The headlines are everywhere: "Big Beautiful Bill Becomes Law!" While most media coverage focuses on income tax changes, there's one "small" change that could dramatically impact your family's financial future. And frankly, most families are completely missing it.
The new law makes the federal estate tax exemption a permanent $15 million per person (adjusted for inflation). Sounds great, right? No more worrying about the exemption dropping back to $5 million like it was supposed to.
But here's what the headlines aren't telling you: This change creates both opportunities and risks that most families haven't considered. And if you live in Minnesota or have Minnesota assets, you're facing a completely different ballgame.
Let me explain what this really means for your family - and why doing nothing could cost your children hundreds of thousands of dollars.
The Minnesota Reality Check: Why $15 Million Doesn't Help Most of My Clients
Minnesota Families Still Face a $3 Million Tax Trap
If you're a Minnesota resident or own Minnesota property, here's your wake-up call: While the federal exemption is now $15 million per person as of January 1, 2026, Minnesota's estate tax exemption remains stuck at just $3 million.
Real-World Example: Meet John and Sarah, a married couple in Minnetonka with a $4 million estate. They think they're "safe" because they're nowhere near $15 million. But when John and Sarah pass away, their estate will owe Minnesota estate tax on the amount over $3 million - potentially costing their family $100,000 or more.
Even worse, Minnesota's estate tax rates can reach 16%.
The Florida Advantage (With a Minnesota Twist)
My Florida clients have it easier in one sense - Florida has no state estate tax. So a Florida couple with a $10 million estate faces no estate tax at all under current law.
But here's where it gets tricky: Many of my Florida clients moved from states like Minnesota and still own property there. Maybe it's the family cabin, rental property, or business interests. If you're a Florida resident but still own assets in a state like Minnesota, with its own estate tax, you could still owe estate taxes there when you pass away.
Establishing Florida Residency and Tax Planning
Another thing to be aware of is that the larger your estate is, the more likely your old state of residence is to argue that you are still a resident for income and other taxes. It is also a myth - and a potentially costly one at that - that as long as you are in Florida for more than six months and a day, you are ok. In fact, there is a lot more to it than that.
If you would like to discover more about how to become a Florida resident for tax purposes and ensure you are no longer taxed “back up north”, then you should grab your copy of my book, The Florida Snowbird Guide: A Fast & Friendly Legal Guide for Florida Relocation and Snowbirds. It is available for sale on Amazon or you can download your copy for free by clicking here.
Planning Tip: I recently helped a Venice, Florida couple who owned a $3.5 million cabin in Minnesota. Without proper planning, their children would have faced Minnesota estate tax on the cabin - even though the family lived in Florida.
Why "Set It and Forget It" Estate Planning Is Dead
The Pendulum Will Swing Back
Here's something most people don't realize: Tax laws change. A lot. In my 30 years of practice, I've seen estate tax exemptions go up, down, and sideways more times than I can count.
While the $15 million exemption is called "permanent," remember that Congress can change "permanent" laws anytime they want. The fact is, “permanent” in Washington means until the end of the press conference or the news cycle but certainly no later than the next election. And if you think I’m being cynical, let me remind you that I graduated from Georgetown University and started my career at a large law firm in Washington, so I understand better than most how Washington works. What happens if a future administration decides to slash the exemption back to $5 million or lower?
The Bernie Sanders and Elizabeth Warren Factor: Previous proposals have suggested estate tax exemptions as low as $3.5 million with tax rates up to 65%. While these didn't pass, they show how quickly things can change.
It's Not Just About Estate Tax Anymore
Even if you're nowhere near the estate tax threshold, modern planning solves problems that have nothing to do with estate taxes:
- Asset Protection: Protecting your home and life savings from long-term care and nursing home costs. Protecting your children's inheritance from their creditors, divorces, and lawsuits
- Incapacity Planning: Making sure your family can manage your affairs if you become disabled
- Tax Efficiency: Minimizing income taxes for you and your heirs
- Control: Ensuring your assets go to the right people, at the right time, and in the right way and in the least expensive way possible
Smart Strategies for Different Wealth Levels
High-Net-Worth Families ($10 Million+): Keep Planning Aggressively
If your family's net worth exceeds $10 million, you're still in the potential estate tax zone - especially considering future law changes. You should continue sophisticated planning strategies like:
- Dynasty Trusts: Protecting wealth for multiple generations
- Credit Shelter and Bypass Trusts: Saving taxes and protecting assets upon the passing of the first spouse
- Grantor Retained Annuity Trusts (GRATs): Transferring growth to children at minimal gift tax cost
- Spousal Lifetime Access Trusts (SLATs): Saving on both estate and income taxes, and protecting your assets, while still providing for your spouse and kids
- Charitable Remainder Trusts (CRTs): Providing income while reducing estate taxes and capital gains taxes on appreciated assets while supporting the causes you care about and leaving a legacy
Mid-Range Families ($3-10 Million): The Sweet Spot for Planning
This is where most of my clients fall - and where the planning opportunities are tremendous.
Minnesota Example: Tom and Linda have a $7 million estate in Edina. They're below the federal exemption but above Minnesota's $3 million threshold. We implemented a plan using a combination of credit shelter planning and a spousal lifetime access trust that:
- Protected their entire estate from estate taxes
- Provided asset protection for them and their children
- Maintained access to assets if needed
- Saved an estimated $64,000+ in Minnesota estate taxes
Florida Example: Robert and Maria in Venice have a $7 million estate. Since Florida has no estate tax, we focused on:
- Trust-based planning to avoid probate in Florida
- Asset protection trusts for their children to protect their inheritance in the event of a divorce or creditor claim
- Income tax planning using trusts
- Charitable strategies that reduced their income taxes by $15,000 annually
- Charitable trusts for their IRAs that will provide significantly more money to their children after they pass than if they gave the accounts to their children directly while supporting causes they care about
Moderate Wealth Families ($500K-3 Million): Don't Ignore the Opportunities
Just because you're not facing estate tax doesn't mean you should ignore estate planning.
Estate Planning: With proper planning, you can make it as easy and inexpensive as possible for your family to manage your assets if you become incapacitated or pass away.
- Financial powers of attorney to manage your finances during incapacity
- Health Care Directives to help manage your health care
- A revocable trust to avoid probate
- Planning provisions to protect the money you leave for your kids in the event they get divorced, get sued, or go through an unforeseen bankruptcy due to a job loss or medical emergency
Income Tax Planning: The new law creates income tax planning opportunities that can save your family thousands. With the increased standard deduction many families won't itemize deductions. But by shifting investment assets to a properly designed trust, you can:
- Offset investment income with charitable contributions
- Qualify for business income deductions you couldn't use before
- Reduce your tax bracket for other benefits
The Long-Term Care Reality: Protecting Your Home and Savings
Here's a sobering statistic that most families in the moderate wealth category don't consider: 70% of people over age 65 will need some form of long-term care during their lifetime. And the costs are staggering.
The Numbers Are Frightening:
- Private nursing home care in Minnesota: $120,000+ per year
- Private nursing home care in Florida: $110,000+ per year
- Home care costs: $65,000-$80,000 per year
- Memory care facilities: $150,000+ per year
Real-World Example: Mary and Jim in Minnetonka built a comfortable $1.2 million estate over 35 years. When Mary developed dementia and needed memory care, the $155,000 annual cost quickly consumed their savings. Without proper planning, Jim faced the heartbreaking choice of spending down everything they'd worked for or getting substandard care for his wife.
The Medicaid Trap: Many families think Medicare covers long-term care. It doesn't. Medicaid does, but only after you've spent down your assets to about $2,000 (with some exceptions for the healthy spouse). This means losing your home, investments, and legacy.
Smart Long-Term Care Planning Strategies:
- Medicaid Asset Protection Trusts: Protect your home and savings while potentially qualifying for Medicaid benefits
- Long-Term Care Insurance: Leverage relatively small premiums to protect your entire estate
- Hybrid Life Insurance/LTC Policies: Provide care benefits while preserving life insurance for heirs
- Strategic Gifting Programs: Reduce countable assets while staying within Medicaid's lookback period
The key is planning before you need care. Once you're in a nursing home, your options become extremely limited. This type of planning works hand-in-hand with your estate plan to ensure your family legacy survives regardless of what health challenges arise.
If you would like to discover more about how you can protect your home and life savings from long-term care and nursing home costs, I have two resources for you:
The Flexibility Factor: Building Plans That Adapt
Powers of Appointment: Your Financial Swiss Army Knife
One strategy I'm using more frequently is building "powers of appointment" into trusts. This gives your family the ability to redirect assets if laws change or circumstances shift.
Example: I created a trust for a Minnetonka family that gives their daughter the power to redirect assets between her children based on their needs. If tax laws change, she can adapt the plan without starting over.
Trust Protectors: Your Plan's Guardian Angel
A trust protector is someone who can modify trust terms if laws change or problems arise. Think of them as your plan's "update mechanism."
I recently helped a family whose trust protector was able to move their trust from Minnesota to Florida when they relocated, saving them significant ongoing tax costs. Click here to discover more about why you should have a trust protector as part of your estate plan.
Action Steps: What You Should Do Now
Schedule a Planning Review
Whether you have an existing estate plan or not, the new law creates opportunities that didn't exist before. Here's what we'll evaluate:
- Current exposure to Minnesota and federal estate taxes
- Income tax planning opportunities under the new law
- Asset protection strategies for your family
- Flexibility provisions to handle future law changes
Don't Wait for "Perfect" Timing
I've seen families wait for the "right time" to update their planning, only to face problems when it's too late. Estate planning isn't about timing the market - it's about protecting your family regardless of what happens.
The Bottom Line: Your Family's Future Depends on Action Today
The Big Beautiful Bill didn't just change tax rates - it changed the entire estate planning landscape. Whether you're in Minnesota dealing with a $3 million exemption or in Florida with more flexibility, the families who take action now will be the ones who benefit most.
The question isn't whether you need estate planning - it's whether you're going to let your family keep more of what you've worked so hard to build.
Your next step is simple: Schedule a consultation to review how these changes affect your specific situation. Call us today at (763) 420-5087 for our Minnetonka Minnesota office or at (941) 909-4644 for our Florida office to schedule your consultation. Or you can fill out the contact form on this page and a member of our team will reach out to you to schedule your consultation. In 30 years of practice, I've learned that the families who plan proactively are the ones who sleep better at night and leave stronger legacies.
Don't let your family become a cautionary tale. Let's make sure your estate plan is ready for whatever comes next.
