Estate Tax Planning in 2026: New Exclusion, Old Mistakes
You can earn a lot, save a lot, invest a lot, and still leave a mess behind.
Not because you did anything reckless.
Because estate planning feels like something you “get to later.”
Then later shows up.
Here’s the simple version of what’s changing in 2026. The federal estate and gift tax exclusion is $15,000,000 per person for 2026. That’s the amount you can pass during life and at death before federal estate tax kicks in.
If your estate goes above the exclusion, the federal estate tax rate can reach 40% on the amount over the line.
So yes, this stuff mostly matters if you’re a high-income earner who’s also building real net worth.
And if you’re a business owner, it can sneak up faster than you think.
This post is about estate tax planning in 2026, written for people who don’t want a law degree. You’ll see what the “new exclusion” means, what people still get wrong, and what a clean plan can look like in real life.
You’ll also see why high-income tax planning, business tax planning, and even 1099 income tax planning all connect to estate planning more than most people expect.
Who this is for in 2026
If your net worth is nowhere near eight figures, you might skim this and move on.
Still, if you check even one box below, read it like it applies to you. Because it probably does.
This is for you if:
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You’re a high-income earner and your wealth is rising fast
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You own a business, or you’re a partner in one
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You hold real estate, private equity, or concentrated stock
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You’re a physician or consultant with serious side income and you do 1099 income tax planning every year
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You expect a liquidity event
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Practice sale
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Business sale
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Large buyout
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Big inheritance (yes, that counts too)
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You’re married and you assume “we’re fine because everything goes to my spouse”
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You live in a state with its own estate or inheritance tax (federal planning is not the full story)
One small detail worth knowing for 2026: the annual gift exclusion stays at $19,000 per recipient. That’s the amount you can give someone in 2026 without even filing a gift tax return in most cases.
If you’re thinking, “Okay, but my real plan is to just leave it all later,” I get it. I also see how that tends to play out.
The 2026 exclusion change, in plain English
The 2026 federal basic exclusion amount is $15 million per person.
For married couples, estate planning often talks about “doubling” the shelter. That’s real, but it depends on how you structure things and whether you preserve the first spouse’s unused exclusion.
That’s where portability enters.
Portability is the rule that can let a surviving spouse use the deceased spouse’s unused exclusion (DSUE). The catch is simple and painful.
Portability is not automatic.
You generally need to file Form 706 to elect portability, even if the estate is below the filing threshold.
That is a classic “old mistake” that stays alive in 2026.
And yes, this is one of those areas where a tax advisor pays for themselves. Not because the concept is complex, but because the timing and paperwork can be unforgiving.
If you want a practical “stay sharp” resource on the tax side of planning in general, I often send people to the IRS newsroom page because it’s a good habit to check primary sources once in a while: IRS tax tips.
Old mistakes people still make (even with a higher exclusion)
A bigger exclusion doesn’t remove mistakes. It can make people more relaxed, which can be worse.
Here are the ones I see over and over.
1) Treating estate planning like it’s only about death
Estate planning is really about:
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control
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access
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taxes
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timing
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keeping the business running
If you’re doing business tax planning but skipping ownership and succession planning, you’re leaving a gap.
2) Forgetting liquidity
Your net worth might be $18 million, but if $12 million is tied up in a business and real estate, your heirs may have a cash problem.
Estate tax is due in dollars, not in “potential value.”
The plan often needs:
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life insurance structured correctly
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a buy-sell agreement
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a path to sell or transfer ownership without chaos
3) No valuation discipline
High-income business owners love clean numbers in the P&L.
Then estate planning shows up and asks, “What is the business worth?”
If you don’t have:
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reasonable valuation support
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clean entity records
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clear cap table or ownership docs
…you can end up with a valuation fight at the worst time.
And this connects back to basic operating habits. Even something as “not estate-related” as understanding business write-offs can hint at whether your records are tight. If you want an example of the kind of discipline I mean, see what capital expenditures are and how clean categorization impacts your long-term planning.
4) Missing portability
This one deserves repetition.
If you want portability, you often need to file Form 706 at the first death. The IRS is clear that the portability election is tied to filing the estate tax return.
People skip it because:
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“We’re under the limit.”
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“We can do it later.”
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“Everything just goes to the spouse.”
Then the survivor dies with an estate that has grown, and the missed exclusion is gone.
5) Leaving your plan disconnected from the rest of your tax strategy
This is where your annual planning loops in.
Estate planning touches:
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entity structuring
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income shifting
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charitable strategies
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retirement accounts
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succession planning
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gifting plans that complement high-income tax planning
If you’re already thinking in long horizons, you’ll like this planning framework: the 10-year target, 3-year picture, 1-year plan, and quarterly rocks. It’s not “estate tax code.” It’s the mental model that keeps you from avoiding decisions until it’s too late.
Examples that feel like real life
Let’s make this concrete. Not perfect. Just real.
Example 1: The practice owner with a strong year and no estate plan
You’re a specialist. You’re clearing high income. Your practice throws off cash. You also own the building.
You’ve been focused on 1099 income tax planning and quarterly payments. You’re careful about penalties. You might even have the safe harbor rules in your back pocket.
If that’s you, keep this bookmarked: safe harbor rules and IRS penalties for business owners.
Now the estate planning gap.
Your balance sheet grows. The business value grows. The real estate grows. Your total estate crosses eight figures before you “feel rich.”
A basic estate plan here often includes:
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updated documents (will, revocable trust, powers of attorney)
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business succession planning
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portability planning if you’re married
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a gifting strategy that matches cash flow
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a liquidity plan so heirs don’t have to fire-sale assets
This is still estate planning, even if it sounds like operations.
Example 2: The high-income couple who assumes marriage solves everything
This is the classic.
One spouse dies, everything transfers to the survivor.
The survivor’s estate grows. Markets rise, real estate rises, the business expands. Then the second death happens.
If portability wasn’t elected, the couple may have effectively used only one exclusion instead of preserving both. The IRS explains that portability is tied to filing and election mechanics.
It’s a paperwork mistake with a price tag.
Example 3: The “my CPA handles it” situation
CPAs can be fantastic. Some do deep planning. Some focus on compliance and filing.
Estate tax planning needs coordination.
You want your tax advisor, estate attorney, and whoever manages investments to be on the same page, especially if:
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you hold multiple entities
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you have multiple income streams
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you’re balancing W-2 and 1099 work
If you want a high-level reference that ties those worlds together, these two are useful reads:
Even if you’re not a physician, the decision-making patterns translate well to other high earners.
And yes, sometimes the “estate planning meeting” turns into a general cleanup of the whole tax system. That’s not a bad outcome.
One odd example I’ve seen: a client who was proud of big write-offs, but their recordkeeping was messy and raised audit risk. They also had a loose estate plan. Those things correlate more than people want to admit. If you’re the kind of owner who stacks deductions like vehicles and home office, make sure the structure is clean: heavy vehicle and home office tax deductions.
FAQs: Estate tax planning in 2026
What is the federal estate tax exclusion in 2026?
For 2026, the IRS lists the basic exclusion amount as $15,000,000 for estates of decedents who die during 2026.
What is the annual gift exclusion in 2026?
The annual gift exclusion is $19,000 per recipient for 2026.
What happens if my estate is above the exclusion?
The amount above the exclusion can face federal estate tax, with the top rate commonly referenced as 40%.
Does portability happen automatically when my spouse dies?
Usually no. Portability is an election, and the IRS explains it’s tied to filing an estate tax return (Form 706) to transfer the unused exclusion to the surviving spouse.
I’m focused on business tax planning. Why should I care about estate planning right now?
Because your business is often your biggest asset. Estate planning is what keeps that asset transferable without drama, tax surprises, or forced liquidation.
Is estate tax planning only for the ultra-wealthy?
It’s for people whose net worth is rising faster than their planning. That includes many high-income business owners who don’t feel “ultra” at all.
The next step
If you’re reading this and thinking, “I might be close, but I’m not sure,” that’s the right feeling.
Estate tax planning in 2026 is not just about the new $15 million exclusion. It’s about avoiding the same old mistakes that show up at the worst time: missed portability, no liquidity plan, messy valuations, and a tax strategy that stops at April.
Your next step can be simple:
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Estimate your net worth honestly
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List what’s illiquid
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Identify whether you need portability planning
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Bring your estate documents, entity docs, and last tax return into one conversation with a tax advisor
If you already invest time into high-income tax planning, treat estate planning like the long-range version of the same work. It’s still planning. It’s just planning for the last set of decisions your family will ever have to make on your behalf.