Hi,
For years, high-net-worth families braced for the 2026 “sunset” that was supposed to cut the estate tax exemption in half.
That threat is now officially gone. 🎉 A new tax law made the estate tax exemption permanent and set it at $15 million per person, $30 million per married couple for 2026, indexed to rise from here.
Everything above the exemption is taxed at 40% when you die. That’s not just today’s net worth, it’s every dollar your assets grow.
So, the winning move is to get appreciating assets out of your estate now, at today’s value, so all the future growth lands with your heirs instead of the IRS. Two vehicles do this cleanly:
- The IDGT (Intentionally Defective Grantor Trust). You sell appreciating assets to a trust for your heirs in exchange for a note at the IRS rate, currently about 4.35%. Everything the assets earn above that rate grows outside your estate, completely free of gift and estate tax. Better still, you pay the trust’s income tax personally, which shrinks your estate further and is itself a tax-free gift to your heirs. It’s the most powerful “freeze” tool in the code right now.
- The GRAT (Grantor Retained Annuity Trust). You transfer assets, take back an annuity for a set term, and all the appreciation above the IRS hurdle rate (currently 5.20%) passes to your heirs gift-tax-free. It can be structured to use almost none of your exemption, which makes it nearly risk-free on the tax side. Ideal for a concentrated position or an asset you expect to jump in value.
Put a $10 million asset that doubles into one of these today and you’ve moved roughly $10 million of growth out of a 40% estate, around $4 million saved, and it compounds across generations. That’s the “dynasty” effect, and it’s why the families who move early win so decisively.
Why now, if there’s no deadline? Every year an appreciating asset sits in your estate is another year of gains locked into the 40% zone, and that year is gone for good. The exemption is also at a historic high that a future Congress could always lower.
None of this works as a do-it-yourself move. It lives or dies on the details: a defensible valuation (especially for closely-held or LP interests, where discounts matter), the note or annuity set at the correct IRS rate, and a gift tax return filed to report it and start the clock. Done right, it’s ironclad. Done loosely, the IRS unwinds it.
If your estate is approaching or past the exemption, reply to this email by Friday and we’ll set up a free 15-minute call with our COO and Tax Strategist, Liliya Maksimov, to map out how much you can move out of your taxable estate this year.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com