By Alex Bridges, CFP®, EA | Tiverton Wealth, LLC
Federal estate and gift tax rules changed significantly in 2026. The federal estate and gift tax exemption increased to $15 million per person, allowing married couples to potentially use combined exemptions totaling as much as $30 million when applicable requirements are satisfied.
Texas does not currently impose a separate state estate or inheritance tax. However, that does not mean high-net-worth Texas families can ignore estate planning. Federal estate taxes, concentrated business ownership, appreciating assets, outdated trusts, capital gains, family governance, and estate liquidity can still create significant challenges.
For families in The Woodlands and Greater Houston, an important starting point is understanding what is included in an estate and whether future growth could move the family closer to the federal exemption. The next step is coordinating the legal, tax, investment, insurance, and family decisions that affect how wealth will eventually pass.
Key Takeaways
- The federal estate and gift tax exemption is $15 million per person in 2026.
- A married couple may potentially use combined exemptions totaling up to $30 million, but the first spouse’s unused exemption is not automatically preserved.
- The annual federal gift tax exclusion is $19,000 per recipient in 2026.
- Texas does not currently impose a separate state estate or inheritance tax, although federal taxes may still apply.
- Families below the exemption may still benefit from planning for capital gains, creditor exposure, incapacity, estate liquidity, and an orderly transfer of wealth.
What Is the Federal Estate Tax Exemption in 2026?
For individuals who die in 2026, the federal basic exclusion amount is $15 million. This is the amount that can generally pass during life or at death without triggering federal gift or estate tax, subject to prior taxable gifts and other applicable rules.
The estate and gift tax systems are unified. Using part of the exemption for taxable lifetime gifts generally reduces the exemption that remains available at death. Gifts that qualify for the annual exclusion usually do not reduce the lifetime exemption.
For example, assume an unmarried Texas resident has an estate worth $17 million and has not previously used any lifetime exemption. Before deductions, charitable transfers, or other adjustments, approximately $2 million could be exposed to federal estate tax. The federal estate tax uses a graduated rate structure with a top rate of 40%.
The calculation is more complicated than simply multiplying the excess estate by 40%. Estate expenses, debts, charitable gifts, transfers to a surviving spouse, lifetime taxable gifts, ownership structure, and valuation issues can all affect the final result.
Can a Married Couple Protect $30 Million?
A married couple may potentially use two $15 million exemptions, but the result is not automatic.
Assets passing to a surviving spouse who is a United States citizen generally qualify for the unlimited marital deduction. That can defer federal estate tax when the first spouse dies. However, relying only on the marital deduction may leave the first spouse’s exemption unused unless the estate plan uses an appropriate trust structure or the executor makes a valid portability election.
How portability works
Portability allows a surviving spouse to use the deceased spouse’s unused federal estate tax exemption. The unused amount is commonly called the deceased spousal unused exclusion, or DSUE.
To elect portability, the executor generally files Form 706, the federal estate tax return, even when the estate would not otherwise owe estate tax. A simplified late-election procedure may be available for certain estates through the fifth anniversary of the deceased spouse’s death, but families should not assume late relief will always be available.
Consider a married couple in The Woodlands with a combined net worth of $22 million. If the first spouse dies with most assets passing directly to the survivor, no federal estate tax may be due at that time. If the executor does not elect portability and the surviving spouse later dies owning the full $22 million estate, only the surviving spouse’s exemption may be available. That result may create estate tax exposure that could otherwise have been reduced through timely planning.
Does Texas Have an Estate or Inheritance Tax?
Texas does not currently impose a separate estate tax or inheritance tax. A Texas resident can nevertheless be affected by federal estate tax and by the laws of another state.
Another state’s estate or inheritance tax may become relevant when a Texas resident owns real estate, a business interest, or other property connected to that state. This frequently arises with vacation homes, inherited family property, mineral interests, and business operations located outside Texas.
Moving to Texas does not by itself establish Texas domicile or prevent a former state from asserting that an individual remained domiciled there. Families who recently moved to The Woodlands, Conroe, Spring, Klein, Cypress, Tomball, or Houston should consult qualified legal and tax professionals about domicile and consider updating their legal documents, registrations, property records, and other evidence of residency.
What Assets Are Included in Your Taxable Estate?
Many families underestimate the size of their estate because they count only their investment accounts. For federal estate tax purposes, the gross estate may include much more.
- Checking, savings, and money market accounts
- Brokerage accounts, stocks, bonds, and alternative investments
- Traditional IRAs, Roth IRAs, 401(k)s, and other retirement accounts
- Primary residences, vacation homes, ranches, and rental properties
- Closely held businesses and professional practices
- Oil, gas, and mineral interests
- Life insurance owned by the deceased person
- Annuities and certain deferred compensation benefits
- Personal property, vehicles, boats, jewelry, art, and collectibles
- Certain assets transferred before death while retaining control or benefits
Life insurance is a common source of confusion. The death benefit is often received by the beneficiary without federal income tax, but it may still be included in the insured person’s taxable estate when the insured owns the policy or retains certain ownership rights.
Why Families Below $15 Million Still Need Planning
Estate tax planning is not limited to families already above the exemption. A family with a current net worth of $8 million may eventually have a much larger estate because of investment growth, business appreciation, real estate, inheritances, and life insurance proceeds.
The future value of an estate will depend on investment returns, spending, gifts, taxes, business results, property values, inheritances, and other factors. Families should use reasonable assumptions and evaluate multiple scenarios rather than rely on a single projected growth rate.
Families under the exemption should also consider issues that have nothing to do with federal estate tax:
- Who will make financial and medical decisions during incapacity?
- Will assets pass to the intended beneficiaries?
- Are beneficiary designations coordinated with the will and trusts?
- Could an inheritance be exposed to creditors, divorce, or poor financial decisions?
- Does the estate have enough liquidity to pay debts, expenses, and taxes?
- Who will manage a business, rental portfolio, or family property?
- Will heirs receive a step-up in tax basis on appreciated assets?
Gifting Rules High-Net-Worth Families Should Understand
The annual gift tax exclusion is $19,000 per recipient in 2026. A married couple may generally give $38,000 to one recipient when each spouse makes or is treated as making half of the gift and the applicable gift-splitting requirements are followed.
For example, a married couple with three adult children and six grandchildren could potentially transfer $342,000 in 2026 using both spouses’ annual exclusions:
$38,000 per recipient × 9 recipients = $342,000.
Gifts above the annual exclusion do not necessarily create an immediate tax bill. The excess may instead use part of the donor’s lifetime exemption and require the filing of Form 709, the federal gift tax return.
Do not overlook income-tax basis
Reducing a taxable estate is not the only tax objective. Appreciated assets transferred during life generally carry the donor’s existing tax basis. By contrast, inherited property generally receives a basis tied to its fair market value at death, subject to specific exceptions and elections.
Suppose a family owns stock worth $1 million with a $100,000 cost basis. Gifting that stock during life may remove future appreciation from the donor’s estate, but the recipient may also receive the donor’s $100,000 basis. Holding the stock until death may result in a basis adjustment, potentially reducing the capital gain recognized if the beneficiary later sells the property.
The appropriate choice depends on estate size, expected growth, charitable goals, liquidity, the recipient’s circumstances, and the likelihood that the asset will be sold. Families should evaluate both estate-tax and income-tax consequences with qualified tax and legal professionals before transferring highly appreciated property.
Planning Strategies That May Be Considered
No single strategy is appropriate for every family. Depending on the circumstances, an estate attorney and tax professional may evaluate:
- Annual exclusion gifting
- Direct payment of qualifying tuition or medical expenses
- Irrevocable life insurance trusts
- Spousal lifetime access trusts
- Grantor retained annuity trusts
- Charitable remainder or charitable lead trusts
- Family limited partnerships or family LLCs
- Business succession and buy-sell planning
- Qualified personal residence trusts
- Generation-skipping transfer planning
- Donor-advised funds and other charitable strategies
These arrangements involve meaningful legal, tax, administrative, and financial tradeoffs. Irrevocable does not simply mean “more advanced.” It means the person creating the trust may permanently give up ownership, access, or control. A strategy should therefore be evaluated within the family’s complete financial plan rather than selected solely because it may reduce estate taxes.
Special Considerations for Texas Business Owners
Closely held business interests can create estate planning challenges even when the family has substantial wealth. The business may represent most of the estate’s value while producing little cash that an executor can use to pay taxes or expenses.
For example, a Houston-area business owner may have a company valued at $18 million but hold only $2 million in liquid investments. If the business owner dies unexpectedly, the family may face questions involving valuation, management succession, ownership rights, employee retention, and estate liquidity.
Business owners should consider:
- How the company would operate during an owner’s incapacity or death
- Whether family members want and are qualified to run the business
- How ownership will transfer among family members or business partners
- Whether a buy-sell agreement is properly drafted and funded
- How the business will be valued
- Whether sufficient liquid assets are available outside the company
- How estate taxes or equalization gifts could affect the business
How a Fee-Only Fiduciary Advisor Can Help
Estate attorneys draft wills, trusts, powers of attorney, and other legal documents. CPAs and tax professionals provide tax analysis and prepare required returns. A fee-only fiduciary financial advisor may help coordinate those recommendations with the family’s investments, cash flow, retirement plan, insurance, business interests, and long-term goals.
At Tiverton Wealth, we are a fee-only registered investment adviser based in The Woodlands, TX. We provide financial planning and investment management services to individuals, families, professionals, business owners, and retirees in The Woodlands and Greater Houston.
Our role may include helping families:
- Create a complete inventory of assets, ownership, and beneficiary designations
- Estimate the current and projected value of the estate
- Evaluate potential gifting and trust-funding scenarios
- Evaluate estate liquidity and life insurance needs
- Coordinate investment accounts with the estate plan
- Identify potential inconsistencies between legal documents and beneficiary designations
- Prepare for meetings with estate attorneys and tax professionals
- Assist with implementation and monitoring of the financial portions of the plan
A financial planner does not replace an estate attorney or provide legal advice. The goal is to help coordinate the legal, tax, and financial components of the plan around the family’s stated objectives.
What to Review in 2026
High-net-worth families should consider reviewing the following items during 2026:
- The estimated value of the total estate, including life insurance and business interests
- Wills, revocable trusts, and irrevocable trusts
- Financial and medical powers of attorney
- Beneficiary and payable-on-death designations
- Prior taxable gifts and previously filed gift tax returns
- Whether portability was elected after a spouse’s death
- Ownership and beneficiary structure of life insurance
- Business succession documents and buy-sell agreements
- Property owned outside Texas
- Expected inheritances and future asset growth
- Plans for charitable giving and family support
An estate plan should also be reviewed after a marriage, divorce, birth, death, major inheritance, business sale, relocation, or significant change in net worth.
Estate Tax Planning in The Woodlands and Greater Houston
Estate tax rules affect families differently depending on their assets, family structure, business interests, charitable goals, and existing documents. A family in The Woodlands with a closely held company may need a different plan from a retired couple in Conroe, a physician in Spring or Klein, or a real estate investor in Cypress, Tomball, or Houston.
Tiverton Wealth helps families evaluate estate planning considerations as part of a broader financial plan covering income, insurance, taxes, investments, retirement, and estate coordination.
To discuss how your estate plan relates to your broader financial life, contact Tiverton Wealth, LLC at 281-865-8858 or alex@tivertonwealth.com. Our office is located at 2001 Timberloch Place, Suite 500, The Woodlands, TX 77380.
Frequently Asked Questions
What is the federal estate tax exemption in 2026?
The federal estate and gift tax basic exclusion amount is $15 million per individual in 2026. Prior taxable gifts may reduce the exemption remaining at death.
Does Texas have an estate or inheritance tax?
Texas does not currently impose a separate state estate tax or inheritance tax. Federal estate tax may still apply, and another state’s tax laws may be relevant when a Texas resident owns property or business interests in that state.
Can a married couple leave $30 million without federal estate tax?
A married couple may potentially use two $15 million exemptions. However, preserving both exemptions may require an appropriate trust arrangement or a timely portability election after the first spouse dies. The result depends on prior gifts, deductions, asset ownership, citizenship, and other circumstances.
How much can I give someone in 2026 without using my lifetime exemption?
The annual federal gift tax exclusion is $19,000 per recipient in 2026. Married couples may generally combine their exclusions to transfer $38,000 per recipient when the applicable requirements are satisfied.
How can a fee-only financial advisor help with estate tax planning?
A fee-only financial advisor may help estimate future estate values, evaluate liquidity, model gifting scenarios, coordinate investments and beneficiary designations, and work with the family’s attorney and tax professional. The advisor does not replace an attorney or provide legal advice.
Do I need a financial planner if I already manage my own investments?
Estate planning involves more than investment selection. A financial planner may help evaluate account ownership, beneficiary designations, taxes, insurance, retirement income, estate liquidity, and how the investment portfolio fits with the legal plan.
What should I look for in a fiduciary advisor in The Woodlands, TX?
Consider the advisor’s fiduciary status, compensation method, services, credentials, experience with complex planning, investment approach, potential conflicts of interest, and ability to coordinate with attorneys and tax professionals. Review the firm’s Form ADV and request a clear explanation of all fees.
Does Tiverton Wealth work with clients outside The Woodlands?
Yes. Tiverton Wealth serves individuals and families in The Woodlands and throughout Greater Houston, including Conroe, Spring, Klein, Cypress, Tomball, and Houston. The firm may also work with clients in other locations where it is properly registered or otherwise permitted to provide advisory services.
Important Disclosure
This article is provided for general educational and informational purposes only. It is not intended as individualized investment, tax, accounting, or legal advice, does not create an advisory or attorney-client relationship, and should not be relied upon as a substitute for advice from qualified professionals familiar with your circumstances. Tax laws, exemption amounts, and planning rules may change, and their application depends on individual facts and circumstances. Tiverton Wealth, LLC does not provide legal services or prepare legal documents. Estate planning strategies should be reviewed with a qualified estate planning attorney and tax professional before implementation. Investing involves risk, including the possible loss of principal. Registration as an investment adviser does not imply a particular level of skill or training.