Estate Planning in 2026 and Beyond

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Insights from Jennifer Alfieri, SVP, Chief Fiduciary Officer for Tompkins Financial Advisors

I started the New Year by attending the Heckerling Institute on Estate Planning, the largest and most influential estate planning conference in the country. This annual gathering brings together the top professionals in the field: tax and estate planning attorneys, trust officers, CPAs, financial planners, and even experts from the Treasury and IRS.

Every year, these specialists meet to discuss new laws affecting estates, taxes, and retirement accounts; planning strategies for high-net-worth families; updates from courts, Congress, and the IRS; and real-world case studies and emerging planning opportunities.

Why do I attend? Because my priority and the priority of everyone at Tompkins, is your peace of mind. Staying on top of the most current laws and planning techniques allows me to give you the best, most informed guidance possible.

In this blog, I'm sharing what I learned so you can understand how these developments may affect your estate plan and what opportunities may benefit you and your family in the coming year.

Tax Law Changes for 2026

Estate planning has changed significantly for 2026. Recent legislation, most notably the One Big Beautiful Bill (OB3) Act, set new tax rules and created opportunities to strengthen your long-term financial plan. Here are the key changes:

1. Higher Federal Estate & Gift Tax Exemption

You can now transfer up to $15 million per person (or $30 million for married couples) without owing federal estate or gift tax. This amount will increase over time with inflation.

2. Don't Forget State-Level Taxes

Your federal exemption may be high, but state rules differ:

  • New York: Estate tax exemption of $7,350,000; no portability between spouses
  • Pennsylvania: No estate tax, but inheritance tax applies
  • Florida: No estate or income tax

Why this matters: Even if you are not subject to federal estate tax, your state residency and property ownership may still create a tax impact for your family. 

3. Income Tax Updates

The current income tax brackets and deductions have been made permanent, including:

  • Top tax rate: 37%
  • Standard deduction: $16,100 for individuals;$32,200 for married couples filing jointly

4. A More Generous SALT Deduction

The cap on state and local tax deductions increased to $40,000, although higher-income taxpayers may see this phased out.

5. Improvements to ABLE Accounts

ABLE accounts are special tax-advantaged savings accounts designed to help individuals with disabilities save money without losing important government benefits like SSI or Medicaid. OB3 has made several improvements:

  • Higher contribution limits
  • Access to the Saver's Credit
  • The ability to receive transfers from 529 education plans

6. New "Trump Accounts" for Children

This is a new type of long-term savings account for children under age 18. Think of it as a child-focused retirement-style account that encourages families to start saving early for a child's future. Contributions can begin July 4, 2026. Details are still coming, but this may be a helpful long-term savings tool for families.

Opportunities to Strengthen Your Estate Plan

Gifting Strategies

While the high exemption reduces urgency, gifting can still be beneficial:

  • Assets you give away now remove future growth from your taxable estate
  • You can give $19,000 per person in 2026 without using any exemption
  • You can make large contributions to 529 education plans, up to $95,000 per child, using a special 5-year "front-loading" rule
  • Paying tuition or medical expenses directly is unlimited and tax-free

Trusts That Offer Flexibility and Protection

Even with higher exemptions, trusts remain key planning tools. Here are a few options to consider:

Spousal Lifetime Access Trust (SLAT)

Allows one spouse to make a gift into a trust that benefits the other spouse, while keeping the assets out of your taxable estate.

Irrevocable Life Insurance Trust (ILIT)

Keeps life insurance proceeds out of your estate and can provide liquidity for estate taxes or equalizing inheritances.

Charitable Trusts

Offer income to you or your family while supporting charities later, or vice versa.

Credit Shelter or Disclaimer Trusts

Provide flexibility and ensure that both spouses' tax exemptions are properly used.

Retirement Accounts: A New Reality

Most beneficiaries must empty inherited IRAs within 10 years. If you had already begun taking required minimum distributions (RMDs), your beneficiaries may also need to take annual withdrawals during the 10-year window.

Some beneficiaries can still "stretch" distributions, including:

  • Surviving spouses
  • Minor children (until adulthood)
  • Disabled or chronically ill individuals
  • Individuals close in age to the account owner

Why this matters for you: Your beneficiary designations may need updating to ensure the right people inherit the right way. These designations override your will so they must be coordinated carefully. 

Roth Conversions May Be Worth Reconsidering

Converting some of your traditional IRA to a Roth can:

  • Reduce future taxes
  • Provide tax-free assets to beneficiaries
  • Eliminate RMDs during your lifetime

Do Your Documents Still Match Your Wishes?

Life changes. And laws do too. It may be time to review your:

  • Will and revocable trust
  • Health care directives
  • Financial power of attorney
  • Guardian designations and HIPAA authorizations
  • Asset titling (joint, individual, trust)

If you have existing irrevocable trusts, make sure they are being properly administered and that tax filings are up to date.

Protecting Your Family and Yourself

  • If You Face Potential Liability

    • Irrevocable trusts and the right insurance coverage can help protect assets from future claims or lawsuits

  • If You Become Incapacitated

    • Well-prepared powers of attorney and revocable trusts help ensure that your financial life remains manageable and your family stays protected.

  • If You Have Vulnerable Family Members

    • Special needs trusts, ABLE accounts, and trust provisions designed for asset protection can help protect beneficiaries without compromising their eligibility for benefits

Your Estate Planning Checklist for 2026

Estate planning doesn't need to be complicated. Use the breakdown below to take manageable steps towards protecting your family's future.

Start Here

  • Gather your estate documents
  • Update retirement and insurance beneficiaries
  • Review powers of attorney and health directives
  • Confirm your asset inventory

Next Steps

  • Meet with your estate planning attorney
  • Review retirement strategies with your financial advisor
  • Evaluate insurance coverage
  • Assess any business succession issues
  • Understand your state tax exposure

Ongoing

  • Update your plans after major life events
  • Monitor legislative updates
  • Ensure trusts are being properly administered
  • Keep beneficiary designations current
Questions to Ask Your Advisory Team
  • How does the new $15 million exemption affect me?
  • Should I make additional gifts this year?
  • Are my retirement accounts properly structured for my beneficiaries?
  • Would a Roth conversion make sense for my situation?
  • Is my trust structure still appropriate?
  • What state tax issues should I plan for?
  • Is my family protected if I become incapacitated?

Estate planning can feel overwhelming, but you don't have to navigate it alone. I'm here to help you understand these changes and take the right steps for your family. Please reach out if you have questions or would like to schedule a review of your estate plan. 

https://www.tompkinsfinancialadvisors.com/about-us/contact-us 

Investments and insurance products are not insured by the FDIC, not deposits of, obligations of, or guaranteed by the bank or its affiliates, and are subject to investment risk including possible loss of principal. The opinions voiced in this material are for general information only and are not intended to provide specific tax or accounting advice or recommendations for any individual. Please consult your tax and accounting advisors before engaging in any transaction.
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