The Estate Tax Exemption Drops in January 2027
Roughly $7 million of per-person exemption disappears when the 2026 sunset takes effect. Our Dallas estate tax attorneys help families and business owners lock in today's exemption with trusts and gifting strategies, before the window closes.
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The Window, In Numbers
$13.61M
Current federal exemption per person ($27.22M per married couple) through December 31, 2026
~$7M
Approximate exemption per person after the sunset takes effect in January 2027
40%
Federal estate tax rate that applies to value above the exemption
The IRS has confirmed there is no clawback: exemption you use before the deadline stays used. Exemption you do not use is gone. For a couple with a $20 million estate, acting before the sunset can mean a federal estate tax difference of several million dollars.
Sunset Planning Strategies
Spousal Lifetime Access Trusts
The flagship strategy for married couples. A SLAT shelters assets under today's exemption while your spouse, and through them your household, keeps practical access to the wealth.
Irrevocable Trusts & ILITs
Move appreciating assets and life insurance outside your taxable estate. Future growth happens beyond the reach of the 40% estate tax.
Strategic Gifting
Completed gifts made before the deadline use the high exemption permanently. We structure gifts of cash, securities, real estate, and business interests with proper appraisals and gift tax returns.
Family LLCs & Partnerships
Consolidate family assets in an entity, then gift interests at appraised values. Valuation discounts can stretch how far your remaining exemption goes.
Business Succession Structures
For business owners, the sunset and succession planning are the same conversation: buy-sell agreements, ownership transfers, and entity restructuring done tax-efficiently.
Existing Plan Review
Already have a will or revocable trust? Those documents direct assets but do not shelter them. We add the tax layer to plans that need it.
Find Out If the Sunset Affects Your Family
A free consultation tells you whether you have exposure, which strategies fit, and what they cost as a flat fee. No obligation, and you will know where you stand either way.
Sunset Planning Takes Months, Not Weeks
Using the exemption properly is a sequence: value the assets, build the structures, fund the trusts, file the returns. Each step depends on the one before it, and several depend on professionals whose calendars fill as the deadline approaches.
The same rush happened ahead of the 2012 exemption cliff. Families who started early got deliberate, well-documented plans. Families who called in November got waitlists. There are months of runway left, which is enough, if you start now.
What a Complete Sunset Plan Involves
- Exposure analysis across your full balance sheet, including business and land
- Strategy selection: SLAT, ILIT, gifting program, entity structure, or a combination
- Qualified appraisals of business interests and real estate
- Trust drafting and entity formation by a licensed Texas attorney
- Asset transfers and trust funding, properly documented
- Gift tax return (Form 709) reporting the completed transfers
Built for Business Owners and High-Net-Worth Families
Most of the families affected by the sunset do not feel rich. They own a business, a ranch, commercial property, or decades of compounding retirement savings, and the numbers add up faster than people expect. Our attorneys work with business owners and families across Dallas-Fort Worth to quantify exposure honestly, recommend only the structures the situation calls for, and implement them at a flat fee agreed up front.
Frequently Asked Questions
The federal estate and gift tax exemption is scheduled to drop from $13.61 million per person to approximately $7 million on January 1, 2027. The current higher exemption expires, or sunsets, at the end of 2026. Anything you do not shelter before the deadline is planned under the lower number. For a married couple, the difference is roughly $13 million of exemption that disappears overnight.
If your estate, including your home, business interests, land, retirement accounts, and life insurance death benefits, is above or near $7 million as an individual or $14 million as a couple, the sunset directly affects how much federal estate tax your heirs could owe. Business owners and families with appreciating real estate are most commonly affected because asset values grow into the lower threshold over time.
The IRS has confirmed there is no clawback: gifts made under today's higher exemption stay sheltered even after the limit drops. The main tools are irrevocable trusts funded before the deadline, including spousal lifetime access trusts (SLATs) that let a married couple shelter assets while retaining indirect access, irrevocable life insurance trusts (ILITs), and structured gifting of business interests or real estate, often through a family limited partnership or LLC.
A spousal lifetime access trust is an irrevocable trust you create for the benefit of your spouse. Assets you move into the SLAT use today's high exemption and grow outside your taxable estate, but your household keeps practical access to the money through your spouse. It is the most popular sunset strategy for married couples because it shelters wealth without giving it away entirely.
Sunset planning is not a single document. It typically requires asset appraisals, entity formation or restructuring, trust drafting, funding, and a gift tax return. Appraisers and estate attorneys book up as the deadline approaches, the same thing happened before the 2012 exemption cliff, and rushed year-end transfers invite IRS scrutiny. Starting six months or more ahead lets each step be done properly.
It depends on the structures your situation calls for, which is why we start with a free consultation and quote a flat fee before any work begins. The context that matters: every dollar of exemption you fail to use before the sunset can cost your heirs 40 cents in federal estate tax. For affected families, proper planning typically saves multiples of its cost.
Not necessarily. A standard will or revocable living trust controls where assets go, but it does not remove them from your taxable estate. Sheltering wealth from the sunset requires irrevocable structures and completed gifts made before the deadline. We review existing plans and add the tax layer where it is needed.
The Exemption Window Closes January 1, 2027
Every case is different. Past results do not guarantee future outcomes.