Potential Downsides of Ignoring an Estate Plan Until 2026
Putting an Estate Plan on the Backburner Could Backfire Soon. Here’s Why.
Estate planning doesn’t need to top your to-do list constantly, but there are some very good reasons it should be a priority before 2026. In fact, whether or not you currently have an estate plan, you’ll likely be better off creating one or reviewing the one you have before Jan. 1, 2026, instead of after.
To dial into why this is so important and the core issues at play, here are some insightful answers, explaining:
While this info can be eye-opening, don’t hesitate to contact an Austin estate planning attorney at the Law Office of Todd A. Wilson, also known as TAW Law Texas, for answers pertaining to your situation, needs, and objectives.
Why It’s Smart to Revisit Your Estate Plan Before 2026
December 31, 2025, has become a crucial deadline in the tax and estate planning worlds. That’s because current estate and gift tax exemptions are set to drop to their 2017 levels as of Jan. 1, 2026. This change on the horizon has become a major focal point for many because it’s expected to:
- Cut gift and estate tax exemptions roughly in half: Specifically, that could mean that the individual exemption would go from $12.92 million (2023 rate) to about $7 million in 2026. Likewise, couples could see their exemption go from $25.84 million (2023 rate) to roughly $14 million as of 2026. This drop is related to sunsetting tax laws, and here’s a look at estimated estate tax exemptions for 2024, 2025, and 2026, highlighting how drastic this drop could end up being.
- Open up new vulnerabilities: Those who haven’t anticipated the changing estate tax exemptions could face far greater liabilities, costs, and taxes than they had originally planned. That could mean that they don’t have the insulation or flexibility they had thought they were getting when they drafted their estate plan.
Notably, it’s also integral to understand that new legislation passed before 2026 could keep current estate tax exemptions in place and put this issue to rest for good.
Nevertheless, carving out a little time to devise or review your estate plan now is a far better move than gambling with the possibility of new tax laws being passed between now and Dec. 31, 2025. In fact, any time there are big changes to estate planning laws or tax statutes, it’s generally judicious to look at an estate plan in light of the newest information and shifts that may be coming.
What If You Don’t Update Your Estate Plan Before 2026? 3 Potential Consequences
You don’t have to make any moves knowing that estate tax exemptions are set to change soon — just like you don’t have to go to the doctor for certain health screenings. If you do, though, you can put yourself in a much better position to take prudent action ASAP and avoid some negative consequences in the future.
If you don’t and you opt to do nothing ahead of the 2026 estate tax changes, here are just some of the drawbacks and costs you and/or your loved ones could possibly face later.
1. Sky-High Tax Rates
Estate tax rates are generally between 18% and 40%, depending on the value of the estate’s taxable assets. The table below highlights the different estate tax rates in 2023, based on the taxable value of an estate (and the latest information from the IRS).
| Taxable Value of an Estate | Estate Tax Rate |
| $10,000 or Less | 18% |
| $10,001 to $20,000 | 20% |
| $20,001 to $40,000 | 22% |
| $40,001 to $60,000 | 24% |
| $60,001 to $80,000 | 26% |
| $80,001 to $100,000 | 28% |
| $100,001 to $150,000 | 30% |
| $150,001 to $250,000 | 32% |
| $250,001 to $500,000 | 34% |
| $500,001 to $750,000 | 37% |
| $750,001 to $1,000,000 | 39% |
| $1,000,001+ | 40% |
If you have been relying on current estate tax exemptions for some tax advantages later, you may be surprised to discover that:
- Those tax advantages may be lost by 2026 when estate tax exemptions could drop sharply.
- Their estates could be subject to much steeper tax rates, possibly even the top 40% rate if you don’t have the right strategies in place to mitigate and respond to these changes.
Ultimately, this could end up meaning that Uncle Sam is the biggest beneficiary of your estate, taking your assets away from the loved ones you’ve named in your estate plan.
2. Less Financial Flexibility in the Future
The next couple of years could fly by, and you won’t be able to turn back the clock once they do. That could mean that you lose out on the chance to take advantage of the higher gift and estate tax exemptions now — and over 2024 and 2025 — before these exemptions are set to dip by many millions.
Additionally, before 2026, you may be able to set up and start funding certain types of estate planning devices, giving you even more flexibility later, even with the uncertainties surrounding tax laws and the economy.
If you ignore all the guidance and warnings, however, the options available after 2026 can shrink — and they may not provide as many benefits, as much flexibility, and the same favorable choices as you would have had if you had gotten into gear with your estate plan before 2026.
3. A Less Effective (or Useless) Estate Plan
Life, laws, and your wishes can change with time, and all of those evolving factors could erode the efficacy of your estate plan, especially in light of the 2026 estate tax exemption changes. In fact, your current estate plan may not do everything you want it to or be as buttoned up as you think if:
- It’s been at least 5 years since you’ve last looked at your estate plan: If your estate plan was drafted or last updated around 2017 or 2018, your estate plan may not account for the sunsetting estate tax exemptions on deck for 2026.
- Your marital status or family has changed: Marriage, divorce, children, and grandchildren can all be good reasons to review and update estate plans. Deaths in the family can be too. If these events have occurred without estate plan updates to follow, your plan can be riddled with omissions and out-of-date information.
- Your estate has changed: If you’ve gained or lost significant assets since your last estate planning review, again, it’s smart to update your estate plan to reflect those changes. If you don’t, those assets could be subject to Texas intestacy laws.
You won’t know if your estate plan is still as effective as you think until you take a fresh look at it, ideally with an attorney. An estate planning lawyer can share more on the latest laws to consider, in light of your estate and your objectives.
If you decide you don’t want or need to do this, however, you could have a false reliance on your estate plan, and your beneficiaries may not end up with the assets or support you intended to provide for them.
What Should You Review & Consider in Your Estate Plan? 5 Essentials
Whether you devise or review an estate plan before or after 2026, you’ll want to focus on some key factors, including (but not limited to):
- Your beneficiaries: Who have you designated to receive different parts of your estate? Do you need to update your beneficiary list or put certain guardrails in place for some beneficiaries? Whoever your designated beneficiaries are and regardless of what they may inherit, you may also want to consider including a “no contest clause” in your will and estate plan.
- Your assets: What new assets have you acquired since you drafted or last updated your estate plan? What have you sold, gotten rid of, or lost? Estates can change pretty dramatically over time, growing or shrinking in unique ways. Adapting an estate plan to these changes can be a smart asset protection move.
- Your asset transfer plans: How will your beneficiaries receive different assets of your estate? Do you plan to make gifts before death or transfer assets via a will or trust? The avenues you’ve selected for transferring assets may not be as advantageous as they once were in light of changing estate tax exemptions.
- Your trusts: How and when will certain assets be distributed to your chosen beneficiaries? Will you be transferring those assets during your lifetime or after? And who do you want to transfer those assets to? There may be better options for trusts in your estate plan, particularly with upcoming tax law changes. Some may include irrevocable life insurance trusts (ILITs), grantor retained annuity trusts (GRATs), and spousal lifetime access trusts (SLATs).
- Your executor and trustees: Who have you named as the executor and alternate executor in your will? Who are the trustees of any trusts you’ve set up? Are these parties still reliable, trustworthy, and good choices for the roles you’ve designated for them? Relationships can change just as much as estates and the laws do. So, check in on the key players in your estate plan, and reassess whether they’re still a good fit for the “job” from time to time.
Depending on your circumstances, your estate, and your goals, there could be several more important aspects of an estate plan to review from time to time (or routinely). The best way to stay on track and keep your estate plan up to date is by working with a seasoned attorney, like the Austin estate planning lawyers at TAW Law Texas.
How to Review or Draft Your Estate Plan with an Experienced Austin Attorney
Get professional legal advice and experienced counsel from a trusted Austin estate planning lawyer who has helped countless folks protect their rights and interests while accomplishing their objectives. Better moves and estate plans are within at TAW Law Texas.
That’s because our Austin attorneys have vast experience, knowledge, and skills in all aspects of estate planning. We are also extremely well-versed in the most recent updates to tax laws, estate planning statutes, and more. Backed by this acumen and an unflinching focus on delivering the best results for our clients, our Austin estate planning lawyers can help you navigate all of the complexities of estate planning with greater ease, more effective counsel, and priceless peace of mind.
Find out more about your options and how we can help you in a free, no-obligation consultation. Just contact us for more answers today.
Todd A. Wilson
Todd A. Wilson has been practicing law since 2007, with the aim of educating all strata of society and sharing crucial insights about the importance of estate planning, probate, and more.
The Law Office of Todd A. Wilson (also known as TAW Law TX) offers affordable estate planning and probate services.