How Smart Tax and Estate Planning Can Save You Thousands

If you're building wealth, smart tax and estate planning are more than financial niceties—they’re essential tools for protecting your assets. With the right strategies, you can legally reduce what you owe, avoid costly surprises, and ensure your estate is passed on in a way that aligns with your values. For many high-net-worth families, annual tax bills and estate expenses can add up to tens or hundreds of thousands of dollars if not managed carefully.

Recent changes in U.S. legislation show how much is at stake. For example, beginning in 2026 the federal estate and gift tax exemption per individual rises to $15 million, thanks to new law. Meanwhile, the state and local tax (SALT) deduction cap has been increased from $10,000 to $40,000 under certain income thresholds. These shifts create real opportunities for taxpayers to save thousands via better planning.

Why Tax & Estate Planning Matter

• Reduce tax liability now: Strategic planning lets you take advantage of deductions, exemptions, and credits before they change or expire.

• Maximize wealth transfer: Effective estate planning minimizes what heirs pay in taxes and fees, so more passes to those you intend.
  
  

• Protect assets: Tools like trusts, gifting, or exemption leveraging guard wealth from creditors, litigation, or unplanned expenses.

• Provide peace of mind: Knowing that your affairs are in order means your family is less likely to face expensive legal problems or probate delays.

Key Strategies That Save Big Dollars

1. Use the Enhanced Estate & Gift Tax Exemptions

• Current laws provide an individual exemption that will increase to $15 million for gifts and estates in 2026.

• Married couples can combine exemptions (making it $30 million) when planning together.

• By making gifts or funding trusts now, you can move future appreciation out of your taxable estate, which reduces future estate tax.

2. Take Advantage of the Higher SALT Deduction Cap

• Under new legislation, SALT deductions are limited to $40,000 for many taxpayers (up from $10,000 previously). 

• If your income is below certain thresholds (e.g. AGI $500,000), you’re in a position to make good use of this.

• Using non-grantor trusts or distributing income strategically can help keep portions of income below thresholds and maximize deductions. 

3. Use Trusts and Gifting Wisely

• Irrevocable trusts, dynasty trusts, spousal lifetime access trusts (SLATs), and other instruments let you gift assets today under current exemptions. Appreciation after transfer is often removed from your estate.

• Trusts also let you control distributions, protect assets from creditors, and in some cases, reduce state-level estate or inheritance taxes.

4. Step-Up in Basis and Timing of Asset Transfers

• When many assets pass at death, beneficiaries receive a “step-up in basis,” which can reduce capital gains taxes significantly if they later sell inherited assets.

• But if you gift assets too early, you lose that benefit. Balancing gifts vs retaining assets until death can produce thousands in savings depending on how much asset appreciation has occurred.

5. Review and Update Your Plan Now

• With laws changing, outdated wills, trusts, and beneficiary designations can leave money on the table.

• Review your plan annually or when major life events occur (marriage, death, inheritance, business sale) to ensure tax and estate planning aligns with current law.
  
  

Real-World Savings Scenarios

• Suppose a married couple is expecting an estate (assets) around $25 million. Without using trusts and gifting wisely, assets over exemption amounts are taxed heavily. By making use of the $30 million combined exemption, they might save millions in estate taxes.
  
  

• Another example: a homeowner in a high-tax state who was limited by the old $10,000 SALT cap can now deduct $40,000 in SALT if they structure income and deductions properly, letting them reduce their federal tax liability by thousands annually.

Conclusion

Smart tax and estate planning isn’t just for the ultra-wealthy—it’s for anyone who has significant assets, wishes to protect their family, or wants to make sure more of their hard-earned wealth ends up where they intend. By leveraging the new higher exemptions, making thoughtful gifts, using trusts wisely, and staying updated with changing tax laws, you can save thousands—and sometimes millions—while ensuring your legacy is preserved. Working with qualified advisors—attorneys, tax planners, financial fiduciaries—is essential to safely implement these strategies and tailor them to your situation.

Frequently Asked Questions (Q&A)

Q1. What is the estate tax exemption threshold for individuals starting in 2026?
Beginning in 2026, the individual federal estate and gift tax exemption is set at $15 million, thanks to the recent legislation. Married couples can effectively double that for combined exemptions. 

Q2. How much can I deduct for SALT under the new law?
For tax years starting in 2025, the State and Local Tax (SALT) deduction cap has increased to $40,000 for many taxpayers. There are AGI thresholds (commonly around $500,000) above which the cap begins to phase out. 

Q3. Are trusts expensive to set up, and do they make sense only for huge estates?
Trusts do have setup and ongoing costs—legal fees, trustee fees, administration. But even moderate estates can benefit. If your assets are sizable enough to be impacted by estate taxes or probate cost, a trust may provide more value than the costs over time.

Q4. What is “step-up in basis” and why does it matter?
Step-up in basis resets the cost basis of inherited property to its value at the time of death. If a beneficiary sells inherited property, they’ll pay capital gains based on post-death appreciation—not entire appreciation from the original purchase. That can save thousands in capital gains taxes.

Q5. What are some pitfalls to watch out for in tax and estate planning?
Common pitfalls include: failing to account for changes in tax law, making poorly timed gifts and losing basis step-ups, over-paying fees in trust administration, ignoring state and local estate or inheritance taxes, and not keeping documents updated after life events. Professional guidance is critical.