By Davis Long, BE22, CFP®, Director of Financial Planning and Wealth Management, MidAtlantic Retirement Planning Specialists

If you've put off updating your estate plan because you were waiting to see what Washington would do, you can stop waiting. The federal estate tax exemption was on track to be cut roughly in half at the end of 2025. That cliff has been avoided.
 

What actually changed

Recent federal legislation permanently raised the estate and gift tax exemption starting in 2026, with the amount now indexed for inflation each year going forward. There's no expiration date built into the new law this time, so the exemption won't quietly shrink back down the way it was set to. The annual gift tax exclusion went up as well, though the top estate tax rate stays where it was.

Here's the practical effect: many retirees who once worried about federal estate tax exposure may no longer need to, at least under the law as it stands today. That last part matters. "Permanent" in tax legislation is a bit of a misnomer — it just means there's no sunset clause written into the statute. Congress can still change its mind, and exemption amounts have moved around plenty over the past few decades.
 

Why you shouldn't file this away and forget it

A bigger exemption doesn't mean your estate plan takes care of itself. If anything, it's a good excuse to take a fresh look at three things:

• Documents built for the old rules. If your trust or will was drafted with the prior, lower exemption in mind — or around the assumption that the exemption would drop — it may not do what you intended anymore.

• Your state. The federal exemption is only half the picture. Plenty of states apply their own estate or inheritance tax at thresholds far below the federal number, which matters a lot if you've moved or split time between states.

• Building in room to adapt. Given how much this landscape has shifted before, it's worth structuring a plan that can bend if the law changes again, rather than one built entirely around today's numbers.

A good moment to take stock

Because there's less pressure to act before a deadline, this is actually a decent time to sit down and think through gifting, trust structure and who's named where — without the rush. If your plan was last touched during the years when everyone assumed the exemption was about to fall, it's probably worth a second look.

Next steps

If it's been a while since anyone looked at your plan — or you've never gotten around to putting one together — consider that a conversation worth having. A qualified estate planning professional, working alongside your tax and legal advisors, can help you figure out whether anything needs adjusting for your situation.

As always, Go Hens!
 

UD’s Gift Planning Team is proud to share charitable giving resources like this to help all our Blue Hens and friends make the most of their money. If you have questions or want to discuss gift planning options, reach out at 302-831-3822 or giftplanning@udel.edu.