In 2025, the federal lifetime estate, gift, and GST exemption is 13.99 million per person, and the annual gift exclusion is 19,000 per recipient. The IRS began enforcing required minimum distributions for many inherited IRAs under the 10‑year rule in 2025. For context, 2026 exemptions have been announced higher.
You can expect practical estate planning changes in 2025. This post explains the key numbers, action steps, strategies by net worth, and what to review in beneficiary and trust language.
Key Numbers (2024 vs 2025 vs 2026—announced)
| Year | 2024 | 2025 | 2026 (Announced) |
| Estate/Gift/GST exemption | $13,610,000 | $13,990,000 | $15,000,000 |
| Annual exclusion | $18,000 | $19,000 | $19,000 |
| Top Rate | 40% | 40% | 40% |
Texas imposes no state estate or inheritance tax; federal amounts apply to Texans.
What to Do Now
So you might wonder what the next step looks like. In short, you should review your will in case any changes are needed and also gain a firm understanding of the value of your assets, anything that you’ll be passing on to your beneficiaries.
- Use 2025 annual exclusion: complete up to $19,000 per recipient ($38,000 per couple) before year‑end; track against the lifetime exemption.
- Decide on 2025 lifetime gifts: if near the exemption, consider selective gifts now; weigh gifting versus keeping low‑basis assets for a step‑up at death.
- Confirm beneficiary designations: IRAs, 401(k)s, life insurance, TOD/POD; align with the 10‑year rule and 2025 RMD enforcement when the owner died on/after RBD.
- Plan portability: file Form 706 at the first death to elect portability even if no tax is due; calendar the nine‑month deadline (and extension options).
- Texas probate readiness: include independent executor language in wills and plan for independent administration to streamline probate.
- Texas incapacity documents: maintain a statutory durable power of attorney, medical power of attorney, directive to physicians (living will), and designation of guardian.
- Trust checkup: if trusts are IRA beneficiaries, label conduit vs. accumulation; conduit may force annual RMDs and full payout by year 10; accumulation can retain but faces compressed brackets.
- 2026 figures: refer to 2026 exemption ($15.0M per person) and the annual exclusion ($19,000) as “announced”; verify final indexing before year‑end.
Strategies by Net Worth
Keeping in mind all the factors mentioned above, we’ll look at some strategic approaches for estate planning for different levels of net worth. Hence, you might have more options.
Under $5M: Focus on Basis Step‑up and Document Updates
If you’re at the net worth level of less than $5 million (or at any level for that matter), you’ll need to
- Prioritize step‑up in basis at death; avoid gifting low‑basis assets unless for non‑tax goals.
- Texas document hygiene: statutory durable power of attorney, medical power of attorney, directive to physicians, designation of guardian, and independent executor language in the will.
- Keep beneficiary designations current on IRAs, life insurance, and TOD/POD accounts.
$5–$15M: Selective Gifts, SLATs/ILITs
Between the $5 to $15 million-dollar mark, you can start looking at irrevocable life insurance trusts (ILITs), spousal lifetime access trusts(SLATs), and if applicable, selective or specific gifts to your beneficiaries.
- Use selective lifetime gifts in 2025; track against the unified exemption and annual exclusion.
- ILITs (irrevocable life insurance trusts) to keep policy proceeds outside the estate.
- SLATs (spousal lifetime access trusts) to lock in exemption; in Texas, execute a community‑property partition agreement so contributed assets are the grantor spouse’s separate property before funding.
- Portability awareness: plan to file Form 706 on the first death to preserve DSUE, even if no tax is due.
$15M+: Advanced Trusts
Beyond the $15 million net worth, you’re not only looking at setting up ILITs and SLATs (especially portability filings), but also GRATs so that your heirs can avoid federal estate and/or gift taxes.
- Layer advanced trusts: SLAT for access, GRAT for appreciating assets, ILIT for liquidity, and a multigenerational dynasty trust for GST efficiency.
- File a portability return (Form 706) even if no estate tax is due, to secure DSUE for the survivor.
- Consider trust situs in a jurisdiction with long or perpetual trust durations and favorable tax rules for dynasty trusts if that aligns with family goals.
SECURE Act 2.0 and Inherited IRAs
Identify the beneficiary type first: eligible designated beneficiary (spouse, minor child, disabled or chronically ill, or within 10 years of the owner), designated beneficiary (other individuals), or a nonperson beneficiary (estate, charity, non–see‑through trust). Most designated beneficiaries of 2020+ deaths fall under the 10‑year rule. If the owner died on or after the required beginning date, annual RMDs are required in years 1–9 and the account must be empty by the end of year 10; if the owner died before the RBD, there are no annual RMDs, but the 10‑year deadline still applies. The IRS is enforcing annual beneficiary RMDs beginning in 2025 for accounts subject to the on/after‑RBD rule.
Trusts as beneficiaries: A conduit trust pays out IRA distributions to the beneficiary, which can force annual RMDs and a full payout by year 10 under the on/after‑RBD rule. An accumulation trust can retain amounts but faces compressed trust tax brackets; the IRA still follows the 10‑year framework and 2025 enforcement. Review trust language now to confirm conduit vs accumulation treatment.
State Taxes & Trust Situs
Texas has no state estate or inheritance tax. Still, heirs who live in, or inherit property located in, states with their own estate or inheritance taxes can face state‑level bills at lower thresholds. Review asset locations and beneficiary states, and consider establishing long‑term trusts in jurisdictions with favorable dynasty‑trust rules and tax treatment.
- Texas does not impose a state estate or inheritance tax, but beneficiaries who live in or inherit assets located in other states may face state‑level estate or inheritance taxes at much lower thresholds.
- Review where assets sit and where beneficiaries reside; an out‑of‑state home, business, or account can trigger that state’s death tax even if the decedent lived in Texas.
- Consider trust situs strategically: some jurisdictions offer long or perpetual dynasty‑trust durations and favorable tax treatment; choosing situs can help multigenerational planning.
However, what if your beneficiaries are scattered throughout different states? This is where “situs” factors into your planning. Situs refers to the physical location and jurisdiction where your trust is located. If your heirs don’t reside in Texas, they may need to consult with a tax expert or an attorney in their state regarding capital gains taxes, “death” (estate) taxes, and so on. And they still have to prepare for any federal taxes that are levied.
Basically, you can expect some changes, like the inherited IRA 10-year rule in 2025, but regardless of the impact from this year’s legislation, you should always review your estate planning to avoid probate actions and to guarantee that your family is taken care of during a challenging time.
Conclusion
A Texas‑smart estate plan in 2025 means aligning federal thresholds with clean documents, clear beneficiary designations, and the right trust language for inherited IRAs, while leveraging exclusions and portability on a timely calendar; Texans face no state estate or inheritance tax, but IRS enforcement under the 10‑year rule makes updates urgent. For quick starts and updates, draft your Texas‑ready will and core documents online at Texas Estate Forms and then coordinate with counsel for trust and beneficiary nuances.
