In 2026, Your Estate Tax Exemption is Cut in Half.
The historically high estate and Generation-Skipping Transfer Tax (GSTT) exemptions are set to expire at the end of 2025. Before this window of opportunity closes, simulate your strategy to protect your assets.
Check My Estate Tax SavingsEstate & GSTT Simulator
Enter your financial information to see the impact of the 2026 tax law changes and compare the savings from establishing a Dynasty Trust.
* You can adjust the trust funding amount up to the 2025 combined spousal GSTT exemption of $27,980,000.
* The simulation assumes both spouses pass away after 2025 when the exemption drops to an estimated $7M per person.
Simulation Results
Projected Tax (No Plan)
$0
Projected Tax (With Trust)
$0
Total Estimated Tax Savings
$0
Visualizing Your Estate Composition
In-Depth Analysis of Key Strategies
Dynasty Trust: The Ultimate Asset Protection Strategy
A Dynasty Trust is the most powerful tool for using the current high GSTT exemption to permanently shield assets from estate and GSTT for multiple generations.
- Permanent Tax Exemption: By funding a trust with your GSTT exemption by 2025, the assets and all future growth are shielded from estate and GSTT in subsequent generations.
- Asset Protection: Assets held in the trust are legally protected from descendants' creditors, lawsuits, and divorces.
- Control: The grantor can specify rules for how the assets are managed and distributed for generations, ensuring the family's legacy and values are maintained.
It is critical to establish this trust by the end of 2025 to "lock in" the current high exemption ($13.99M per person).
The Non-Portability Trap of the GSTT Exemption
While the estate tax exemption is portable between spouses, the GSTT exemption is not portable.
This means if the first spouse to die does not use their GSTT exemption, it is permanently lost. For example, if a husband's will simply leaves "everything to my wife," his $13.99M GSTT exemption vanishes. This necessitates sophisticated planning with trusts to utilize each spouse's exemption while they are alive.
Basic Tools: Annual Gifting & Direct Payments
Along with advanced strategies, foundational methods should be used to transfer wealth without using the lifetime exemption.
- Annual Gift Tax Exclusion: For 2025, you can give up to $19,000 per person to any number of individuals without filing a gift tax return. A couple can give $38,000. This is the simplest way to transfer assets to grandchildren without GSTT implications.
- Direct Educational & Medical Payments: You can pay for tuition or medical expenses for anyone in any amount, as long as the payment is made directly to the institution. This does not use your annual or lifetime exemptions and is a very effective way to preserve them.
Frequently Asked Questions
Q: What is the GSTT and why is it important?
A: The Generation-Skipping Transfer Tax (GSTT) is an additional 40% tax imposed on transfers that skip a generation, such as gifts to grandchildren. It's designed to prevent wealthy families from avoiding a layer of estate tax. Without planning, assets can be double-taxed by both the estate tax and the GSTT.
Q: What exactly is changing in 2026?
A: Barring new legislation, on January 1, 2026, the estate and GSTT exemption amounts will revert to their pre-2018 levels, adjusted for inflation. This means they will be cut roughly in half (to about $7 million per person). The same assets will be subject to much higher taxes starting in 2026.
Q: If I make a large gift now, could it be retroactively taxed if the law changes?
A: No. The IRS has issued "anti-clawback" regulations, which state that gifts made using the current high exemption amounts will not be retroactively taxed, even if the exemption is lower at the time of death. This is precisely why acting now is so critical.