By Harry Prabandham · Updated September 27, 2026
Estate & Legacy
Estate Planning Beyond the Basics: Exemptions, Trusts, and Transfer Tools
Past a basic will, estate planning coordinates trusts, titling, and gifting with the 2026 federal exemption of $15 million per person and state rules.
Estate Planning Beyond the Basics: Exemptions, Trusts, and Transfer Tools
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What does a complete estate plan actually control?
- An estate plan decides who receives your assets, who manages them if you can't, and who makes medical decisions for you.
- A will covers only assets in your sole name without a beneficiary; retirement accounts, life insurance, and jointly titled property pass outside it.
- Anything not covered by a will, trust, or designation passes under your state's intestacy rules, which may not match your wishes.
- Durable financial powers of attorney and health care directives handle incapacity, which a will does not address.
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What does a complete estate plan actually control?
- An estate plan decides who receives your assets, who manages them if you can't, and who makes medical decisions for you.
- A will covers only assets in your sole name without a beneficiary; retirement accounts, life insurance, and jointly titled property pass outside it.
- Anything not covered by a will, trust, or designation passes under your state's intestacy rules, which may not match your wishes.
- Durable financial powers of attorney and health care directives handle incapacity, which a will does not address.
How much can pass free of federal estate tax in 2026?
- The 2025 tax law set the basic exclusion at $15 million per person for 2026, indexed for inflation after that, with no scheduled sunset.
- Amounts above the exclusion are taxed at up to 40%, and lifetime taxable gifts use up the same exclusion.
- A surviving spouse can claim the unused exclusion of the first spouse to die (portability), but only by filing a timely Form 706.
- The annual gift exclusion is $19,000 per recipient in 2026, and gifts within it don't reduce your lifetime exclusion.
- Future legislation can still change these figures, so plans generally benefit from built-in flexibility.
Which states add their own estate or inheritance tax?
- Several states and Washington, D.C., levy estate taxes, some with exemptions far below the federal level; Oregon's applies to estates of $1 million or more.
- A handful of states impose inheritance taxes on heirs, with rates that often depend on the heir's relationship to the deceased.
- Most states don't allow portability, so couples in those states sometimes use a credit shelter trust at the first death.
- California has no estate tax, but assets passing through probate there can face a slow court process and statutory fees.
Revocable and irrevocable trusts: what's the trade-off?
- A revocable living trust can help avoid probate and plan for incapacity, but its assets remain in your taxable estate.
- A trust only works for assets retitled into it, so an unfunded trust often ends up in probate anyway.
- An irrevocable trust can remove future growth from your estate, in exchange for giving up direct control and access.
- Irrevocable doesn't always mean unchangeable; decanting, trust protectors, or court modification may be available depending on state law.
- Assets given to a completed-gift irrevocable trust generally don't receive a basis step-up at death, per Revenue Ruling 2023-2.
Tools that shift future appreciation to heirs
- A grantor retained annuity trust (GRAT) can pass appreciation above an IRS-set rate to heirs while using little or no exemption.
- A spousal lifetime access trust (SLAT) uses exemption now while keeping indirect access through a spouse, with divorce and death risks.
- Family partnerships or LLCs may support valuation discounts, but the IRS scrutinizes them and they need real non-tax purposes.
- Gifting pre-IPO shares at a low valuation can shift growth, but the valuation must be defensible and reported on a gift tax return.
- Gifted assets keep your original basis, so reducing estate tax can increase heirs' future capital gains tax.
Triggers for revisiting the plan
- Common triggers include marriage, divorce, a birth, a death, a move to another state, and a liquidity event such as an IPO or acquisition.
- Beneficiary designations and account titling deserve their own review, since they override the will.
- Trustee, guardian, and executor choices can go stale as people's circumstances change.
Key takeaways
- Wills, trusts, designations, and titling have to work together; any one of them can override the others.
- The 2026 federal exclusion is $15 million per person, but state estate taxes may apply at much lower levels.
- Transfer tools involve trade-offs among control, estate tax, and capital gains basis.
- This is educational only; Rubric does not give legal advice, so work with an estate attorney and a CPA on documents and filings.
Related Topics
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Estate Planning Basics: The Core Documents and How Assets Pass
An estate plan is the set of documents and beneficiary designations that decide who inherits, who manages assets, and who decides for you if you can't.
Estate & LegacyFederal Estate and Gift Tax Exemption in 2026
For 2026, the federal estate and gift tax exemption is $15 million per person ($30 million per married couple), indexed for inflation from 2027.
Estate & LegacyGRATs for Concentrated and Pre-IPO Stock
A GRAT is an irrevocable trust that pays you an annuity for a set term; growth above the IRS 7520 rate can pass to heirs with little or no gift tax.
Sources
- IRS — Estate and gift tax FAQs
- IRS — What's new: estate and gift tax
- IRS — Tax year 2026 inflation adjustments (Rev. Proc. 2025-32)
- IRS Revenue Ruling 2023-2 (basis of assets in irrevocable grantor trusts)
- 26 U.S.C. § 2010 — Unified credit against estate tax (Cornell LII)
- Oregon Department of Revenue: Estate transfer tax