’s situation will vary in complexity and scope. It is advisable to get started early and be assured that the strategy and plan has been fully implemented as opposed to not having sufficient time to fully implement.

It is important to note that any changes must be complete PRIOR to 1/1/26.
Paperwork to transfer assets must be done, not in process.

An Overview of the Process

Develop Strategy

2024

Q1

Develop
Strategy

Create Plan

2024

Q2-Q3

Create
Plan

Implement Plan

2025

Q1

Implement
Plan

Asset Valuation

2025

Q1-Q3

Asset
Valuation

Final Review

2025

Q3

Final
Review

Transfer Assets

2025

Q4

Transfer
Assets

Important note: the documentation required to implement the plan can take time.

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Recommended Actions

Unified Gift and Estate Tax Reduction change
Our trust and estate attorneys will guide and counsel you from initial strategy through implementation, helping you make an informed decision as to what actions may make sense to effectively plan and implement your gifting strategies and estate plan. We will work with your accountant, wealth advisors and other trusted professionals for a coordinated effort.

Call us at 781-235-5500 , email us or contact one of our trust and estate attorneys in our Private Client Services practice to schedule a meeting. We look forward to assisting you in strategizing, planning and implementing a plan to take advantage of the current gift and estate tax lifetime exemptions before they could be dramatically reduced.

Unified Gift and Estate Tax Reduction change