For years, South Carolina estate planning attorneys told clients to act before 2026, when the federal estate tax exemption was set to be cut roughly in half. That deadline never arrived. Congress made the higher exemption permanent, raising it to $15 million per individual, or $30 million for a married couple, starting January 1, 2026.
The higher exemption removes one source of exposure. It does nothing to fix a trust that still divides assets using outdated language, a life insurance policy nobody ever coordinated with the rest of the plan, or a surviving spouse who never filed the one form that would have preserved a deceased spouse’s unused exemption.
The deadline is gone, but the work of making sure your plan still does what you intended is not.
For years, families and their attorneys watched a deadline. The Tax Cuts and Jobs Act of 2017 temporarily doubled the federal estate tax exemption, but that increase was scheduled to expire at the end of 2025, falling back to roughly half its size. Planning around that countdown shaped much of estate planning advice.
The One Big Beautiful Bill Act, signed into law in July 2025, eliminated that countdown. Beginning January 1, 2026, the federal estate and gift tax exemption rose to $15 million per individual and $30 million for a married couple, with future increases tied to inflation. The increase carries no expiration date built into the statute.
According to the IRS estate tax overview, the federal estate tax applies only when a deceased person’s taxable estate exceeds the exemption amount in effect at death. At $15 million per individual, the overwhelming majority of South Carolina households fall well below that line, even accounting for a home that appreciated substantially, a retirement account that grew for decades, or a small business.
The planning question changed. It used to be “how do we get under the threshold before it drops.” Now it’s simpler and applies to nearly any estate size: does your existing plan still do what you think it does under the current rules? Our guide to estate planning in South Carolina covers the foundational documents every plan should include, regardless of estate size.
A higher exemption does not automatically fix everything in an existing plan. Trusts and wills written years ago sometimes direct an amount “up to the federal estate tax exemption” to one set of beneficiaries, with the rest going elsewhere, often to a spouse or to charity, and that language can produce a very different result now that the number itself has nearly doubled. Plans built specifically to beat the old 2025 deadline may no longer need that structure.
An out-of-state will or trust still must meet South Carolina’s execution requirements, regardless of any federal exemption. Understanding which estate planning documents you need and whether your existing documents still work as intended is an important part of any review.
Trusts remain among the most effective tools for control, privacy, and asset protection, even when federal estate tax is not the primary concern. Learn how DeMott Law Firm can help you set up the right trust structure for your situation.
Irrevocable trusts give families a way to protect assets from creditors, plan for a loved one’s special needs or Medicaid eligibility, and remove assets from the federal taxable estate. When you move assets into a properly structured irrevocable trust, you give up direct ownership and control of them. In exchange, depending on the structure, those assets can be shielded from creditors, preserved for a beneficiary’s long-term care without disqualifying them from public benefits, or kept out of the federal estate tax count at your death.
This is different from a revocable living trust. Because you retain the ability to amend or revoke a revocable trust, the law treats you as still owning those assets, and they remain part of your taxable estate, exposed to the same creditors and the same eligibility rules as everything else you own. A revocable trust offers probate avoidance, privacy, and incapacity planning, but not the protection an irrevocable trust can provide. To understand the difference in more depth, see our comparison of revocable and irrevocable trusts.
Lifetime gifting is one of the simplest ways to move wealth to the next generation. In 2026, an individual can give up to $19,000 per recipient without filing a gift tax return or touching the lifetime exemption. A married couple can combine exclusions to give $38,000 per recipient to as many recipients as they want.
Gifts within the annual exclusion also remove future growth from your estate. Say you gift $19,000 of stock to your grandchild today. If that stock grows to $40,000 by the time they sell it, the growth happened entirely outside your estate.
Larger gifts draw down your $15 million lifetime exemption, the same figure that applies at death, since the two are unified. For an estate closer to the threshold, timing matters and is worth discussing with an attorney.
Grandparents can also front-load five years of annual exclusions into a 529 plan at once, up to $95,000 per beneficiary or $190,000 per couple, or pay tuition directly to a school, both outside the regular gift limits. These contributions carry their own tax reporting rules.
Assets passing to a qualifying 501(c)(3) organization are excluded from the taxable estate. For families with causes they care about, charitable giving accomplishes two goals at once: supporting an organization that matters to them and reducing the value of the estate that would otherwise be subject to tax, where that is relevant.
Two structured options exist for families who want to give more deliberately. A Charitable Remainder Trust lets a donor transfer appreciated assets into a trust, draw an income stream during life, and direct what remains to charity at death. A family holding Charleston-area real estate or low-basis stock that has grown substantially over the years could use this structure to diversify away from a single concentrated asset without triggering an immediate capital gains tax hit. A Donor-Advised Fund is simpler: a donor contributes assets, takes an immediate deduction, and recommends grants to charities over time.
Life insurance proceeds are generally income tax-free to named beneficiaries. However, if the insured owns the policy at death, the death benefit is typically included in the insured’s gross estate for federal estate tax purposes under IRC §2042.
In many cases, that inclusion does not create an estate tax liability on its own. But for higher-net-worth households with illiquid assets, a closely held business, farmland, or coastal real estate that has appreciated well beyond its purchase price, life insurance is often used for the purpose of liquidity.
An Irrevocable Life Insurance Trust (ILIT) can be used to own the policy outside the insured’s estate. When properly structured and maintained, this removes the death benefit from the taxable estate and allows the proceeds to be used for estate taxes, debts, or buy-sell obligations without forcing the sale of long-term family assets.
The tradeoff is control. Once established, an ILIT is irrevocable and must be administered correctly to preserve its tax benefits.
Married couples have planning advantages that have nothing to do with where the exemption sits. Our guide to estate planning for married couples covers several of them in detail.
The unlimited marital deduction lets assets pass to a surviving U.S. citizen spouse free of federal estate tax, regardless of amount. That defers any estate tax question until the second spouse dies.
Portability is where families most often lose ground. When the first spouse dies, the surviving spouse can elect to use the deceased spouse’s unused exemption (DSUE), potentially $30 million combined at current levels. Portability isn’t automatic. The executor must file Form 706 within nine months of death, with possible extensions, even if no tax is owed. Skipping that filing is a common way to lose a benefit that costs nothing to preserve. Relief may sometimes be available later, but a late election brings its own complications.
A national calculator can tell you the current exemption amount. It cannot tell you whether your trust’s formula clause still divides assets the way you intended, or whether your executor knows about the portability deadline.
To learn more about our approach, visit our Charleston estate planning attorney page. If you are weighing whether a trust or a will fits your situation, our comparison of trust vs. will can help clarify the options.
No. South Carolina eliminated its state estate tax in 2005 and does not impose a state-level inheritance tax. Residents are only subject to the federal estate tax if their taxable estate exceeds the federal exemption at death.
The federal estate and gift tax exemption is $15 million per individual, or $30 million for a married couple, beginning January 1, 2026. Congress removed the scheduled expiration of the higher exemption amounts, which had been set for the end of 2025.
No. A revocable living trust does not reduce estate tax because the grantor retains control of the assets, which keeps them in the taxable estate. Irrevocable trusts, when properly structured and funded, can remove assets from the estate.
In 2026, an individual can give up to $19,000 per recipient without filing a gift tax return or using any lifetime exemption. A married couple can combine exclusions to give $38,000 per recipient.
Often, yes. Many estate plans drafted before 2026 contain formulas tied to the old federal exemption amount, and that language can divide assets differently now that the number has changed. A review confirms whether your documents still produce the result you intended.
Reducing federal estate tax exposure is now a concern for a smaller group of South Carolina families than it was a year ago, and that is a good outcome for the typical estate. It does not eliminate the value of a careful review, particularly if your plan was drafted before this year, if you are married, or if your estate includes a business or significant real estate.
Contact DeMott Law Firm, P.A. at (843) 695-0830 or schedule a consultation online.
