Is 2026 a big year for your wealth? | Job Binary

January 1Art, 2026 may not be on your radar. But if you’re married, wealthy, and have valuable assets like a growing business, real estate portfolio, or investments that could be worth tens of millions or more before you die, you should.

Why? Because come 2026, many of the tax fixes that were part of the Tax Cuts and Jobs Act of 2017 (TCJA) are expected to expire. The most impactful change for wealthy couples may be a significant reduction in the estate tax exemption, which currently stands at $12.06 million per person in 2022 (or $24.12 million per couple). Under current law, those higher exemption amounts would revert to the 2010 inflation-adjusted level of $5 million, or about $6.4 million ($12.8 million for married couples) in 2026 — about half of today’s rate — at that federal tax rate. estates in excess of the exemption amount are 40%, plus the state’s death tax, if you live in a state where you have it.

At the end of 2025, Congress must pass an act to prevent the high benefits from expiring. And given record levels of the national debt and aggressive government spending priorities, it’s reasonable to assume that raising revenue through taxes may be a priority going forward. years. For these reasons, Heritage Financial’s wealth management teams are now talking to clients about the incredible opportunity to lock in today’s all-time high levels of estate tax exemptions to help reduce federal estate taxes and increase the ability to leave to their heirs.

A Spousal Lifetime Access Trust is a unique opportunity

A Spousal Lifetime Access Trust (SLAT) is a major estate we discuss with clients that contains significant appreciable assets whose net worth, either now or in the future (before death) may materially exceed the potential aggregate exemption amount ($6.4) in 2026 estate planning tool. million per person, or $12.8 million per couple, given the change in this aspect of the TCJA.

Key features of this belief include:

  • An irrevocable trust established by each spouse (grantor) in favor of the other spouse (beneficiary); (note: irrevocable trusts cannot be identical)
  • Funding of each trust by the respective grantor free of gift tax from current available estates up to the exemption ($12.06 million each or $24.12 million total)
  • Excluding gifted assets from the grantor’s estate, shielding those assets (and their future growth) from estate taxes
  • Spousal beneficiary access to trust income and/or principal, if applicable, subject to certain rules
  • Trust income is taxed to the grantor instead of the trust, effectively allowing the assets in the trust to grow tax-free.
  • The remaining beneficiaries (usually the children) receive the assets when the SLAT ends, often when the beneficiary’s spouse passes away.
  • Ability to structure SLAT as a generation-skipping trust

This strategy is powerful because it involves each spouse establishing a SLAT for the benefit of the other. If each spouse funds their respective trusts up to the current estate tax exemption amount of $12.06 million, together they can protect more than $24 million in assets from estate taxes, and more when considering future growth and income from those assets. For wealthy couples, this strategy is important for tax savings and inheritance planning. A modified version of this strategy can also be used with wealthy individuals.

It should be noted that a key feature of the strategy involves establishing irrevocable trusts, which of course means relinquishing some control. Couples following this strategy should maintain control of enough remaining assets to live comfortably after funding their respective SLATs. So, we’ve found that this strategy works best for wealthy couples who have or expect to have at least $15 million or more in assets.

An opportunity too great to wait

With the estate tax exemption rate at an all-time high and likely to be halved in about three years, the opportunity is huge. Funding a SLAT with the full $12.06 million exemption amount would save an additional $2.4 million in taxes per person today (not including future tax savings or any state estate tax savings that vary by state) compared to protecting about $6. million after January 1, 2026.

But three years left. Why act now?

Nothing this impressive happens without complications. The SLAT strategy is no exception. We’ve seen firsthand what it takes to get this type of estate planning strategy right. In the cases we have worked on, the process involved not only wealth managers with financial planning experience, but also estate planning attorneys and tax accountants. Coordinating all parties and providing common knowledge takes time. Neglecting just one small detail (such as setting up identical trusts for each spouse in violation of the mutual trust doctrine) can negate tax benefits.

But it’s not just technical details. We’ve learned that it takes time for clients to understand the risks versus the benefits. They should be comfortable with the idea of ​​removing large amounts of wealth from their current assets for the benefit of their beneficiaries. They need time to discuss it with their family. And for clients whose wealth includes business or real estate assets, it takes time to complete due diligence.

January 2026 is many years away, but now is the time to plan for the end of this wonderful opportunity for wealthy couples.

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