Estate Planning in 2026: Who Actually Still Needs a Trust With the Higher Exemption

If you saw the headline that the federal estate tax exemption jumped to $15 million per person in 2026 and mentally filed “estate planning” under problems-other-people-have, slow down. The One Big Beautiful Bill Act (OBBBA) made that $15 million exclusion permanent, and for the vast majority of Americans it genuinely does mean no federal estate tax bill, ever. But “no federal estate tax” and “no trust needed” are two different questions, and conflating them is the most common estate planning mistake we see in 2026. State estate taxes, asset protection, blended families, special needs beneficiaries, and plain old control over how your money gets spent after you’re gone all live in a world the federal exemption doesn’t touch.

Key Takeaways

• The federal exemption is $15 million per person in 2026, and it’s now permanent. OBBBA didn’t just bump the number up from $13.99 million in 2025 — it removed the scheduled sunset that used to hang over the old Tax Cuts and Jobs Act exemption, so this is the new baseline, not a temporary high-water mark.
• A married couple can shelter $30 million with basic portability planning. Thanks to the portability rules under IRC Section 2010(c), a surviving spouse can inherit their deceased spouse’s unused exemption — but only if the executor files a timely Form 706 to elect it.
• State estate taxes didn’t move an inch. Oregon taxes estates above $1 million and Massachusetts above $2 million — figures wildly disconnected from the federal number — which means plenty of comfortably middle-class households still have real state estate tax exposure.
• Trusts do jobs that have nothing to do with the estate tax. Asset protection, Medicaid planning, control over a spendthrift heir, and providing for a beneficiary with a disability are all reasons to use a trust that exist whether the federal exemption is $1 million or $15 million — see our broader estate planning overview for how these pieces fit together.
• “No trust” isn’t the automatic right answer for the 99%, but it’s often the right default. For a lot of people, simple wills, updated beneficiary designations, and a well-funded revocable trust for probate avoidance cover the need — the expensive irrevocable structures are for specific situations, not everyone.

The rule: what actually changed in 2026

Let’s get the numbers pinned down first. For decedents dying in 2026, the federal basic exclusion amount — the amount you can pass on at death (combined with lifetime gifts) before federal estate tax applies — is $15,000,000 per individual, up from $13,990,000 in 2025. The IRS confirmed this in its 2026 inflation-adjustment announcement, and the underlying statutory language now reads, in 26 U.S. Code § 2010(c): “the basic exclusion amount is $15,000,000.”

Two things make 2026 different from every prior year of TCJA-era planning. First, OBBBA (enacted July 2025) struck the old sunset provision that would have cut the exemption roughly in half after 2025 — so this isn’t a temporary window you need to rush through before it closes. Second, the $15 million figure is now the fixed base year, with inflation adjustments kicking in starting with 2027 deaths (using 2025 as the base year for the cost-of-living calculation). The generation-skipping transfer (GST) tax exemption moves in lockstep with the estate exemption under IRC Section 2631(c), so it’s also effectively $15 million.

The annual gift tax exclusion — the amount you can give any one person each year without touching your lifetime exemption or filing a gift tax return — stays at $19,000 for 2026, unchanged from 2025. That’s actually notable: it’s the first year since 2021 the number hasn’t moved. (If your spouse isn’t a U.S. citizen, the exclusion for gifts to them rises to $194,000 for 2026.)

Why it matters: the math for a typical HNW couple

Here’s where the “who actually needs a trust” question gets concrete. Consider a married couple, Priya and Daniel, with a combined net worth of $9.4 million — a home in the Boston suburbs worth $2.1 million, a taxable brokerage account at $3.8 million, retirement accounts totaling $2.6 million, and a $900,000 life insurance policy owned outside any trust.

Against the $15 million per-person federal exemption, Priya and Daniel aren’t close to federal estate tax exposure even individually, let alone combined. If Daniel dies first, his executor can file Form 706 to elect portability, passing his unused exclusion to Priya — meaning she’d effectively have both exemptions available, north of $28 million combined even before 2027 inflation indexing. No federal estate tax planning is urgently needed here from a pure exemption-math standpoint.

But Priya and Daniel live in Massachusetts. Massachusetts taxes estates above $2,000,000, with a $99,600 credit and then graduated rates from 7.2% to 16% on the excess. On a $9.4 million estate with no planning, that’s a real state estate tax bill measured in the hundreds of thousands of dollars — even though the federal return shows zero owed. This is the gap that catches people off guard: they read that the exemption is $15 million, assume they’re covered, and never look at the state layer.

How it works in practice: portability, credit shelter trusts, and the state layer

Portability (DSUE) is the first tool, and it’s often underused. Under IRC Section 2010(c), a surviving spouse’s exclusion equals their own basic exclusion amount plus the “deceased spousal unused exclusion” (DSUE) — whatever the first spouse to die didn’t use. We’ve covered how portability and the marital deduction interact in more depth elsewhere. The catch: this only works if the deceased spouse’s executor files an estate tax return and affirmatively elects portability, even if the estate is well under the filing threshold and wouldn’t otherwise need to file. The election, once made, is irrevocable, and the return has to be timely filed — generally within 9 months of death, with extensions. Miss that window with no extension and no automatic relief, and the DSUE is usually gone for good (though the IRS does allow simplified late-portability relief for up to 5 years in many cases).

Credit shelter (bypass) trusts do a job portability can’t. In states like Oregon, where there’s no state-level portability, each spouse’s $1 million state exemption has to be used or lost when that spouse dies — it doesn’t transfer to the survivor automatically. A credit shelter trust captures the first spouse’s state exemption amount at death, keeps those assets (and their future appreciation) out of the surviving spouse’s estate, and still lets the surviving spouse benefit from the trust during their lifetime. Without it, a couple can end up paying Oregon estate tax on money that a properly drafted trust would have shielded.

State estate tax exposure is broader than people assume. As of 2026, roughly a dozen states plus D.C. impose an estate tax — including Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington — several with exemptions at $2 million to $7 million, far below the federal $15 million (Tax Foundation). A handful of other states impose an inheritance tax instead (a tax on the recipient based on their relationship to the decedent), including Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Oregon’s exemption is the lowest in the country at $1 million and isn’t indexed for inflation, so it quietly erodes in real terms every year.

The catch: where trust planning gets oversold or undersold

Not every high-net-worth household needs an irrevocable trust, and it’s worth saying that plainly. If you live in a no-estate-tax state, your combined household net worth is well under the federal exemption even after accounting for future growth, and your family situation is straightforward, an elaborate trust structure can be an expensive answer to a problem you don’t have. Complexity has real costs: legal fees to draft, ongoing administration, separate tax returns for irrevocable trusts, and the loss of flexibility that comes with giving up control of an asset.

On the other hand, people sometimes assume a revocable living trust — the popular probate-avoidance tool — does more than it actually does. A revocable trust is still part of your taxable estate for both federal and state purposes; it doesn’t reduce estate tax exposure by itself, and it offers essentially no asset protection while you’re alive, since you retain full control. If your goal is minimizing Massachusetts or Oregon estate tax, or shielding assets from a lawsuit, a revocable trust alone doesn’t get you there — you need an irrevocable structure, and that’s a bigger commitment. Our comparison of revocable vs. irrevocable trusts walks through that trade-off in detail.

And portability isn’t a substitute for good drafting. It only preserves the dollar amount of the deceased spouse’s unused exemption — it does nothing to shield future appreciation on assets, doesn’t protect assets from the surviving spouse’s creditors or a subsequent remarriage, and requires that timely 706 filing that’s easy to miss if nobody’s tracking the deadline.

Strategy: what to actually weigh

The honest framework is less “trust or no trust” and more “what job do you need done”:

• Pure federal estate tax minimization for a couple under roughly $20–25 million combined: often just needs a will, updated beneficiary designations, and a portability election on the first death. No irrevocable trust required for this goal alone.
• State estate tax exposure in a low-threshold state: a credit shelter/bypass trust, or in some cases relocating a portion of the estate or changing domicile, becomes worth modeling — especially in Oregon, where there’s no portability backstop. For households already thinking about a non-grantor trust as part of that state-tax picture, see how a non-grantor trust can help avoid state income tax.
• Asset protection from lawsuits, creditors, or a beneficiary’s divorce: requires an irrevocable trust, set up well before any claim arises (transfers made after a claim exists can be unwound as fraudulent conveyances). An intentionally defective grantor trust is one structure worth understanding here, since it combines asset protection with income tax advantages.
• Medicaid/long-term-care planning: irrevocable trusts funded more than five years before a Medicaid application can keep assets out of the countable-resource calculation — but the five-year lookback means this only works with real lead time.
• Blended families or a beneficiary who needs protection from themselves: a trust lets you control timing and amounts of distributions in a way a simple will cannot — useful whether the beneficiary is a spendthrift adult child or a second spouse you want to provide for without disinheriting kids from a first marriage. Our guide to trusts for children and wealth protection covers this scenario specifically.
• A beneficiary with a disability: a properly drafted special needs trust lets that person receive support without losing eligibility for means-tested benefits like SSI and Medicaid.

Beyond trusts themselves, two related planning moves often come up alongside this conversation: preserving step-up in basis on inherited assets so heirs don’t inherit an unnecessary capital gains bill, and using donor-advised funds to combine charitable intent with estate and income tax planning.

Where Harness fits in

Estate planning at this level isn’t a DIY-template exercise, and it isn’t purely a tax question either — it sits at the intersection of federal tax law, your specific state’s rules, and family dynamics that a generic checklist can’t account for. That’s exactly the kind of situation where a specialist earns their fee: someone who can model your actual numbers against both the federal exemption and your state’s threshold, coordinate with an estate attorney on drafting, and revisit the plan as OBBBA’s provisions and state legislation continue to shift. Harness connects you with tax advisors who work with high-net-worth families on exactly this kind of cross-border federal/state estate planning. If a windfall or inheritance is what’s prompting the estate planning conversation in the first place, our guide to tax planning for a large windfall or inheritance is a useful companion read. Get started with Harness and make the most of the new tax landscape.

Putting it all together

Before you decide whether you need a trust in 2026, walk through three questions:

1. Does my state have its own estate or inheritance tax, and where does my estate sit relative to that threshold — not just the federal $15 million number?
2. Am I trying to solve a tax problem, or a control/protection problem (asset protection, blended family, special needs, Medicaid)? The federal exemption only addresses the first.
3. Has my executor or spouse been briefed on the portability election and its filing deadline, so a beneficial DSUE claim doesn’t get lost to a missed Form 706?

If the answer to any of these is “I’m not sure,” that’s the conversation to have with an advisor before assuming the higher federal exemption means you’re done planning.

Frequently Asked Questions

Do I need a trust if my estate is under $15 million? Not necessarily for federal estate tax purposes. But if you live in a state with its own estate tax — Massachusetts and Oregon are two examples with thresholds far below $15 million — a trust may still reduce state-level exposure. Trusts are also used for reasons unrelated to any estate tax, like asset protection or controlling how a beneficiary receives money.

What is portability and how does it work? Portability lets a surviving spouse use the deceased spouse’s unused federal exemption amount, on top of their own, under IRC Section 2010(c). It requires the deceased spouse’s executor to file an estate tax return (Form 706) and make an election, even if the estate wasn’t otherwise required to file. The election is irrevocable once made.

Is the $15 million exemption permanent, or will it drop again like it almost did under the old law? OBBBA removed the sunset provision that was scheduled to cut the exemption roughly in half after 2025. The $15 million base (for 2026) is now a permanent feature of the statute, with inflation adjustments applying to future years. Of course, future legislation could always change the law again.

Which states have their own estate tax in 2026? Roughly a dozen states plus D.C. currently impose an estate tax, including Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington, with exemption thresholds ranging from $1 million (Oregon) to amounts closer to the federal figure. A separate small group of states impose an inheritance tax instead. Check your specific state, since thresholds and rules change.

Does a revocable living trust reduce estate taxes? No. A revocable trust is included in your taxable estate for both federal and state purposes because you retain control over it during your lifetime. Its main benefits are avoiding probate and providing management continuity if you become incapacitated — not tax reduction.

What happens if my spouse’s executor misses the deadline to elect portability? The DSUE election generally must be made on a timely filed estate tax return, including extensions. If that deadline is missed, portability may be lost, though the IRS has procedures allowing simplified relief for late elections in many cases, generally within five years of death. This is a deadline worth calendaring carefully.

Do I still need life insurance planning if the exemption is so high? Possibly, depending on your state and your goals. Life insurance held in an irrevocable life insurance trust (ILIT) can keep the death benefit out of your taxable estate for state estate tax purposes, and can also provide liquidity to pay any estate tax due without forcing a sale of illiquid assets like a business or real estate.

Should I move to a state without an estate tax to avoid this issue? Changing domicile is a real strategy some people use, but it requires genuinely relocating your legal residence, not just a change of mailing address, and involves its own set of tax and practical considerations. It’s worth discussing with an advisor rather than treating it as a simple fix.

Meet the Authors 

David Snider

David Snider is the Founder & CEO of Harness, a platform to power entrepreneurial tax advisors & their clients. Harness was recognized by Inc Magazine as one of the 200 fastest growing companies in the U.S. David incubated Harness as an executive-in-residence at Bain Capital Ventures. Previously he served as COO & CFO of Compass, a real estate tech company that he helped grow from pre-launch to a valuation of $1.8 billion. David was an investor at Bain Capital private equity, where he completed investments worth over $2 billion as well as the IPO of Sensata on the NYSE. He is the author of Money Makers, published by Macmillan.

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