My neighbor’s daughter asked him a question over dinner last month. What happens to the cabin. He changed the subject, which is the traditional answer.
He can afford to relax about the part he was worried about. The federal estate exemption rose to $15 million a person in January. Thirty million for a couple. Nobody in his family is anywhere near it.
The old schedule had that line dropping to roughly $7 million this year. Last summer’s tax law removed the drop and made the higher figure permanent, indexed to inflation. So the federal bill is off the table for nearly everyone reading this.
The small print stayed where it was. The annual gift exclusion is still $19,000 per recipient, the same as last year.
That is what you can hand one person in a calendar year without filing anything. A couple can do $38,000 to the same child. Past that you file a return, and the excess eats into your lifetime number.
That figure climbs only in thousand-dollar steps. So it sits still for years while the groceries do not.
What the federal line does now
$15 million a person, $30 million a couple, and a 40% rate on anything above it. Permanent, and it rises with inflation from here.
What your own state does
A minority of states run an estate or inheritance tax of their own, on far lower thresholds. New York starts at $7.35 million this year and never asked Congress.
The expensive mistake in this aisle involves basis, and it has nothing to do with the rate. Basis is what the tax collector says you paid for a thing.
Say the cabin cost $40,000 back in 1988. Today it would fetch $400,000. Leave it in the will, and your daughter’s basis resets to the value on the day you die. She can sell the next morning and owe nothing on the gain.
Sign the deed over to her this year instead, and she carries your old $40,000. Same cabin. A $360,000 gain sitting in her lap.
One line of code stands between a clean sale and a bill the size of a new car. Same house. Same daughter. Different signature. That is a conversation for your own attorney.
Where the cohort’s money sits this quarter, and the aisle a dinner-table question belongs to.
But it cuts the other way too. Fear of this tax sells a great deal of paperwork nobody needs.
A trust that has to be administered for thirty years carries a fee every one of those years. On an estate that was never going to owe federal tax, those fees are the only certain number in the file.
Simple is often right at this level. Ask what it costs a year. Then ask what it does that a will cannot.
The arithmetic
Federal figures: Internal Revenue Service inflation adjustments for tax year 2026, released October 9, 2025. Estate and lifetime gift exemption $15 million per individual, up from $13.99 million for 2025, and $30 million for a married couple; the rate above the exemption is 40%; the annual gift exclusion holds at $19,000 per recipient, $38,000 for a couple splitting a gift; the exclusion for gifts to a non-citizen spouse rises to $194,000. The One Big Beautiful Bill Act set the $15 million figure without a sunset and indexed it, replacing the scheduled fall to roughly $7 million. State figure: New York Department of Taxation and Finance, 2026 basic exclusion amount $7,350,000. Basis at death and carryover basis on lifetime gifts are longstanding federal rules, not a 2026 change. The $360,000 gain in the cabin example is Boomers Trade’s own arithmetic on an illustrative purchase of $40,000 in 1988 and a $400,000 sale today. Cohort size: Census Bureau, roughly 76 million Americans born 1946 to 1964.
The $15 million climbs with inflation every year from here, so the federal side gets easier while you sleep. The $19,000 is the one to watch each October, because that is the number your actual plan runs on. My neighbor still has not answered his daughter. The cabin will answer for him, and the answer depends on which piece of paper he signs first.
Andrew
Boomers Trade is written by someone getting older right alongside you, and watching who profits from it.
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