New law impacts gifting rules, triggers need to update estate plans
Gifting is an important estate planning tool with tax and Medicaid eligibility consequences. The governing rules evolve and such changes can trigger the need to review and update estate planning strategies. A strategy that worked under one exemption amount, one reporting threshold or one Medicaid policy may produce unexpected tax or benefit outcomes after these changes. As such, planning requires flexibility, documentation and periodic review.
What changes, why it matters
Transfer tax rules often change through adjustments to the federal gift, estate and generation-skipping transfer exemptions. State estate tax regimes can also change through rate revisions and exemption resets. It is also important to review Medicaid rules as they can shift as a result of agency interpretation, state plan amendments, and increased enforcement intensity.
In a recent example, President Donald Trump’s One Big Beautiful Bill Act (OBBBA) has changed the rules that guide the lifetime federal gift and estate tax exemption. As of 2026, the OBBBA clarifies that the lifetime estate and gift tax exemption has risen to $15 million per individual and $30 million per couple. This means those who had used their full exemption in 2025 now have an additional $1.01 million per person during 2026.
How to use gifting effectively in an estate plan
Annual exclusion gifting depends on current thresholds which generally change every year. It is important to review these thresholds as a missed requirement can convert an intended exclusion gift into a taxable gift. Larger lifetime gifts depend on exemption levels, like those discussed above. A later reduction can change remaining capacity for additional transfers, estate liquidity planning. Discuss these possibilities to help better ensure your estate plan is in line with your goals.
How to strengthen gifts against legal risk
It is important to keep clear documentation to support the gift, such as dated receipts. Avoid informal handoffs that invite later challenges. It can also help to coordinate gifts with trusts and beneficiary designations. Those who are also considering Medicaid planning are wise to reassess Medicaid lookback exposure and cash flow needs.
Gifting remains powerful because it can shift appreciation, simplify administration, and support loved ones during life. A smart approach uses periodic reviews, careful documentation, coordinated tax reporting and alignment with long-term care planning. Consult qualified counsel to tailor gifting to current law, personal objectives and foreseeable changes.