Estate Planning in 2026: Avoiding Tax Surprises Before They Hit Your Family
The 2026 federal estate exemption is $15 million per person. Learn how Arizona retirees in Scottsdale, Paradise Valley, and Chandler can use gifting, trusts, and tax-smart planning to protect their wealth and family legacy.
“Do I really need to worry about estate taxes?”
That’s a question I hear often especially from people who’ve built their wealth the long, steady way. The next thing they usually ask is:
“Raman, we’re not billionaires. Why would the IRS care about us?”
It’s a fair question.
But here’s what most people miss: estate taxes no longer just hit the ultra-rich. With Arizona’s home values skyrocketing, investment portfolios growing, and life insurance proceeds counting toward your estate, plenty of Arizona retirees are closer to the tax line than they think.
In 2026, the federal estate tax exemption is $15 million per person ($30 million per couple). That might sound like plenty, but when you add up homes, IRAs, and business interests, the numbers climb fast.
Why This Matters for Arizona Retirees
If you live in Scottsdale, Paradise Valley, Chandler, or Phoenix, you’ve seen how quickly property values have grown.
Let’s take a real-life example I often see:
- A primary home in Paradise Valley worth around $4 million (Zillow 2025)
- A vacation home in Tucson or Sedona worth $1 million
- Investment and retirement accounts totaling $4–6 million
- A small business or partnership valued at $2–3 million
- Life insurance with a $2 million death benefit
That puts your estate at roughly $13–16 million — and the IRS counts every penny.
People I’ve worked with in Scottsdale and Chandler often find themselves near or above the threshold without realizing it. They didn’t overspend — they just saved diligently, reinvested, and let compounding do its thing.
As The Wall Street Journal noted in March 2025, “The number of Americans facing estate tax exposure will nearly double once current exemptions expire.”
That’s why 2026 is such a critical planning year.
Step 1: Understand Where You Stand
For 2026, each person can transfer up to $15 million free of federal estate tax. Couples can pass $30 million combined. Above that, the IRS applies a 40% estate tax.
Arizona doesn’t have a state estate or inheritance tax, but that doesn’t mean you’re safe. Growth alone can push you over the federal limit.
According to Fidelity’s 2025 Wealth Planning Report, a $10 million estate growing at 5% annually will exceed $26 million within 20 years.
Even moderate inflation, market growth, or property appreciation can quietly tip a family into taxable territory.
Step 2: Take Inventory of Your Estate
Make a list of everything you own, including:
- Real estate (primary, secondary, and rental)
- Investment and retirement accounts
- Life insurance (death benefits count)
- Business ownership and partnerships
- Family assets and collectibles
Then ask:
“If my assets keep growing, how close am I to $15 million?”
If you’re near that number — or could reach it within 10–15 years — you have time to plan proactively.
Step 3: Move Wealth the Smart Way
You can gift $19,000 per person per year (or $38,000 for couples) without touching your lifetime exemption.
Example: A Chandler couple with three children and six grandchildren gifts $38,000 to each family member. That’s $342,000 per year outside the taxable estate. Over ten years, that’s $3.42 million, plus growth, that avoids future estate taxes.
According to Morgan Stanley’s 2025 Family Wealth Report, consistent gifting can reduce an estate’s taxable value by up to 25% over a decade without sacrificing family control.
Step 4: Use Trusts and Family Limited Partnerships
Trusts and Family Limited Partnerships (FLPs) aren’t just for the ultra-wealthy. They’re practical tools for families who want to keep control while reducing tax exposure.
Here’s how they work:
- Revocable Living Trusts help avoid probate and streamline estate transfer.
- Irrevocable Life Insurance Trusts (ILITs) exclude life insurance proceeds from your taxable estate.
- Grantor Retained Annuity Trusts (GRATs) move appreciating assets like real estate or business interests out of your estate while retaining some income.
- Spousal Lifetime Access Trusts (SLATs) allow one spouse to transfer assets to the other’s trust for long-term protection and growth.
- Charitable Trusts (CRUTs and CLATs) combine philanthropy with estate-tax reduction.
- Family Limited Partnerships (FLPs) let you transfer ownership in real estate or businesses at a discounted value while keeping management control.
Example: A Paradise Valley couple placed $5 million in commercial real estate into an FLP. By applying a 25% minority-interest discount, they reduced the estate’s taxable value by $1.25 million while maintaining full control of the property.
As Vanguard’s 2025 Estate Planning Guide notes, “FLPs and irrevocable trusts are the cornerstone of modern multi-generational planning, blending control with tax efficiency.”
Step 5: Keep Flexibility in Your Plan
Tax laws change. Fast.
Adding disclaimer provisions allows heirs to “refuse” or redirect part of their inheritance into a trust if tax laws shift. It’s like a built-in safety valve, ensuring your family can adapt even if Congress decides to lower the exemption.
Think of it as future-proofing your plan.
Step 6: Don’t Overlook Income Taxes for Heirs
Estate taxes get attention, but income taxes can quietly take a bigger bite.
Under the SECURE Act, children inheriting IRAs must empty those accounts within 10 years, often during their peak earning years.
Example: A Scottsdale couple left a $2.4 million IRA split between two kids. Each took $120,000 a year in taxable withdrawals for 10 years — pushing both into higher federal tax brackets.
Had the couple done partial Roth conversions earlier, their children could have inherited tax-free income.
The Fidelity 2025 Retirement Income Study found that families using Roth conversions and withdrawal sequencing reduced their heirs’ total tax burden by up to 40%.
Step 7: Prepare for Changing Exemptions
Here’s the question every high-net-worth retiree should be asking:
“What’s my plan if Congress cuts the estate-tax exemption in half?”
It’s not hypothetical — it’s happened multiple times.
| Year | Exemption | Top Rate |
| 2000 | $675,000 | 55% |
| 2010 | $5 million (temporary) | 35% |
| 2017 | $5.49 million | 40% |
| 2018 | $11.18 million (TCJA increase) | 40% |
| 2026 | $15 million (inflation-adjusted) | 40% |
If the exemption drops back to $7.5 million per person, many Arizona families — especially those with property and business equity — could owe estate tax for the first time.
The Bottom Line
Estate planning isn’t about how much money you have. It’s about how much stays with the people you care about.
If you live in Scottsdale, Paradise Valley, Chandler, or Phoenix, rising property values and market gains mean it’s time to revisit your plan before 2026 arrives.
At Singh PWM, I help retirees and business owners coordinate estate, tax, and investment strategies — all under one flat annual fee.
No commissions. No percentage-based management fees. Just transparent, fiduciary advice designed to keep more of your wealth in your family’s hands.
Schedule your free Estate & Legacy Strategy Call today to see how your current plan stacks up and what steps can protect your estate before the exemption changes.
References
- Fidelity Investments, 2025 Wealth Planning Report
- Morgan Stanley, 2025 Family Wealth Insights
- Vanguard, 2025 Estate Planning Guide
- The Wall Street Journal, “More Americans Will Face Estate Tax Exposure by 2026” (March 2025)
Related Reading
- Am I Paying Too Much in Advisor and Investment Fees?
- Retirement Planning Without Taxes: Why It Costs So Much (and How to Fix It)
- Finding Your Safe Withdrawal Rate in Retirement
Important Disclosures
The information provided herein was obtained from sources believed to be reliable and is believed to be accurate as of the time presented, but it is provided “as is” without any express or implied warranties of any kind.
This material is intended for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. You should consult with your own qualified investment, tax, or legal advisor before making any decisions based on this material.
Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Withdrawal strategies and tax outcomes will vary depending on individual circumstances, account types, tax brackets, and market conditions. No strategy can guarantee success or prevent losses.
Investment advisory services are offered through Singh PWM, LLC, a registered investment adviser offering advisory services in the State of Arizona and other jurisdictions where registered or exempted.
Singh PWM, LLC is a registered investment advisor offering advisory services in the State(s) of Arizona and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute.
