Estate Tax Alert: Protecting Assets from the 2026 Exemption Reduction

AAFCPAs advises clients to consider proactive strategies to shield their assets now from steep tax liabilities should the estate tax exemption be left to decrease to $7 million on January 1, 2026. Now is the time for high-net-worth individuals to consider wealth transfer and gifting strategies that can help you maintain control while also locking in future appreciation.

Lock in Asset Appreciation

High-net-worth individuals have a unique opportunity to use potential changes to estate tax exemptions to their benefit through strategic gifting to family members or spouses. Structured in the right manner, for instance in a properly designed trust, clients can protect the appreciation on those assets from estate tax, financially shielding future growth. Since one of the main concerns clients have when gifting assets is a perceived loss of control, this can also be handled in a manner that keeps you in charge of those assets.

Consider an individual that owns real estate worth $500,000 today with the expectation that its value will increase over time. By placing that property in a properly structured trust, they may lock that value in. Then, if that property appreciates and is worth $2 million in 10 years, appreciation may be excluded from your estate, depending on how it is gifted. Careful planning can result in significant tax savings.

Assets placed in trust for the benefit of your children also offer additional protections. Specifically, a properly structured trust could safeguard their inheritance from creditors and potential bankruptcy. It may also provide some protections in the event of a divorce depending on state laws.

Under the current $13.6 million estate tax exemption, any gift made today preserves appreciation free of estate tax, which can reach up to 40 percent at the federal level. This presents a significant opportunity for those who capitalize on it. Understanding all options available to you and how those options align with your personal goals is critical for effective estate planning.

The Importance of Early Planning

Those who delay action could miss valuable opportunities for wealth preservation. The deadline for taking advantage of the current exemption is December 31, 2025; now is the time to act. The process for establishing a properly structured trust and navigating the legal landscape takes a great deal of time and involves multiple parties, who may or may not be accepting new clients. Those who wait until the last minute could be left scrambling, particularly as demand grows for similar estate planning services. Starting early gives you more options and control, ensuring your strategy is as well-planned and effective as possible.

How We Help

AAFCPAs advises high-net-worth clients on a range of estate planning strategies designed to safeguard assets while preserving their access and control. Our tax professionals work closely with estate attorneys and wealth advisors to ensure those plans align with our clients’ financial goals, locking in future appreciation and minimizing tax liabilities. If you are considering the transfer of wealth or exploring ways to protect future appreciation, we can discuss options tailored to your unique situation. If you have questions, please contact Daniel Seaman, CPA, Tax Partner at 774.512.4025 or dseaman@nullaafcpa.com, Joshua England, LLM, Esq., Partner & Tax Attorney at 774.512.4109 or jengland@nullaafcpa.com—or your AAFCPAs Partner.