Tax-Smart Estate Planning

The federal basic exclusion amount is $15 million per person in 2026. Current law did not impose the previously scheduled 2026 reduction. Families should still review formula clauses in older trusts, projected growth, portability, basis consequences, and whether advanced gifting or trust strategies fit their goals.

When a person dies owning appreciated property, the tax basis is reset to fair market value on the date of death — eliminating prior unrealized capital gains. This is one of the most powerful features in the tax code and is lost when assets are gifted during life, which carries over the original basis. Deciding which assets to gift and which to hold until death is one of the most important tax-planning choices a family can make.

In Texas, both halves of community property generally receive a step-up in basis at the death of the first spouse. This is more generous than common-law states, which only step up the deceased spouse's half. However, the advantage only applies if the property is properly characterized as community property — which can require explicit community-property agreements, partition agreements, or conversion agreements depending on the asset and how it was acquired.

Yes. In 2026, estates and non-grantor trusts reach the 37% federal ordinary-income bracket above $16,000 of taxable income and the 20% long-term capital-gains bracket above $16,250. Grantor-trust drafting, DNI planning, and distribution strategy may mitigate that compression when appropriate.

Probably yes — because estate tax is only one of several tax concerns. Income tax on trusts, capital-gains tax on inherited appreciated assets, step-up basis planning, and community-property characterization all matter regardless of whether your estate is subject to federal estate tax. Most of the highest-value tax planning happens outside the estate-tax question.

A grantor trust is a trust in which the grantor is treated as the tax owner for income-tax purposes, while the trust is still a separate entity for estate-tax purposes. Intentionally defective grantor trusts (IDGTs), SLATs, and GRATs all use this structure. The benefit: the grantor pays the trust's income tax from outside the trust, which is effectively an additional tax-free gift to the beneficiaries. The right fit depends on the overall plan.

Yes, and we encourage it. Tax-smart estate planning works best when the attorney, CPA, and financial advisor are in the same conversation. We routinely review current asset titling, beneficiary designations, and account locations alongside your existing advisors so the estate plan, investment plan, and tax return are consistent with each other.

Carla holds a Master of Laws in Taxation from New York University School of Law — widely regarded as the most respected tax LLM program in the country. She practiced as an in-house tax attorney at Alcon Laboratories from 1985 to 1989 and at Eckert Seamans from 1989 to 1993 before opening her own estate planning firm. Few Texas estate planners have a real tax background; Carla does. That is the difference between an estate plan that handles ownership and one that handles the tax bill.