The Exemption Stopped Moving. The Planning Didn’t.
For most of the last decade, estate planning for high-net-worth clients has been organized around a date. The Tax Cuts and Jobs Act doubled the federal estate and gift tax exemption starting in 2018, but only through the end of 2025 — after which it was set to fall back to roughly half its size. Entire practices built their planning calendars around that cliff: use-it-or-lose-it gifting strategies, irrevocable trust funding pushed to beat the deadline, client conversations anchored to "before it reverts." That cliff no longer exists, and a lot of advisors are still planning as though it does.
The One Big Beautiful Bill Act, signed into law in 2025, raised the basic exclusion amount to $15 million per individual starting in 2026 — up from $13.99 million in 2025 — and made the exemption permanent, with indexing for inflation continuing each year going forward [1]. There is no scheduled reversion. 2026 is the first full year advisors are working under a genuinely stable number, and the planning conversation that made sense for the last several years — get ahead of the sunset — doesn't apply anymore.
What actually changed, and what didn't
The instinct after news like this is to assume estate planning got simpler. For the small number of clients with estates approaching or exceeding $30 million (roughly $15 million per spouse, portability included), the calculus is genuinely different — the urgency to gift before a deadline is gone, replaced by a more patient, less deadline-driven conversation about lifetime gifting, trust structures, and generation-skipping strategies.
But for the much larger group of clients who were never going to face federal estate tax exposure at $13.99 million and certainly won't at $15 million, the binding constraint was never really the transfer tax. It was always income tax basis. That constraint didn't move, and permanence makes it more visible, not less.
Here's the mechanism advisors need to keep front of mind: assets held until death get a step-up in basis to fair-market value, eliminating built-in capital gains tax. Assets gifted during life carry over the donor's original basis, passing the built-in gain to the recipient. When the exemption was smaller and shrinking, the pressure to gift aggressively before the sunset sometimes overrode that basis math — better to move assets out of the taxable estate now, even at a basis cost, than risk a much smaller exemption later. With the exemption permanent and generous, that pressure is gone for the vast majority of clients. The right default for most estates under $15 million per person has shifted decisively toward holding appreciated assets for the step-up, not gifting them away.
A practical reframing for client conversations
Use this sequence with any client whose estate planning strategy was built around the old sunset:
- Recalculate the actual exposure. At $15 million per individual and $30 million with portability, confirm in writing whether the client's estate is realistically within range. Most aren't, and saying so plainly removes urgency that no longer serves them.
- Reassess any gifting strategy adopted defensively before 2026. If a client accelerated gifts specifically to beat the sunset, revisit whether that decision still makes sense now that the sunset is gone — and whether basis was given up for a benefit that no longer exists.
- Shift the estate conversation toward basis planning. For clients below the exemption, the working question becomes which assets to hold for step-up versus which non-tax reasons (creditor protection, control, minor or special-needs beneficiaries) justify lifetime transfer anyway.
- Revisit irrevocable trusts funded under time pressure. Some may still make sense; others were funded to solve a deadline problem that has since disappeared, and unwinding or adjusting them may be worth exploring with counsel.
- Keep watching the portability and inflation mechanics. The exemption still adjusts for inflation annually starting in 2027, and portability rules for a surviving spouse remain in play — permanence removed the cliff, not the ongoing bookkeeping.
Bottom Line
A permanent exemption sounds like less work for advisors, and for the narrow slice of clients who are genuinely estate-tax-exposed, it does remove one source of deadline pressure. For everyone else, it removes a distraction that was quietly overriding the better analysis all along. The advisors who benefit most from this change are the ones who use the calm to go back and ask a basis question they'd been skipping past for a decade: not "how do we get assets out of the estate before the window closes," but "should these assets move at all." That's a smaller, quieter conversation than the one advisors have been having since 2018 — and for most clients, it's the more valuable one.
For CFP® candidates, this is a clean illustration of how a single legislative change can simultaneously simplify one planning domain (the sunset is gone) while making a neighboring one (basis planning) more consequential. The two interact, and the exam increasingly rewards recognizing that interaction rather than treating estate and income tax planning as separate silos.
Sources
[1] Arnold & Porter, "Increases to the Federal Estate and Gift Tax Exemption Under the One Big Beautiful Bill Act (OBBBA)," July 2025, confirming the $13.99 million 2025 exclusion, the $15 million 2026 exclusion, and permanent (non-sunsetting) status with continued inflation indexing beginning 2027. arnoldporter.com
