A Historic High — and a History of Volatility
The federal estate tax exemption is at the highest level in American history. Under the One Big Beautiful Bill signed on July 4, 2025, each person can transfer up to $15,000,000 free of federal estate tax — $30,000,000 for a married couple using the portability election. Amounts above that threshold are subject to graduated rates, with a top marginal rate of 40% on amounts exceeding $1 million over the exemption.
For most Utah families, that number is large enough that federal estate tax feels like someone else's problem. And for now, it largely is.
But the exemption has not always been this generous, and there is no guarantee it stays here. The history of this number is a history of dramatic swings driven by shifting congressional priorities — and families who assumed it would always be high have been caught flat-footed when it dropped. The families who planned when the exemption was generous came out ahead.
How Much the Exemption Has Changed
To understand why current planning matters, it helps to see how dramatically the exemption has moved over the past 25 years:
| Year(s) | Exemption per Person | What Changed |
|---|---|---|
| 2001 | $675,000 | Pre-EGTRRA baseline |
| 2002–2003 | $1,000,000 | EGTRRA phased increase |
| 2004–2005 | $1,500,000 | EGTRRA phased increase |
| 2006–2008 | $2,000,000 | EGTRRA phased increase |
| 2009 | $3,500,000 | EGTRRA final step |
| 2010 | Repealed / $5,000,000 | EGTRRA sunset; retroactive reinstatement |
| 2011–2012 | $5,000,000 | TRA 2010; portability introduced |
| 2013–2017 | $5,000,000–$5,490,000 | ATRA made permanent; inflation indexed |
| 2018–2025 | $11,180,000–$13,990,000 | TCJA doubled exemption; indexed annually |
| 2026+ | $15,000,000 | OBBB raised and made permanent |
Notice that the exemption was under $1 million as recently as 2003 — a level that would expose a significant number of Utah families to estate tax today. In 2010, the estate tax was briefly repealed entirely before Congress reinstated it retroactively. This is not a stable number governed by principle; it is a political number governed by whoever controls Congress and the White House.
What a Future Congress Could Do
The One Big Beautiful Bill made the current $15 million exemption permanent — meaning it does not have a scheduled sunset date as prior legislation did. But "permanent" in federal tax law means only that it does not expire automatically. Congress retains the authority to amend or repeal it at any time through ordinary legislation.
Several scenarios could unfold in future legislative sessions:
Reduction to the $5–7 million range
This is the most commonly discussed change. Prior Democratic-sponsored proposals in the 2020s called for exemptions between $3.5 million and $7 million per person. At $7 million, a married Utah couple would face estate tax on everything above $14 million — a threshold that many business owners, real estate investors, and successful professionals in Utah Valley could approach or exceed.
Rate increase above 40%
Some proposals have paired a reduced exemption with a higher marginal rate — 45%, 55%, or even a graduated rate structure reaching higher on very large estates. A higher rate amplifies the cost of not planning, since more of each dollar above the exemption is lost to tax.
Elimination or curtailment of portability
Portability — the rule that allows a surviving spouse to use a deceased spouse's unused exemption — was introduced in 2010 and has become a cornerstone of married-couple planning. A future Congress could eliminate it or add restrictions, reducing the effective shelter available to couples who relied on it rather than using both exemptions during their lifetimes.
Changes to the step-up in basis
Separately from the estate tax exemption, Congress could modify or eliminate the step-up in cost basis that inherited assets currently receive at death. Today, when you inherit an asset, your cost basis is "stepped up" to the fair market value at the date of death — effectively eliminating the capital gains tax on lifetime appreciation. Eliminating this rule would create a significant new tax burden on heirs, independent of the estate tax itself.
Who Gets Affected — and at What Thresholds
At $15 million per person, very few Utah families are currently exposed to federal estate tax. But the calculation changes meaningfully at lower thresholds — and it is worth understanding where your family stands.
A taxable estate includes more than most families initially expect: the fair market value of your home, other real estate, investment accounts, retirement accounts, business interests, and life insurance death benefits (if the policy is owned by you rather than a trust). For a successful Utah business owner or professional, these figures add up quickly.
- At $7 million per person / $14 million per couple: Business owners with commercial real estate, Utah Valley tech equity, or multiple investment properties could approach this threshold. A $3 million home, $2 million in retirement accounts, $1.5 million in a brokerage account, and a $1 million business interest puts a couple within reach of $14 million combined.
- At $5 million per person / $10 million per couple: A broader group of Utah families becomes exposed — particularly those with significant equity in a growing private company, a commercial real estate portfolio, or concentrated positions in appreciated stock.
- At $3.5 million per person / $7 million per couple: This level brings in a meaningful share of high-income Utah families, especially those who have accumulated wealth steadily over 20–30 years and whose estates will continue to grow with compound returns and real estate appreciation.
The compound growth problem: Even if your estate is below a reduced threshold today, it may not stay there. An estate worth $8 million today, growing at 6% annually, reaches $14 million in roughly 10 years. Planning done now — when the exemption is $15 million — captures the current generous rules and locks in transfers that will be protected regardless of what Congress does later.
The Anti-Clawback Opportunity
One of the most important — and underused — aspects of current estate planning law is the IRS's anti-clawback rule. The IRS has confirmed in final regulations that gifts made using a higher exemption amount will not be subject to additional estate tax if Congress later reduces the exemption.
In plain terms: if you make a $10 million gift today using your current $15 million exemption, and Congress later reduces the exemption to $5 million, your estate will not owe tax on that $10 million gift at your death. The gift is locked in at the rules in effect when it was made.
This creates a genuine planning window. The current exemption is not just high — it is also portable to the future. Families who make significant gifts into irrevocable trusts now are effectively insulating those assets from any future reduction in the exemption. Families who wait and plan to "deal with it later" may find that later arrives with a much smaller exemption and no ability to retroactively capture the current rules.
Planning Strategies for High-Net-Worth Utah Families
The strategies below are not appropriate for every family, and each involves real trade-offs — primarily the irrevocable transfer of control over assets. But for families whose estates are large enough that a reduced exemption would create meaningful tax exposure, these tools are worth understanding.
Spousal Lifetime Access Trust (SLAT)
One spouse creates an irrevocable trust for the benefit of the other spouse and descendants. Assets transferred into the trust use the grantor's gift tax exemption and are removed from the taxable estate, but the beneficiary spouse retains access to trust income and principal for their lifetime needs.
A SLAT is one of the most practical tools for married couples who want to remove assets from their taxable estate while maintaining indirect access through their spouse. The key limitation: the grantor spouse gives up direct access to the assets. If both spouses create SLATs for each other, care must be taken to avoid the reciprocal trust doctrine, which can undo the estate tax benefits if the trusts are too similar.
Grantor Retained Annuity Trust (GRAT)
The grantor transfers assets into a trust and retains an annuity payment for a fixed term of years. At the end of the term, whatever remains in the trust — everything that grew above the IRS-prescribed hurdle rate (the § 7520 rate) — passes to the beneficiaries free of gift and estate tax.
GRATs work best when interest rates are low (reducing the hurdle) and when the assets transferred are expected to grow significantly — concentrated stock positions, business interests ahead of a sale, or investment real estate with strong appreciation potential. A zeroed-out GRAT requires no use of the gift tax exemption at all if structured correctly, making it an attractive complement to the other strategies described here.
Charitable Remainder Trust (CRT)
A Charitable Remainder Trust is an irrevocable trust that pays an income stream to the donor (or other named individuals) for a term of years or for life, with the remaining trust assets passing to a designated charity at the end of the term. The donor receives a partial charitable income tax deduction at the time of the gift, calculated based on the present value of the charitable remainder.
Because the CRT is a tax-exempt entity, it can sell highly appreciated assets — investment real estate, concentrated stock, a business interest — without recognizing immediate capital gains tax. The full pre-tax proceeds are reinvested, generating a larger income stream than a taxable sale would produce. Assets transferred into the CRT are removed from the donor's taxable estate, reducing potential estate tax exposure as well.
CRTs work best for charitably inclined families who hold low-basis appreciated assets and who want both a current income stream and an estate tax reduction. Two common structures: the Charitable Remainder Unitrust (CRUT), which pays a fixed percentage of the trust's annual value (so payments fluctuate with performance), and the Charitable Remainder Annuity Trust (CRAT), which pays a fixed dollar amount each year regardless of performance. See our Charitable Giving page for more on how charitable planning intersects with estate planning.
Irrevocable Life Insurance Trust (ILIT)
A life insurance policy owned by the insured is included in the taxable estate at death. An ILIT removes the policy from the taxable estate by having the trust own it instead. The death benefit passes to the trust's beneficiaries free of both income and estate tax — providing liquidity to pay estate taxes, equalize inheritances, or simply pass a tax-free benefit to heirs.
For families whose estate is primarily illiquid — a business, real estate, or concentrated stock — an ILIT also solves a practical problem: heirs receive cash to pay estate taxes without having to sell the underlying asset under pressure. See our detailed post on Irrevocable Life Insurance Trusts in Utah for a full explanation of how ILITs work and what Crummey notices require.
Annual Gift Exclusion Program
Every person can give up to $19,000 per recipient per year in 2026 without using any gift tax exemption and without filing a gift tax return. A married couple can combine their exclusions for $38,000 per recipient annually. For a family with three adult children and six grandchildren, that is $342,000 per year transferred completely outside the estate — with no exemption used and no forms filed.
Annual gifting is not dramatic, but it is persistent. Over 10 years, the same family transfers $3.4 million without touching the lifetime exemption. Combined with 529 plan superfunding — which allows five years of annual exclusion gifts to be made at once to a 529 account — systematic gifting can move significant assets out of a taxable estate with minimal administrative burden.
Dynasty Trusts
A dynasty trust is a long-term irrevocable trust designed to hold assets across multiple generations, avoiding estate tax at each generational transfer by keeping the assets inside the trust rather than distributing them outright to beneficiaries. Utah is one of the most favorable states in the country for dynasty trusts: rather than the common-law rule against perpetuities, Utah has replaced it with a statutory 1,000-year vesting period under Utah Code § 75-2-1203, meaning a properly drafted trust can hold assets for up to 1,000 years — well beyond any practical planning horizon.
Assets transferred into a dynasty trust today — using the current $15 million exemption — are also sheltered from the generation-skipping transfer (GST) tax, which applies at the same rate as the estate tax (40%) to transfers that skip a generation. Funding a dynasty trust now, while the GST exemption is also at $15 million, allows a family to protect an enormous amount of wealth across generations from both estate tax and GST tax.
Utah's Advantage: No State Estate Tax
Utah repealed its state estate tax in 2005. This is a meaningful planning advantage that Utah residents often overlook when comparing notes with family or colleagues in other states.
Residents of Oregon face a state estate tax starting at estates above $1 million, with rates up to 16%. Washington state imposes estate tax on estates above $3,000,000 (as of July 1, 2026) at rates up to 20%, with that threshold now fixed and no longer indexed for inflation. Massachusetts and Oregon residents with estates between $1 million and $15 million face state estate tax bills that Utah residents do not — regardless of what the federal exemption is.
For Utah families, the federal exemption is the only threshold that matters. There is no second layer of state tax to plan around. This simplifies planning and means that if the federal exemption drops to $5 million, a Utah resident's exposure is limited to the federal 40% rate — not a combined federal and state rate that could approach 60% in high-tax states.
Frequently Asked Questions
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The federal estate tax exemption for 2026 is $15,000,000 per person, as established by the One Big Beautiful Bill signed July 4, 2025. A married couple can shelter up to $30,000,000 from federal estate tax through the portability election. Amounts above the exemption are subject to graduated rates with a top marginal rate of 40%. Utah has no separate state estate tax.
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No. The IRS has confirmed through final regulations that gifts made under a higher exemption will not be subject to clawback if the exemption is later reduced by Congress. A family that makes a $10 million gift today — using a portion of the current $15 million exemption — will not owe additional estate tax on that gift even if the exemption later drops to $5 million. The only consequence of using your exemption now is that it reduces the amount available for future gifts or for your estate at death.
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No. Utah repealed its state estate tax in 2005. Utah residents are subject only to the federal estate tax. This is a meaningful advantage over residents of states like Oregon, Washington, and Massachusetts, which impose their own estate tax on top of the federal tax — often at lower exemption thresholds.
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A Spousal Lifetime Access Trust is an irrevocable trust that one spouse creates for the benefit of the other spouse and their descendants. The grantor transfers assets into the trust using their gift tax exemption, removing those assets from the taxable estate. The beneficiary spouse retains access to income and principal during their lifetime. When the beneficiary spouse dies, the remaining trust assets pass to the named beneficiaries — typically children — free of estate tax. The key limitation is that the grantor spouse loses direct access to those assets. If both spouses create SLATs for each other, care must be taken to avoid the reciprocal trust doctrine.
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A Charitable Remainder Trust (CRT) is an irrevocable trust that pays an income stream to the donor or other named individuals for a term of years or for life, after which the remaining assets pass to a designated charity. The donor receives a partial charitable income tax deduction at the time of the gift. Because the CRT is a tax-exempt entity, it can sell highly appreciated assets without immediate capital gains tax, reinvest the full proceeds, and provide a larger income stream than a taxable sale would produce. Assets in the CRT are also removed from the donor's taxable estate. CRTs work best for charitably inclined families holding low-basis appreciated assets — investment real estate, concentrated stock, or business interests.