Your family can inherit wealth without a federal estate-tax bill and still inherit a serious problem.

A business nobody has authority to operate. A home the children cannot agree to keep or sell. A trust that never received the assets it was supposed to govern.

The IRS has confirmed a federal estate- and gift-tax basic exclusion amount of $15.48 million per person for 2027, compared with $15 million in 2026. That provides another $480,000 of exclusion per person. The annual gift-tax exclusion also rises to $20,000 per recipient, from $19,000 in 2026. But the decision that follows should begin with your family's balance sheet and the instructions governing it.

Few estates owe federal estate tax. Families still need a plan.

The Tax Policy Center estimates approximately 6,890 federal estate-tax returns for people dying in 2026, of which roughly 3,900 would be taxable. These are estimates for a year of death, not a count of returns filed during calendar year 2026 or final IRS totals. Source: Tax Policy Center, table T26-0072.

That distinction matters. Filing a return does not necessarily mean an estate owes tax. And owing no federal estate tax does not resolve incapacity, probate exposure, an unfunded trust, or a dispute among the children.

For many families, the immediate work concerns who can act, who receives what, and whether the instructions actually govern the assets. Larger estates also need to model transfer taxes and liquidity. The planning should follow the exposure.

What the larger exclusion changes

The federal estate- and gift-tax systems generally share a lifetime exclusion. Taxable gifts made during life can reduce the exclusion available at death. The number in the headline therefore does not necessarily equal the amount you personally have left to use.

Two spouses could potentially use a combined $30.96 million of basic exclusions, before accounting for prior taxable gifts and the planning needed to use both spouses' amounts. Marriage alone does not preserve every unused dollar.

That additional room may matter to a family holding a growing business, investment real estate, or concentrated stock. It also gives families a reason to revisit earlier assumptions rather than simply putting the new number into an old spreadsheet.

Treat the next two years as a planning opportunity

An election should remind families that federal tax policy can change with political leadership. A future change in control of Congress and the White House could create the votes for legislation that substantially reduces these generous exclusions.

Current law does not schedule the exclusion to expire in two years. A reduction would require a change in federal law, and neither its timing nor its size can be promised. But building a family's plan around the assumption that today's rules will remain available indefinitely is a risk of its own.

For families with substantial or rapidly appreciating assets, 2027 and 2028 should be working years. Evaluate gifts, obtain defensible valuations, design appropriate trusts, and complete suitable transfers while the law permits them. Moving future appreciation outside a taxable estate can matter as much as the value transferred today.

An unused lifetime exclusion is not automatically reserved for you if Congress later lowers it. The treatment of completed gifts under any future reduction must also be evaluated under the law and regulations then applicable; no plan should promise immunity from future legislation.

The point is to begin the analysis now. Any transfer still has to preserve sufficient income, liquidity, and control for the people making it, with its income-tax consequences understood. Serious planning takes time. Waiting for a tax bill to become law can leave a family trying to complete years of decisions in a few weeks.

Preserve the surviving spouse's options

When the first spouse dies, an unused exclusion may be transferred to the surviving spouse through a portability election. Generally, that requires a properly filed federal estate-tax return, even when the estate owes no federal estate tax. Filing deadlines and available relief require attention.

A surviving spouse can miss an opportunity because everyone assumed there was nothing to file.

Portability also does not transfer unused generation-skipping transfer-tax exemption. Families planning for grandchildren need a separate analysis of those allocations and trust provisions.

Read the formula inside the trust

Some trusts divide assets at the first death using a formula tied to the federal exclusion. As that exclusion rises, the formula may direct more property into a separate trust than the couple expected.

That can affect the survivor's access, control, administration, and the income-tax treatment of assets at the survivor's later death. The result depends on the actual language and circumstances.

Before removing a bypass-trust provision, examine why it exists. A second marriage, children from an earlier relationship, creditor concerns, and future growth can all affect the answer. Optional disclaimer and QTIP provisions can preserve flexibility, but they require sound drafting and proper administration.

A gift can solve one tax problem and create another

Transferring an appreciating asset may move future growth outside a taxable estate. It can also transfer control and affect the recipient's income-tax basis.

Gifted property generally carries over the donor's basis, subject to exceptions. Property included in a decedent's estate generally receives a basis adjustment under the applicable rules, which can be upward or downward. Retirement accounts and other special assets follow different rules.

For a family whose estate is below the federal threshold, making a large gift solely to use exclusion can produce an avoidable capital-gains cost later. For another family, expected appreciation and estate-tax exposure may support that same transfer. Model both outcomes before signing.

California families still need coordinated planning

A larger federal exclusion does not fund a living trust, appoint an effective successor, coordinate beneficiary forms, or resolve competing claims to the family business.

California property-tax consequences also require their own review. A federal estate-tax exclusion does not determine whether a transfer of the family home qualifies for Proposition 19 relief.

Families with foreign property, overseas heirs, or different citizenship and domicile statuses need additional coordination. The headline exclusion should never be applied indiscriminately to a nonresident who is not a U.S. citizen. Treaties, asset location, and transfer-tax status can change the analysis.

Use the planning opportunity to review the structure

Start with an updated inventory: ownership, debt, business value, insurance, retirement accounts, and prior taxable gifts. Then examine who can act during incapacity, what happens at the first death, and how the family obtains cash without a forced sale.

This is the purpose of Risk Exposure Mapping. It connects the tax calculation to the people, property, authority, and liquidity the plan must address.

The exclusion is one number. Your family has more than one exposure.

Request a planning review through the Law Office of James Burns Services page. Foundational estate planning and advanced tax or asset-protection consulting follow different engagement paths.

Frequently asked questions

Is $15.48 million the official 2027 exclusion?

Yes. The IRS confirmed that estates of decedents dying during 2027 have a $15.48 million basic exclusion amount. Prior taxable gifts, ownership, portability, and other facts still determine how much exclusion a particular person or estate can use.

Does every married couple automatically receive $30.96 million?

No. That is a potential combined amount. Prior gifts, ownership, trust design, portability, and each spouse's circumstances affect the result.

Should we eliminate our bypass trust?

Review the language first. Tax basis, survivor control, creditor concerns, and blended-family objectives may support keeping, modifying, or replacing provisions.

Does this eliminate the need for a living trust?

No. Incapacity management, trust funding, succession, and inheritance instructions remain separate planning needs.

General information only; individual results depend on the law, documents, assets, and family circumstances. This article does not establish an attorney-client relationship.

Source: IRS, IR-2026-133 and Revenue Procedure 2026-35.