The landscape of estate planning continues to evolve, and 2026 brings significant changes to federal estate tax exemptions that California families should understand. Whether you are beginning your estate planning journey or reviewing an existing plan, staying informed about these updates can help you make strategic decisions to protect your family’s legacy.
This comprehensive guide answers the most frequently asked questions about the 2026 estate tax changes, explains how they may affect your family, and outlines what steps you should consider taking to ensure your estate plan remains effective.
What is the federal estate tax exemption for 2026?
The Federal Exemption rate before Federal Estate Taxes are applied is now 15.0m per person. This means a married couple can move up to 30.0m, by allowing the surviving spouse to use the decedent spouse’s unused share before there will be any Federal Estate Tax considerations. As this is a Federal tax exemption, when referring to the “doubling” which is called portability, this only applies to married persons. Therefore persons living together or in a domestic partnership do not have the same right to use the decedent’s unused share of exemption.
Key Takeaways:
- $15 million exemption per individual
- $30 million combined for married couples through portability
- Portability allows a surviving spouse to utilize their deceased spouse’s unused exemption
- Important: Portability benefits apply only to legally married couples, not to domestic partnerships or cohabiting partners
Will fewer estates owe estate tax under the new 2026 exemption?
While the threshold for owing a Federal Estate Tax is now higher, very few families in the US actually faced the tax in the first place. It is estimated that less than half of 1% of the US households will cross the exemption limit.
This means that for the vast majority of American families, federal estate tax will not be a concern. However, this does not diminish the importance of proper estate planning, which provides many benefits beyond tax avoidance, including probate avoidance, asset protection, and ensuring your wishes are honored.
How does the 2026 estate tax change affect high-net-worth families?
High net worth families may now pass a little more than 2.0m more than they could in 2025.
For families with significant assets, this increase provides additional flexibility in wealth transfer strategies. High net worth planning strategies may include the use of irrevocable trusts, charitable planning vehicles, and sophisticated gifting strategies to maximize the benefits of these higher exemptions.
Are there specific state or local estate taxes and are they affected by the 2026 estate tax change?
California does not have its own estate tax (inheritance tax) at this time, having done away with such a tax in 2005 (prior to this while CA did have its own tax, it was a deduction against the Federal Estate Tax, so same net outcome). Several states still impose their own tax including Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia – all at varying rates of exemption amounts, and varying rates of tax applied.
For California residents, this is welcome news. Your estate plan can focus on other critical objectives such as avoiding probate, providing for family members, and ensuring a smooth administration of your estate.
What is the gift tax annual exclusion for 2026?
The annual gift tax exclusion remains the same from 2025 at $19,000 per recipient, although multiple persons may make such a gift to the same person. In the case of a married couple, both spouses can give to the same person i.e., child, grandchild thus doubling the gift to $38,000. In a family situation wherein the donors have a confidence and trust/faith in their son/daughter-in-law a total gift of $76,000 could be given to the couple. Example: dad gives daughter 19k, gives son-in-law 19k and mom does likewise 19k x 4 = $76,000. This money could be used for any purpose, but a common theme would be down payment for a home.
Annual Gift Tax Exclusion Summary:
- $19,000 per recipient (unchanged from 2025)
- Married couples can combine gifts: $38,000 to a single recipient
- Strategic family gifting: Up to $76,000 to a married child and their spouse
- Common uses include down payment assistance for home purchases
How does the inflation adjustment set the 2026 estate tax exemption?
The inflation adjustment has moved the Federal Estate Tax exemption amount to 15.0m per person (30.0m per married couple) from the 2025 exemption amount. The exemption amount will again be adjusted in 2027 and years subsequent. Since there is always some measure of inflation, this amount will continue to either remain at the historic highs or even further increase over the course of our lifetimes.
This ongoing adjustment provides some predictability for long-term planning. Working with an experienced estate planning attorney ensures your trusts and overall plan remain aligned with current law while anticipating future changes.
Do I need to update my estate plan because of the 2026 tax changes?
Estate plans should be reviewed regularly, as there are many changes in laws from year to year. For estate plans created prior to 2018, there is a strong likelihood that the plan uses outdated tax principles, including the use of credit shelter trusts (often referred to as A/B Trusts and used prior to the recent tax changes) which should be changed to fit the current environment. Further, people’s opinions and options change over time and people come in and out of our lives. Unless the family was relatively close to the threshold triggering an estate tax, the change from last year to this year will affect very few families.
When to Consider Updating Your Estate Plan:
- Your estate plan was created before 2018 and may include outdated tax provisions
- Your plan includes Credit Shelter Trusts (A/B Trusts) that may no longer be necessary
- Your family circumstances have changed (marriages, divorces, births, deaths)
- Your financial situation has significantly changed
- It has been more than three to five years since your last review
For more information about revocable living trusts and how they fit into modern estate planning, we encourage you to explore our resources or schedule a consultation.
The 2026 estate tax updates provide significant opportunities for California families to preserve and transfer wealth. With a $15 million individual exemption ($30 million for married couples), most families will not face federal estate tax liability. However, proper estate planning remains essential for avoiding probate, protecting assets, and ensuring your wishes are honored.
Key Points to Remember:
- Federal estate tax exemption is now $15 million per person ($30 million for married couples)
- Less than 0.5% of U.S. households will exceed the exemption threshold
- California has no state estate or inheritance tax
- Annual gift tax exclusion remains $19,000 per recipient
- Estate plans created before 2018 may need updating
- Regular estate plan reviews are recommended every three to five years
Schedule Your Free Consultation
Understanding how the 2026 estate tax changes affect your specific situation requires personalized guidance. At the Law Offices of David R. Schneider, we provide comprehensive estate planning services tailored to your family’s unique needs and goals.
With over 27 years of experience serving Southern California families, David R. Schneider personally works with each client to develop customized solutions that protect your legacy and provide peace of mind.
Contact Us Today:
- Phone: (805) 374-8777
- Email: dschneider@drs-law.com
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- Address: 325 E. Hillcrest Drive, Suite 195, Thousand Oaks, CA 91360