The federal cost-of-living adjustments for 2026 took effect on January 1. Many families read the headlines last fall, made a mental note, and never revisited their documents. With several months of the tax year still ahead, there is time to put the current rules to work before another set of adjustments arrives.
The 2026 Federal Estate and Gift Tax Numbers
The most significant change involves the federal estate and gift tax exemption. Estates of decedents who die during 2026 have a basic exclusion amount of $15,000,000, up from $13,990,000 for estates of decedents who died in 2025, according to the IRS inflation adjustments for tax year 2026. For married couples, that means a combined shelter of $30 million.
A few other figures matter for planning between now and December:
- The annual gift tax exclusion remains at $19,000 per recipient, unchanged from 2025.
- Married couples who split gifts can transfer $38,000 per recipient this year without touching their lifetime exemption.
- The annual exclusion for gifts to a spouse who is not a U.S. citizen rose to $194,000.
What Higher Exemptions Do Not Fix
It is tempting to read a $15 million exemption and conclude that estate planning no longer matters for the average Michigan family. But that conclusion is incorrect.
The federal estate tax was never the reason most people plan. Probate avoidance, incapacity documents, guardianship for minor children, blended family arrangements, and business succession all sit outside the tax code entirely. A family with a $600,000 home and two retirement accounts has just as much reason to plan as one with a taxable estate. Maybe more, because there is less cushion for error.
Cost-of-living pressure cuts the other way, too. Home values across Oakland County have climbed steadily. Retirement balances, life insurance proceeds, and business interests add up faster than people expect. And tax law is never permanent in any practical sense. Congress changed these rules once. It can change them again.
When a Mid-Year Review Makes Sense
An estate plan drafted five or ten years ago was built around different numbers. A review before year-end is worth scheduling if any of the following apply:
- Your documents were signed before 2018, when the exemption structure last changed significantly
- You have married, divorced, had children, or lost a named trustee or agent
- You own a business and have not addressed succession
- Your plan includes formula clauses tied to old exemption amounts
That last item deserves emphasis. Older trusts sometimes fund sub-trusts based on the exemption in effect at death. With the exemption now at $15 million, a formula written in 2010 can push far more into a trust than the drafter ever intended, sometimes disinheriting a surviving spouse in practice. A Southfield, MI estate planning lawyer can review formula language and confirm your documents still do what you meant them to do.
For families with larger estates, the months remaining in 2026 also leave room for additional lifetime gifting. Annual exclusion gifts must be completed by December 31, and larger transfers that use the expanded exemption take time to structure properly.
Acting Before Year-End
The 2026 adjustments reward people who treat estate planning as an ongoing process rather than a one-time signing. The rules moved in a favorable direction, but favorable rules only help when your documents are current enough to use them, and the calendar is already working against anyone who has been putting a review off since January.
Gudeman & Associates, P.C. has guided Michigan individuals, families, and business owners through decades of shifting tax thresholds. If your plan has not been reviewed since these changes took effect, or if you are starting from scratch, an estate planning lawyer in Southfield can walk you through how the current numbers apply to your situation. Contact our office to schedule a consultation.
