The 2026 Tax Landscape: Is Your Estate Plan Ready?
If you haven't reviewed your estate plan in the last few years, your family’s legacy could be at risk. We are approaching a major shift in federal tax law. While the "sunset" of the 2017 Tax Cuts and Jobs Act was long-feared, the recent passage of the One Big Beautiful Bill Act (OBBBA) has changed the game for 2026 and beyond.
What is Changing in 2026?
For several years, families in Athens and Limestone County were bracing for a "tax cliff" where exemptions would be cut in half. However, under the new legislation, the federal estate and gift tax exemption is set to rise to a baseline of $15 million per person starting January 1, 2026. While this is good news for many, it also introduces new complexities in how we structure wealth transfer and asset protection.
Why a "Simple Will" Might Not Be Enough
Many North Alabama residents believe a basic Will is a "set it and forget it" document. In reality, estate planning is a dynamic process. Even with higher exemptions, your plan must address more than just taxes—it must address control, protection, and timing. To stay ahead of these changes, you should consider:
- Spousal Lifetime Access Trusts (SLATs): A powerful tool for married couples to lock in high exemptions while still maintaining access to the assets if needed.
- Irrevocable Life Insurance Trusts (ILITs): Ensuring your life insurance proceeds remain tax-free and provide immediate liquidity for your heirs.
- Business Succession: If you own a business in Athens, the OBBBA may change how you transfer non-voting interests to the next generation.
The Importance of Portability
One of the most critical aspects of the new law is the continuation of "portability." This allows a surviving spouse to "port" over any unused portion of their deceased spouse's exemption. However, this isn't automatic—it requires specific filings that a skilled Athens estate planning attorney must handle to ensure your family doesn't leave millions in protection on the table.
Don't Wait Until the End of the Year
The best time to "lock in" your current protections and adapt to the new $15 million threshold is now. Attorney Harlan D. Mitchell provides personalized guidance to ensure your plan reflects the latest federal shifts while remaining grounded in Alabama law.
For a detailed overview of how these federal shifts work, you can review the official Estate and Gift Tax Overview from Congress.gov.
Is your plan outdated? Learn more about our Estate Planning services and secure your family's future.