In this video, Attorney Justin M. Kennedy explains the new 2026 estate tax exemption, why prior scare tactics were premature, and what this means for your estate planning going forward.
TRANSCRIPT:
Hello, I’m attorney Justin M. Kennedy with Litherland, Kennedy and Associates, a California estate planning and elder care law firm.
The Federal government has changed the estate tax law for 2026.
As you may know, in 2025 we have an estate tax exemption of $13.99M per person. That is $27.98M for a married couple. Every dollar of your assets above those thresholds is subject to a 40% federal estate tax.
The law increasing the exemption to almost $14M was set to expire at the end of 2025 and return the estate tax exemption back to $5M, indexed for inflation in 2026.
There were many attorneys in our community intentionally trying to scare their client and prospects into engaging in expensive advanced estate planning techniques to avoid or limit estate tax exposure prior to 2026.
Even our office’s clients received some of these solicitations from those other attorneys. When our clients asked us about it, I explained the status of the law and then I gave them my recommendation. I explained that it was premature to engage in such advanced estate planning techniques and I asked them to be patient. I explained that I did not expect the estate tax exemption to fall to, let alone stay at $5M in or after 2026. I even braced our clients that Congress could wait until mid-2026 to act but if they did, they would make the law retroactive to January 2026. Our clients see me and the other attorneys with our office as a trusted resource and they followed our recommendation.
Luckily, our clients did not have to wait long, as in early July 2025 the Federal government changed the estate tax exemption law for 2026. The exemption will no longer expire and return to $5M.
Instead, the exemption has been set at $15M per person ($30M for a married couple) and it will be further indexed for inflation in years to come. Additionally, Congress did not include an expiration date into the new law. This means that the fear of the $5M exemption is gone absent new legislation.
If you would like to learn more about how these limits may impact you and your estate planning needs, then we invite you to register for one of our upcoming presentations. You may find those presentations on our website attorneyoffice.com.
Thank you.
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