Do you have at least $1,000,000 in liquid assets, not including your primary residence? Liquid assets include cash, money market accounts, stocks, bonds, and other investments that can be easily and quickly converted to cash. As a high-net-worth individual, you may be eligible for certain tax considerations.
For the tax year 2025, the federal estate, gift, and generation-skipping transfer (GST) tax exemption amounts are:
- Individual Exemption: $13.99 million
- Married Couple Exemption: $27.98 million
This WAS an increase from the 2024 amounts due to inflation adjustments.
As we approach 2026, individuals and families, not just the ultra-wealthy, must understand the potential changes in tax law. For instance, particularly concerning is the area of estate planning. The current estate tax exemption under the Tax Cuts and Jobs Act of 2017 (TCJA) expires on 12/31/2025. A major legislative change, the "One Big Beautiful Bill Act" (OBBBA), has significantly altered the future of the estate tax:
- Sunset Eliminated: The law eliminated the "sunset" provision from the 2017 Tax Cuts and Jobs Act (TCJA), which would have automatically cut the exemption amount roughly in half at the end of 2025.
- 2026 Increase: Instead of a reduction, the basic exclusion amount is permanently increased starting in 2026:
- Individual Exemption (2026): $15 million (indexed for inflation starting in 2027)
- Married Couple Exemption (2026): $30 million (indexed for inflation starting in 2027)
Other Key Elements for 2026
- Top Federal Estate Tax Rate: The maximum tax rate remains at 40%.
- Annual Gift Tax Exclusion: The amount an individual can give to any other person without using up any of their lifetime exclusion or paying gift tax is $19,000 per recipient for 2026.
This change could significantly impact estate planning strategies. Let us share the steps you should consider to navigate these potential changes sooner rather than later.
Tax law changed upon passage of the Tax Cuts and Jobs Act of 2017
Under the TCJA, the estate tax exemption was more than doubled. Initially, it was $5,490,000 for an individual and $11,180,000 for a married couple. Since then, adjusted annually for inflation, it is $15 million for individuals and $30 million for couples in 2026.
These 2026 exemption amounts were made permanent (subject to inflation adjustments beginning in 2027) by the "One Big Beautiful Bill Act" (OBBBA), eliminating a previously scheduled reduction.
For 2025, the seven tax rates were unchanged, but the tax brackets rose from $325 at the 10% rate to $5,350 at the 32% rate. There are a few steps you can consider, guided by your estate planning attorney in advance. In essence, they include, but are not limited to, the following:
Review your current Florida estate plan
Evaluate with your attorney how the bracket changes impact your estate plan. You must understand how your assets will be taxed and whether your current plan optimizes your tax situation.
Consider utilizing the current exemption.
Does your estate exceed the 2025 exemption amounts? High-net-worth individuals may explore postponing taking advantage of the current exemption levels.
Explore trust agreements that can help you reach your goals.
Specific trust agreements can be powerful tools in Florida estate planning. They offer benefits like asset protection, tax optimization, and legacy preservation. Your attorney will be able to help you understand the types of trusts that might be suitable for your situation.
Charitable planning.
Charitable contributions can provide tax benefits and help reduce the taxable value of your estate. Consider establishing charitable trusts or other philanthropic vehicles as part of your Florida estate plan. Equally important, create the legacy you want to leave to future generations.
Tax law is subject to change.
Keep in mind, tax laws and exemptions are subject to change. Stay informed and maintain flexibility in your Florida estate planning to adapt to any legislative changes. The sunset of the current estate tax exemptions in 2025 presents both challenges and opportunities in Florida estate planning. Taking proactive steps now will enable you to position your estate to adapt effectively to these changes. These changes could impact a broad range of estates, not just those of the ultra-wealthy.
Do you question the need for attorney guidance with so many online resources? Because laws and regulations are complex, and because every person has a lot at risk, more people than ever are seeking professional guidance from an experienced, knowledgeable source. That helps explain the rapid growth of our firm. Whether you happened upon this website by accident or are one of the many referrals we receive from a nearly 15-year collection of satisfied clients, our staff can provide customized estate planning guidance for you. Call us. Our number: 1 (772) 218-0480
Written by: John Mangan, JD, MBA
