The Sunset That Never Came: Rebuilding Your Estate Strategy for the $15M Era
- J.T. Hardcastle
- Aug 10
- 6 min read
For most of the last decade, the advice to families with real wealth came with a clock attached. The federal estate tax exemption was scheduled to fall roughly in half at the start of 2026, so advisors told clients to move fast — make big gifts, fund trusts, and lock in the high limits before they disappeared. A great many families did exactly that, often under genuine pressure and on a tight timeline. Then the deadline they were sprinting toward simply evaporated. The 2026 law didn't cut the exemption. It raised the number and erased the expiration date. This is the sunset that never came, and it leaves a lot of thoughtful people holding an estate strategy built for a $15M era that arrived in a very different shape than anyone planned for.
That's good news wrapped around a quiet problem. The relief is real — the cliff is gone. But a plan designed to beat a deadline is not the same as a plan designed for permanence, and the two can behave very differently once the pressure is off. Rebuilding doesn't mean tearing everything down. It means reading what you already have with fresh eyes and adjusting the pieces that were shaped by a race rather than by your actual goals.
The exemption that stopped shrinking
Here's the short version of what changed. Under the 2017 tax law, the exemption had climbed to roughly $14 million per person by 2025, but it carried a built-in expiration set for January 1, 2026, when it was scheduled to revert to around $7 million. That looming cut is what drove years of urgent gifting. Instead, the One Big Beautiful Bill Act set the exemption at $15 million per person and made it permanent, indexed for inflation, which means a married couple can now shelter up to $30 million from federal estate tax.
One honest footnote on "permanent." It means there's no scheduled sunset written into the law — not that a future Congress can never revisit it. For planning purposes, the important thing is that the artificial countdown is gone. And when the countdown disappears, so does the main reason many recent decisions were made. That's exactly why the plan deserves a second look.
Start by reading the plan you already have
Before adding anything new, the first job is to reread what's already in your documents. This is where the most expensive surprises hide, and the biggest one has a boring name: the formula funding clause.
Many wills and revocable trusts drafted during the sunset years contain language that funds a credit shelter trust — sometimes called a bypass trust — "up to the available federal exemption," with whatever is left passing to the surviving spouse. That wording was sensible when the exemption was small. It quietly breaks when the exemption is enormous. As one estate planning firm put it plainly, an old formula clause can now direct far more into the bypass trust than a family ever intended.
Picture a $5 million estate. Back when the exemption was $2 million, that formula put $2 million in the bypass trust and left $3 million for the spouse. Apply the same untouched formula today, with a $15 million exemption, and the formula sweeps the entire $5 million into the bypass trust — leaving the surviving spouse's share at zero.
That's not a tax problem. It's a family problem — a spouse unintentionally routed around by language nobody reread. It's also completely fixable, but only if someone actually opens the document and checks. If you signed a will or trust before 2026 and it uses exemption-based formula funding, put that review at the very top of your list.
The same "read it again" instinct applies to any spousal lifetime access trusts a couple set up in a hurry. When both spouses create nearly identical trusts for each other, the IRS can collapse them under the reciprocal trust doctrine and pull the assets back into both estates. Advisors reduce that risk by making the two trusts genuinely different — different beneficiaries, different powers, different terms and timing. Trusts built side by side under deadline pressure are the ones most likely to look like mirror images, so they're worth a careful comparison now.
A formula clause or a pair of look-alike trusts is exactly the kind of thing that reads fine at a glance and causes real damage at the worst possible moment. It's worth having a second set of eyes on the actual documents.
Built a plan around the old sunset? Book a Clarity Call to revisit it — 30 minutes, no pitch.
Rebuild around basis, not just the estate tax
Once you've checked the plumbing, the bigger shift is in what your plan is optimizing for. For most families, a $15 million exemption takes federal estate tax off the table entirely. That doesn't end the planning — it changes the target. The conversation moves from shrinking your taxable estate to protecting your heirs from income tax, and the quiet hero of that conversation is the step-up in basis.
When you gift an appreciated asset out of your estate during your life, your heirs generally inherit your original cost basis along with it, which means a lifetime of built-up capital gains is still waiting to be taxed when they sell. When that same asset instead passes at your death, it usually receives a step-up in basis to its value on that date, erasing those gains for the people who inherit it. Under the old sunset pressure, giving assets away early to beat the cliff often won the argument. With no cliff and no estate tax to plan around, holding the asset and letting your heirs receive the step-up is frequently the smarter outcome now.
This even reaches back into gifts you've already made. Assets you moved into a trust in, say, 2022 that have appreciated sharply since then may now be candidates for a strategic swap — trading cash back into the trust for the low-basis asset, so it returns to your estate and gets that step-up at death. It sounds technical, and it is, but the principle is simple: with the estate tax threat gone for most families, don't leave a capital gains bill sitting inside a strategy that was built to dodge a different tax entirely. The most useful exercise this year is to re-run every large gift you're weighing against the plain alternative of holding the asset and letting it step up, and let the numbers make the call rather than a deadline that no longer exists.
Build for flexibility — and don't skip what didn't change
If the last few years taught us anything, it's that the law can move. So the plan you rebuild now should be able to bend without breaking. That means leaning on flexible tools — disclaimer provisions that let a surviving spouse decide how much to route into a trust after the fact, broad powers of appointment, and trustees or trust protectors who can adapt the structure as circumstances shift. A plan built to flex is a plan that survives the next surprise.
At the same time, a few essentials didn't change at all, and they're easy to forget in the calm. Portability — the feature that lets a married couple actually reach that combined $30 million — is not automatic. To carry a deceased spouse's unused exemption forward, the survivor's representative has to elect it by filing a federal estate tax return, even when no tax is owed and the estate would otherwise never file. Miss that filing and the second exemption is simply gone. The generation-skipping transfer tax exemption isn't portable at all, so it has to be assigned on purpose. And your state may tax what the federal government won't: several states impose their own estate or inheritance tax with thresholds far below the federal line, sometimes starting at $1 or $2 million. A family comfortably under the federal exemption can still owe a real state bill they never saw coming.
For the smaller group of families whose estates still sit above $15 million per person, the charitable toolkit does the heaviest lifting — and now it can be built patiently rather than jammed into a year-end scramble. A well-structured donor advised fund can shrink a taxable estate while turning what would have gone to the IRS into support for the causes you care about, and a charitable trust can pass wealth to heirs at a reduced transfer-tax cost while funding your generosity along the way. With no deadline forcing the timing, giving can finally be matched to your values instead of to a tax cliff.
Permanent removes the deadline, not the work
The real danger of a permanent exemption isn't a tax bill. It's relief turning into neglect — filing the estate plan under "handled" and never opening it again. But the plan you built for a sunset was shaped by a countdown, and countdowns make people do things they wouldn't choose in a calmer moment. Rebuilding for the $15M era is mostly about undoing that pressure: rereading the documents, checking the formulas, protecting the basis, and directing your wealth toward the people and the generational transfer already underway in your own family. The sunset never came. The opportunity to plan well, without a clock, finally did.
Whether the permanent exemption simplifies your plan or quietly leaves real work to do depends on your estate, your state, and the moves you already made under the old deadline. The conversations that move people from "interesting article" to "actual decision" happen one set of real numbers at a time.
Book a Clarity Call — 30 minutes with a Partner. No pitch. No homework.
J.T. Hardcastle is a Partner at Sage & Main who helps families and business owners align their wealth with their values through tax-smart planning and intentional generosity.
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