New Jersey Estate Planning Attorney Christine Matus Discusses the Implications of the 2026 Estate Tax Exemption Sunset

The upcoming estate tax exemption changes set to take effect in 2026 could significantly impact New Jersey residents. Christine Matus (https://matuslaw.com/estate-tax-exemption-sunset-2026/), a leading New Jersey estate planning attorney at The Matus Law Group, highlights the critical need for individuals and families to reassess their estate plans before the exemption reverts to pre-2018 levels.

Under current federal law, individuals can transfer up to $13.61 million without incurring estate taxes, with couples benefiting from a combined exemption of $27.22 million. However, once the exemption is reduced in 2026, many estates that were previously untaxed may face new federal tax liabilities. New Jersey estate planning attorney Christine Matus advises that now is the time to take proactive steps to protect estates from potential tax burdens.

For New Jersey residents, the changes present unique challenges. While the state does not impose its own estate tax, it does have an inheritance tax, which could still impact the distribution of assets. Christine Matus emphasizes that New Jersey estate planning attorneys can help individuals navigate both federal and state tax obligations, ensuring that estate plans remain effective in light of the shifting tax landscape.

The scheduled sunset of the current estate tax exemption is a result of provisions from the Tax Cuts and Jobs Act (TCJA) of 2017. When the TCJA was enacted, it significantly increased the federal estate tax exemption, allowing individuals to shield a larger portion of their estate from federal taxes. However, unless Congress takes further action, the exemption will return to pre-TCJA levels, adjusted for inflation, creating a new financial challenge for high-net-worth individuals.

Christine Matus points out that in 2017, the estate tax exemption was only $5.49 million. If it reverts to a similar level in 2026, an estate worth $20 million would face a taxable amount of approximately $14.51 million-substantially higher than the $6.39 million that would have been taxed under the 2024 exemption levels. For many New Jersey families, this change underscores the need to explore estate planning strategies that could mitigate the impact of increased estate taxes.

Proper planning can help minimize estate tax burdens and preserve assets for beneficiaries. Estate planning strategies such as the use of trusts, strategic gifting, and the reassessment of asset ownership structures can all contribute to a more tax-efficient estate plan. Trusts, in particular, can play a vital role in managing estate taxes. Options such as credit shelter trusts, grantor retained annuity trusts (GRATs), and charitable remainder trusts (CRTs) allow individuals to structure their assets in a way that reduces taxable estate values. "Carefully structured estate plans can help families protect their wealth and provide financial security for future generations," says Christine Matus.

Additionally, making use of the current lifetime gift exemption before it is reduced in 2026 can be an effective way to minimize taxable estate values. New Jersey residents may also consider establishing irrevocable life insurance trusts (ILITs) to provide liquidity for estate taxes, ensuring that heirs do not have to liquidate assets to cover tax liabilities.

Given the challenges of federal and state tax laws, early preparation is key. The years leading up to 2026 provide a crucial window of opportunity for individuals to take advantage of the current tax laws before the exemption is reduced. Estate plans should be reviewed regularly to ensure they remain aligned with both current laws and personal financial goals.

Delaying estate planning could lead to unintended tax consequences, including higher tax liabilities and potential complications for heirs. "Estate planning is not just about preserving wealth; it's about making sure that your assets are distributed according to your wishes while minimizing financial burdens on your loved ones," says Christine Matus.

While the federal estate tax changes will affect many high-net-worth individuals, New Jersey residents must also consider the state's inheritance tax laws. Unlike estate taxes, which apply to the total value of an estate, inheritance taxes are based on the relationship between the decedent and the beneficiary. Spouses, children, and parents are typically exempt from inheritance taxes, but more distant relatives and non-relatives could face substantial tax obligations.

Christine Matus emphasizes that understanding the interaction between federal and state tax laws is critical for effective estate planning. "By taking the time to evaluate estate planning options now, individuals can avoid unnecessary taxation and ensure that their legacy is preserved for their families," she explains.

With the estate tax exemption sunset approaching, New Jersey residents are encouraged to take a proactive approach to estate planning. Christine Matus and The Matus Law Group provide tailored estate planning solutions designed to help individuals navigate the evolving tax landscape. By reviewing estate plans now, individuals can take advantage of the current exemption levels and implement strategies that minimize future tax liabilities.

Estate planning decisions made today can have long-lasting financial implications for families. With a thorough understanding of estate tax laws and available planning tools, individuals can make informed choices that protect their wealth and provide for future generations. Christine Matus remains committed to helping New Jersey residents prepare for the upcoming changes, offering comprehensive guidance on estate planning strategies that align with their financial goals.

About The Matus Law Group:

The Matus Law Group has been dedicated to serving New Jersey residents with comprehensive estate planning services for years. Led by Christine Matus, the firm is committed to helping individuals and families protect their assets, navigate tax laws, and create estate plans that align with their financial and personal goals. The firm provides legal guidance on wills, trusts, asset protection, and tax-efficient strategies to ensure clients can confidently plan for the future. With a focus on personalized solutions, The Matus Law Group strives to offer peace of mind to clients by helping them preserve their legacies and secure financial stability for their loved ones.

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