Estate Tax Planning 2026: What the “Big Beautiful Bill” Means for Your Estate Plan in King County
If you have been following the headlines, you may have seen the One Big Beautiful Bill Act (OBBBA) splashed across financial news. Signed on July 4, 2025, the law locks in a fifteen‑million‑dollar federal estate and gift tax exemption for every U.S. citizen starting January 1, 2026. Married couples who coordinate properly can shield about thirty million dollars from federal estate, gift, and generation‑skipping transfer (GST) tax. The flat 40 percent rate on anything above those amounts stays put, and the step‑up in basis at death is also untouched.
Those numbers sound huge, and for most families they are. But here is the real takeaway: estate tax planning is only one small part of a truly comprehensive estate plan. Let’s walk through what changed, who still needs to think about taxes, and why focusing on taxes alone leaves big gaps in family protection.
1. A Quick Tour of the New Rules
Congress could have let the current exemption fall back to about six million dollars in 2026, but OBBBA made the higher limit permanent and even bumped it up a bit. The exemption will continue to rise with inflation. Spousal portability remains in place, so a surviving spouse can add any unused exemption of the spouse who died first. If your estate is comfortably under the new threshold, federal estate tax is unlikely to be your family’s biggest headache.
2. Who Should Still Care About Estate Taxes?
Ultra‑high‑net‑worth families. If your total estate, including life insurance and closely held business interests, edges toward thirty million dollars, you are still in the tax zone.
Entrepreneurs and real estate investors. Business sales, rapid appreciation, or the eventual sale of a portfolio property can push you over the line faster than you think.
Anyone worried about future political shifts. Congress has raised and lowered the exemption many times. If a later law trims the limit, today’s advanced strategies may prove invaluable.
For everyone else, tax savings are welcome but not life‑changing. What can be life‑changing is whether your heirs avoid probate, whether someone you trust can manage your affairs if you are incapacitated, and whether family harmony survives the transition.
3. The Bigger Picture: Beyond the Tax Conversation
Probate avoidance. A revocable living trust keeps your affairs private, speeds up distributions, and prevents an out‑of‑state child from flying across the country for court hearings.
Incapacity planning. Financial and medical powers of attorney make sure bills get paid and health decisions align with your wishes if an accident or illness leaves you unable to act. No amount of tax savings can help if your accounts are frozen during an emergency.
Beneficiary designations. Retirement accounts, life insurance, and payable‑on‑death bank accounts can bypass probate entirely. If the names on those forms disagree with your will, chaos follows.
Long‑term care costs. Nursing‑home bills can run more than one hundred thousand dollars per year. Medicaid eligibility planning and asset‑protection trusts often matter far more than federal estate tax for middle‑class families.
Family dynamics. Clear instructions, letters of intent, and no‑contest provisions reduce the chance that children from prior marriages, siblings, or in‑laws will drag each other to court.
4. State Taxes and Other Surprises
Even with a fifteen‑million‑dollar federal exemption, your estate could still face state inheritance or estate taxes. A well‑crafted plan will address these local rules as carefully as the federal ones.
5. Putting It All Together
Update your net‑worth snapshot. Include life insurance death benefits and current real‑estate values.
Meet with an estate planning attorney. Discuss whether you need advanced tax tools or a simpler probate‑avoidance strategy.
Check beneficiary forms. Make sure they match your overall plan.
Review every three to five years. Laws change, markets move, and families evolve.
Ready for a Truly Comprehensive Estate Plan?
Our King County estate planning team looks at the entire landscape: probate, incapacity, family harmony, local inheritance taxes, and, yes, the new federal estate‑tax rules. Whether your assets total two hundred thousand dollars or two hundred million, we will create a plan that fits your life, protects your loved ones, and adapts to whatever Congress does next.
Contact us to schedule a consultation, and feel confident that every piece of your estate puzzle is in place, not just the tax corner.
