Do you own a home? Planning to update your estate plan in 2026? The U.S. housing market now exceeds $49.7 trillion in total value (according to Redfin). That’s the single largest concentration of family wealth in American history. Yet Trust & Will reports that 55% of Americans have no estate plan at all.
This gap between what people own and how they protect it creates real problems. Without documentation, courts decide who gets your property. Without powers of attorney, strangers make your medical decisions. Without planning, the IRS may take a large portion of what you intended for your family.
Death and taxes remain certain. Your family’s security doesn’t have to be uncertain.
When Did You Last Review Your Estate Plan?
If it’s been three years or more, a lot has changed. Tax laws shifted. Maybe your family grew. Your assets probably look different now than they did in 2023. And that old estate plan? It’s likely built around exemption limits and state rules that don’t apply anymore. We see this all the time. People assume their documents are fine because nothing dramatic happened. But the law moved, and their plan didn’t. Get it reviewed by an estate planning attorney before you’re caught off guard.
This applies whether you live in a state with its own estate tax or a state like Michigan that has none. If you own property in multiple states, each jurisdiction applies different rules to your assets. A vacation home in Massachusetts exposes you to that state’s $2 million exemption threshold, regardless of where you maintain primary residence.
A secondary residence in another state adds complexity. A tax attorney can determine which state offers better tax treatment for your principal residence designation. They can also make sure your powers of attorney remain valid across state lines.
2026 Federal Estate Tax Law Changes
Congress passed the One Big Beautiful Bill Act on July 4, 2025, and it rewrote the estate tax playbook. Starting January 1, 2026, the rules are different. If someone passes away in 2026, their estate can transfer up to $15 million before federal estate tax kicks in. That’s up from $13.99 million the year before. Big jump.
Here’s what these numbers mean for your planning.
For Individuals
So what does $15 million actually mean for you? You can give away or leave behind that much, during your life or after you’re gone, without owing a penny in federal estate tax. Go over that number, though, and the IRS takes 40% of everything above it. That’s a big bite.
For Married Couples
Here’s something most people don’t realize about married couples. If one spouse dies and doesn’t use their full $15 million exemption, the surviving spouse can grab what’s left. They just need to file a federal estate tax return to claim it. That’s called portability, and it’s a huge deal for couples who plan ahead.
For Annual Gifts
Now, about gifts. You can give $19,000 per person in 2026 without touching your lifetime exemption. Married? You and your spouse can give $38,000 to the same person, no paperwork, no impact on your estate. If your spouse isn’t a U.S. citizen, the annual gift limit to them goes up to $194,000 in 2026.
Worth Noting:
Starting in 2027, this exemption should adjust for inflation. Remember all that talk about the exemption dropping back to $7 million per person in 2026? The 2017 tax law had that scheduled. It’s not happening now. The new law made the higher exemption permanent.
State Estate Taxes That Catch People Off Guard
Federal exemptions tell only part of the story. Some states impose their own estate tax, and their exemption amounts are often much lower than the federal exemption. Massachusetts, for example, has a state estate tax exemption of just $2 million with no inflation adjustment.
Twelve states and the District of Columbia maintain separate estate or inheritance taxes. If you live in or own property in these areas, your estate may owe state taxes even when it falls well below federal thresholds.
If your estate totals $4 million, you owe nothing to the federal government. If you own property in Maryland, where the state exemption is $5 million, you remain protected. Cross the border into Massachusetts with a $2 million threshold, and your heirs face a state tax bill.
Why Higher Exemptions Still Require Updated Plans
The federal exemption went way up. That’s good news. But it doesn’t mean you can ignore your estate plan. In fact, there are some specific reasons you should pull those documents out and take another look.
Your Documents May Contain Outdated Formulas
Many estate plans drafted before 2011 include provisions based on exemption levels that no longer exist. These formulas can produce unintended results when applied to current law.
State Taxes Work Independently
Federal law does not affect state-level estate or inheritance taxes. Your state may still apply its own rules.
The 40% Rate Remains Substantial
For estates exceeding exemption limits, the tax rate has not changed. The 40% federal estate tax rate still applies to amounts above the exemption.
Political Conditions Shift
Congress retains the authority to amend or repeal tax laws. Future administrations may revisit the estate tax framework. Planning with flexibility protects against legislative changes.
What the Higher Exemption Opens Up
Higher exemption limits create planning opportunities that did not exist before 2026. The increase of $1,010,000 per person presents additional gifting opportunities even for individuals who previously used their full lifetime exclusion amounts.
If you’ve been considering property investments, business expansion, or wealth transfers to the next generation, the current exemption structure allows you to do so with reduced tax exposure. Assets transferred today, along with their appreciation over time, exit your taxable estate permanently.
With the federal estate and gift tax exemption now permanently elevated and indexed for inflation, individuals and families have a unique opportunity to make meaningful transfers of wealth without incurring federal transfer taxes.
Act before your circumstances change or the law does. Contact a qualified estate planning attorney to review your current documents against 2026 requirements.
How Five States Handle Estate and Inheritance Taxes in 2026
Your estate plan operates under two separate tax systems. Federal and state. While the federal exemption increased to $15 million per person in 2026, state laws follow their own rules, thresholds, and timelines. Some states impose estate taxes. Others impose inheritance taxes. A few impose both. Many impose neither.
What applied when you drafted your original documents may no longer reflect current law. Here’s how five states handle estate and inheritance taxes in 2026, and what these rules mean for your planning.
Maryland
Maryland has one of the most complex estate tax environments in the country. The state imposes both an estate tax and an inheritance tax, making it one of only two jurisdictions (along with the District of Columbia’s neighbor) to levy both.
Estate Tax
Maryland’s estate tax exemption remains fixed at $5 million per individual. This figure has not changed since 2019 and is not indexed for inflation. Married couples can shelter up to $10 million through proper portability elections filed on a timely Maryland Estate Tax Return. The estate tax rate ranges from 0.8% to 16% on amounts exceeding the exemption.
The Federal Gap
This creates a significant difference from the federal exemption. An estate worth $12 million owes nothing to the federal government under the new $15 million exemption. That same estate owes Maryland approximately $700,000 in state estate taxes on the $7 million exceeding Maryland’s threshold.
Inheritance Tax
Maryland also hits you with a 10% inheritance tax, but only on certain people. If you leave money to your spouse, kids, grandkids, parents, or siblings, they pay nothing. Leave something to a niece, nephew, friend, or anyone outside that direct family circle? They owe 10% on whatever they receive.
One thing to watch in Maryland. Governor Wes Moore floated the idea of dropping the state estate tax exemption from $5 million down to $2 million back in January 2025. People had opinions about that, as you’d expect. Nothing passed. The $5 million exemption still stands for 2026. But if your estate is anywhere near that number, keep an eye on what the legislature does next.
New Jersey
The state got rid of its estate tax back on January 1, 2018. If you’re a New Jersey resident and you pass away in 2026, it doesn’t matter how much your estate is worth. No state estate tax. Period.
New Jersey Retains Its Inheritance Tax
But here’s where people get tripped up. New Jersey still has an inheritance tax. And that’s not the same thing.
An estate tax looks at everything you own before it gets divided up. One bill, based on total value. An inheritance tax works differently. It looks at each person who receives something and taxes them based on two things: how much they got and how they’re related to you.
New Jersey splits beneficiaries into four groups, and each group pays a different rate.
1. Class A (Exempt)
Spouses, domestic partners, civil union partners, parents, grandparents, and direct descendants pay no inheritance tax on any amount received.
2. Class C (11% to 16%)
Siblings and children-in-law receive the first $25,000 tax-free. Amounts above this threshold face graduated rates from 11% to 16%.
3. Class D (15% to 16%)
All other beneficiaries, including cousins, nieces, nephews, friends, and unmarried partners, pay between 15% and 16% on their entire inheritance with no exemption.
4. Class E (Exempt)
Charitable organizations, religious institutions, and educational entities pay no tax.
Three-Year Lookback
New Jersey includes any federal adjusted taxable gifts made within three years of death in the taxable estate for inheritance tax purposes. Deathbed gifts do not avoid this tax.
Planning Note
If you plan to leave assets to siblings, in-laws, or anyone outside your direct family line, New Jersey’s inheritance tax can reduce their share significantly. Naming these individuals as beneficiaries of life insurance policies held in an irrevocable trust, rather than as direct estate beneficiaries, may provide tax-efficient alternatives.
New York
New York is one of the most aggressive estate tax systems in the country. NY has a lower exemption and a punishing “cliff” provision that can multiply tax liability with minimal estate growth.
2026 Exemption
The New York estate tax exclusion amount for deaths occurring in 2026 is $7,350,000, up from $7,160,000 in 2025. Also, New York’s threshold is not portable between spouses. Each spouse must use their own exemption through proper trust planning, or the first-to-die’s exemption is lost.
The Cliff
New York’s estate tax includes a “cliff” provision that eliminates the exemption entirely if an estate exceeds 105% of the exclusion amount. For 2026, this cliff triggers at approximately $7,717,500 (105% of $7,350,000).
For example;
An estate valued at $7,350,000 pays zero New York estate tax.
An estate valued at $7,500,000 pays tax only on the $150,000 exceeding the exemption.
An estate valued at $7,800,000 has exceeded the cliff. The entire $7,800,000 becomes taxable from the first dollar. The estate tax liability jumps from approximately $20,000 to over $600,000.
Tax Rates
New York’s estate tax rates are graduated, starting at 3.06% and climbing to 16% for estates substantially exceeding the exemption. Combined with the cliff provision, this creates scenarios where a modest increase in estate value produces catastrophic tax consequences.
The Santa Clause
Many New York estate plans include a “charitable savings clause” (sometimes called a “Santa Clause”). This provision automatically directs any estate value exceeding the cliff threshold to a designated charity. The charitable bequest brings the estate back below the cliff, eliminating state estate tax while supporting a cause the decedent selected. This strategy can save beneficiaries hundreds of thousands of dollars.
No Gift Tax
New York does not impose a gift tax. Gifts made within three years of death are added back to the estate for purposes of determining whether the estate exceeds the exemption or cliff threshold.
Planning Note
New York residents with estates between $7 million and $8 million face the highest relative risk. Annual asset appreciation, life insurance proceeds, or inherited assets can push an estate over the cliff without warning. Review your estate value annually and implement cliff-avoidance strategies before values approach the danger zone.
Ohio
Ohio eliminated its state estate tax effective January 1, 2013. This repeal applies to all deaths occurring on or after that date, regardless of estate value.
No Estate Tax
Ohio imposes no state-level estate tax. An estate worth $50 million passes to heirs without any Ohio estate tax obligation.
No Inheritance Tax
Ohio also imposes no inheritance tax. Beneficiaries receive their full inheritance without state-level taxation based on their relationship to the deceased or the amount they receive.
Federal Rules Still Apply
While Ohio provides a favorable state environment, federal estate tax rules remain in effect. For 2026, estates exceeding $15 million per individual ($30 million for married couples) face federal estate tax at rates up to 40%.
Multi-State Considerations
Ohio borders Pennsylvania, which imposes an inheritance tax on beneficiaries at rates of 4.5% to 15% depending on relationship. If you own real estate or tangible property in Pennsylvania, your Ohio beneficiaries may owe Pennsylvania inheritance tax on those specific assets. Similar exposure exists with property owned in other states that maintain estate or inheritance taxes.
Planning Note
The absence of Ohio estate and inheritance taxes does not eliminate the need for planning. Probate costs, federal estate tax exposure for larger estates, and income tax treatment of inherited retirement accounts all require attention. Ohio’s favorable tax environment makes it an attractive domicile for high-net-worth individuals.
Texas
Texas imposes no state estate tax and no state inheritance tax. In November 2025, Texas voters approved Proposition 8, a constitutional amendment that permanently prohibits the state legislature from implementing estate, inheritance, or death taxes.
Constitutional Protection
Proposition 8 added Section 26 to Article 8 of the Texas Constitution, barring the legislature from imposing a state tax on the property of a deceased individual’s estate, imposing a tax on the transfer of estates, inheritances, legacies, successions, or gifts, or increasing any transfer tax rate that was in effect on January 1, 2025.
No Gift Tax
Texas does not impose a state gift tax. Residents need only consider federal gift tax rules when making lifetime transfers.
Federal Rules Still Apply
Texas residents remain subject to federal estate tax for estates exceeding the $15 million per individual exemption ($30 million for married couples) in 2026. The federal rate reaches 40% on amounts above the exemption.
Community Property State
Texas follows community property law. Assets acquired during marriage are generally owned equally by both spouses. Upon death, half of community property belongs to the surviving spouse automatically, and the decedent can only direct disposition of their half through their will or trust. This affects both estate planning structure and potential estate tax calculations.
Multi-State Considerations
If you own property in states that impose estate or inheritance taxes, those assets may trigger tax obligations in those jurisdictions regardless of your Texas residency. A vacation home in Maryland, investment property in New York, or inherited land in Pennsylvania could expose your estate to state-level taxes that Texas cannot shield.
Planning Note
The constitutional prohibition on Texas estate and inheritance taxes provides long-term certainty that few other states offer. For individuals considering relocation to reduce estate tax exposure, Texas now provides both current benefits and constitutional protection against changes. Federal planning should always be done for estates approaching or exceeding the $15 million threshold.
Update Your Estate Plan When Your Family Grows
The annual U.S. birth rate may be falling, but there were still 11.8 births per 1,000 persons in 2017. If your family recently welcomed a new member, it’s time to update your estate plan.
A tax attorney can show you how a new addition to your family will affect your estate taxes. They can guide you through the best ways to include this new family member in your plan. They can also identify the best types of “gifts,” whether that’s an education plan, a part of your estate, or a trust.
The same applies if you’re planning an adoption or now have an adopted grandchild. Speaking of adoptions, check if you’re eligible for the adoption tax credit. Eligible families may receive up to a $13,840 non-refundable tax credit.
When You Make a Substantial Investment
Let’s say you made some investments last year that paid out well last month. Or maybe you’re part of the lucky 30% of Americans who receive a wealth transfer during their lifetime.
Either way, both can mean a substantial addition to your assets. Even if you don’t reach the federal estate tax exemption, have an attorney review your plan. This way, you can decide how you want your now-larger estate distributed.
The same is true if you’re expecting your assets to increase in value over time. A common example is when you’re planning to sell your business. If this sale will push your estate’s value beyond the federal exemption, it’s time to review your plan.
With the right guidance from your tax attorney and estate planner, you may be able to transfer some of your wealth.
When You Suffer Investment Losses
On the flip side, your estate may have suffered losses since the last time you updated your plan. Considerable losses warrant a careful review of your estate documents.
Let’s say that when you executed a trust, your estate was worth $5 million. That trust indicates that $500,000 will go to your church and another $500,000 to charity. Your three kids and spouse will split the remainder.
Over the years, you’ve lost quite a lot due to financial setbacks. Your estate’s worth has dropped to $1.5 million.
If you pass away, your church and charity may still receive what your outdated trust indicates. Your four family members may only end up with $125,000 apiece.
$125,000 is still a meaningful amount, but you’d probably rather have more of your estate go to your loved ones, right? That’s why it’s important to keep your tax attorney and estate planner in the loop.
Losing a Loved One
No one wants to think about losing a family member, whether a spouse or a child. Yet death is inevitable, and sometimes accidental.
It’s understandable if the only thing you want to do is grieve and mourn. But you should consider revising your estate plan soon. This is especially true if the person you lost was your primary representative.
Don’t Wait to Update Your Estate Planning Documents
As you can see, there are many situations that call for revisiting and revising your estate plan. Any major life change, whether an addition or a loss, should prompt you to reach out to a tax attorney and estate planner.
This way, you can make sure you’re paying your taxes and paying the right amount. Most importantly, you can better prepare for what comes next.
Need a tax attorney you can rely on to help with your estate? Connect with us now. We take care of estate tax issues so you don’t raise red flags with the IRS.
