Is the Federal Estate Tax Exemption Really “Permanent”? What Every Family with $3.5 Million or More Needs to Know

By Chuck Roulet, Estate Planning & Elder Law Attorney | Roulet Law Firm, P.A.

“Permanent in Washington Means Until the Press Conference Is Over”

Early in my career, before I became an estate planning attorney, I worked as a legislative assistant at one of the largest law firms in the world — in Washington, D.C. My job was to track proposed legislation: building relationships on Capitol Hill, in the White House, and at federal agencies, then analyzing how bills would move through committee, who the key players were, and what the political winds meant for our clients.

I learned something during those years that most people never fully appreciate: in Washington, “permanent” is a term of art, not a promise.

I was reminded of this recently on a call with a client, their financial advisor, and the advisor’s in-house legal team. When I raised the idea of incorporating estate tax planning into their plan, the younger attorneys on the call waved it off. The exemption had been made “permanent,” they said. Nothing to worry about.

I held my tongue in the moment — these were valued referral partners and it wasn’t the time or place. But afterward, I circled back to the financial advisor privately and shared what I know from experience: permanent in Washington means until the political calculus changes. And right now, the political calculus is changing.

What the One Big Beautiful Bill Actually Did

President Trump signed the One Big Beautiful Bill into law, extending the elevated federal estate tax exemption established under the Tax Cuts and Jobs Act. As of 2026, the exemption stands at $15 million per person — $30 million for a married couple — with portability and annual inflation indexing.

For most American families, this is genuinely good news. The vast majority of estates will never approach these levels.

But here’s what I want you to understand: the word “permanent” in that legislation does not mean what it means in everyday life. It means the provision does not have a built-in sunset date. It does not mean Congress cannot change it tomorrow. It does not mean a future administration won’t run on changing it — because one already did.

Senator Van Hollen Just Introduced a Bill to Cut the Exemption to $3.5 Million

In March 2026, Senator Chris Van Hollen introduced the “Strengthen Social Security by Taxing Dynastic Wealth Act.” The core provisions:

• Reduce the individual estate, gift, and generation-skipping transfer tax exemption from $15 million to $3.5 million per person ($7 million per couple)
• Raise the top estate and gift tax rate from 40% to 45%
• Cap the lifetime gift exemption at $1 million per individual
• Direct all resulting revenue into the Social Security trust fund

Now, I want to be direct with you: I do not believe this bill passes as a standalone measure, and I certainly do not believe President Trump would sign it on its own. Several of my colleagues share that view.

But that is not the end of the analysis — not by a long shot.

Why “It Won’t Pass” Is the Wrong Way to Think About This

Here is what nearly thirty years of watching Washington has taught me: legislation rarely dies — it transforms and finds a vehicle.

Senator Van Hollen was politically astute in tying this proposal directly to Social Security. Why? Because the Social Security trust fund is projected to run out within a few years. At that point, the federal government faces three choices: stop paying benefits, reduce benefits, or raise taxes to maintain solvency. Cutting benefits is politically toxic for both parties. Raising income taxes broadly is nearly as hard. But an estate tax targeted at wealthy estates? That’s a much easier political lift, and it polls well across party lines.

Here is the scenario I am watching: President Trump has asked for a substantial increase in defense spending and is seeking authorization for military action in the Iran conflict. That kind of spending requires legislative deals. If Democrats were to attach an estate tax provision to a defense authorization bill or a Social Security solvency package — the kind of must-pass legislation that neither party can easily block — the political calculus shifts dramatically.

Horse trading is how Washington actually works. I saw it from the inside. I see the same patterns now.

Who Is Actually at Risk — And Who Isn’t Thinking About It

Let me describe a conversation I’ve been having repeatedly in recent months, because it illustrates exactly who this affects.

A married couple recently moved from Minnesota to Florida. Their combined estate is over $10 million. They are intelligent, well-advised people. And when we sat down, they told me they weren’t worried about estate taxes.

Here’s their reasoning: Florida has no state estate tax. And their estate is well below the current $30 million federal exemption for a married couple. So why worry?

It’s a completely reasonable conclusion — based on today’s law.

I walked them through what changes if the Van Hollen framework — or anything like it — becomes law. At $3.5 million per person, their estate is no longer safely below the threshold. It is potentially subject to a 45% tax on everything above $7 million as a couple. On a $10 million estate, that’s a very real number.

I told them they had two options. They could skip the planning now, keep their costs lower in the short term, and watch the political landscape. If nothing changes, they’ve lost nothing but a modest planning investment. But if the exemption is lowered — and we don’t know how much warning we’ll get — a reactive approach could mean a complete rewrite of their trust documents under time pressure, at significantly greater cost, and potentially with fewer options available.

Or they could build flexibility into their plan now. They chose to plan now. And I believe that was the right decision.

The Minnesota Dimension: You’re Already Fighting a Two-Front War

If you live in Minnesota, or if you split time between Minnesota and Florida as many of my clients do, you are already navigating something that most of the country doesn’t face: a state estate tax with a $3 million exemption.

Minnesota is one of a small number of states that imposes its own estate tax, entirely separate from the federal system, with a much lower exemption. A Minnesota resident with a $4 million estate pays no federal estate tax today — but faces a Minnesota estate tax on everything above $3 million.

For my Minnesota clients, the federal estate tax has always been a horizon to watch, not just a present concern. The good news is that smart planning can address both state and federal exposure simultaneously. The key is building that flexibility into your documents before you need it.

The Planning Strategy: “Wait and See” Without Waiting Until It’s Too Late

One of the most powerful tools I use for clients in this situation is what I call “wait and see” estate tax planning. It allows us to build flexibility directly into your trust documents today, without locking you into a specific tax structure that may not be necessary.

The Disclaimer Trust and the Clayton Election

When we draft your revocable living trust, we can include either a disclaimer provision or a Clayton election — both of which give the surviving spouse a window of time after the first spouse’s death to evaluate the situation and make an informed decision.

With a disclaimer, the surviving spouse has nine months after the first spouse’s death to review the size of the estate, the current exemption amount, and then decide: does it make sense to fund a bypass trust and/or a QTIP trust to take advantage of the first spouse’s exemption, or is the estate still safely below the threshold so that everything can simply flow to the surviving spouse’s share of the trust?

The Clayton election extends that window to fifteen months and provides additional flexibility in how assets are allocated between the bypass and QTIP components.

The key insight here is that you don’t have to predict what the law will be at the time of the first death. You build the mechanism in now, and you make the substantive decision when you have real information in hand.

Beyond Tax Planning: The Lifetime Asset Protection Trust

Estate tax planning doesn’t exist in a vacuum. For many of my clients, the deeper concern isn’t just their own estate tax exposure — it’s what happens to the wealth they pass to their children.

This is where the Lifetime Asset Protection Trust with Generation-Skipping Transfer provisions becomes one of the most versatile tools in the planning toolkit.

When your children receive an inheritance outright — a check, a transferred account, a deed — that inheritance becomes their asset. It’s subject to their creditors, their divorcing spouse’s claims, their bankruptcy estate if something goes wrong. Life is unpredictable. An unexpected job loss, a medical emergency, a lawsuit — these things happen to good, responsible people.

A Lifetime Asset Protection Trust keeps your child’s inheritance in a protected structure. They can still access and benefit from the assets. But the assets are shielded from the risks that life brings.

Here’s the estate tax dimension: if your children live in a state with a lower estate tax exemption — Minnesota, for instance, with its $3 million threshold — they may face their own estate tax liability on assets they inherit from you. A trust with GST provisions can be structured so that your children’s inheritance never becomes part of their taxable estate. They can elect to leave assets in trust rather than taking outright distribution, preserving the GST protection and keeping those assets outside the reach of their own estate tax.

So in a single structure, you accomplish three things at once: creditor and divorce protection for your children, potential estate tax savings at your children’s level, and multigenerational wealth transfer that functions as you intend rather than being eroded at every generation.

The Cost of Waiting vs. The Cost of Planning

I want to address the question I know is in the back of your mind: what does this actually cost, and is it worth it?

Here is the honest answer. Building flexibility into your estate plan now — the disclaimer or Clayton election, the Lifetime Asset Protection Trust provisions, the GST structure — requires more sophisticated drafting than a simple “I love you” trust that leaves everything to your spouse and then to your children. It costs more upfront.

But consider the alternative. If the exemption is lowered and you come to me in a reactive mode — six months after a bill passes, with an unclear implementation timeline — we are doing a complete rewrite of your documents. The complexity is higher. The time pressure is real. And critically, some planning strategies that work beautifully when done proactively become unavailable or much harder to implement on a deadline.

The couple I described earlier made a smart calculation: the cost of building this flexibility in now is modest compared to the cost of reacting under pressure later. More importantly, if nothing changes legislatively, their plan still protects their children, still addresses the Minnesota estate tax, and still reflects their actual wishes. They lose nothing by planning well.

What I Want You to Do Right Now

If your estate — individually or combined with your spouse — is above $3.5 million, I want to have a conversation with you. Not because I am certain the law will change. I’m not. No one is. But because the risk is real, the cost of proactive planning is manageable, and the cost of being caught unprepared is not.

I have been doing this for nearly thirty years, across two states, for families at every level of wealth. I have seen what happens when planning is done well in advance, and I have seen what happens when families try to scramble after the fact.

You don’t have to scramble. You just have to make a phone call.

Call us today to schedule a consultation to discuss your own planning at (941) 909-4644 for our Florida office or at (763) 420-5087 for our Minnetonka, Minnesota office. Or you can fill out the contact form on this page and a member of our team will reach out to you to schedule.

And if you’d like to go deeper on the fundamentals of estate planning before we speak, I invite you to join us in my free Estate Planning Masterclass. It’s a no-cost resource I created specifically for families who want to discover how to avoid probate, save on taxes, protect the money they leave for their kids in the event they get divorced and much more. Click here to sign up.

Frequently Asked Questions

Q: Is the $15 million federal estate tax exemption really permanent?

The One Big Beautiful Bill removed the built-in sunset date from the original TCJA, which is why it’s described as “permanent.” But Congress can change tax law at any time. The exemption reflects the current political majority’s priorities — and those majorities change.

Q: What is the Van Hollen bill and how likely is it to pass?

Senator Chris Van Hollen introduced the “Strengthen Social Security by Taxing Dynastic Wealth Act” in March 2026, which would reduce the individual exemption to $3.5 million and raise the top rate to 45%. In isolation, I don’t believe it passes under the current administration. But the proposal could find its way into must-pass legislation — a defense authorization bill, a Social Security solvency package — where the political calculus is very different.

Q: I live in Florida. There’s no state estate tax here. Why do I need to worry?

You’re right that Florida has no state estate tax, which is one of the reasons it attracts so many retirees. But the federal estate tax applies to all U.S. residents regardless of state. If the federal exemption is lowered to $3.5 million per person, a Florida couple with a $10 million estate could face a substantial federal estate tax bill — even with zero state exposure.

Q: I live in Minnesota. How does this interact with the MN estate tax?

Minnesota has its own estate tax with a $3 million exemption — completely separate from the federal system. If you’re a Minnesota resident with an estate above $3 million, you’re already facing state-level exposure. A change to the federal exemption could mean exposure on both fronts simultaneously. A well-designed plan can address both.

Q: What is a disclaimer trust and how does it help with estate tax uncertainty?

A disclaimer trust is a provision we build into your revocable living trust. After the first spouse dies, the surviving spouse has nine months to evaluate the estate size, the current law, and decide whether to fund a separate bypass trust or allow everything to flow to the survivor’s share. It’s a flexible, “wait and see” approach that doesn’t require predicting the future.

Q: What is a Clayton election?

A Clayton election is similar to a disclaimer in concept but provides an extended decision window of fifteen months and greater flexibility in allocating assets between bypass and QTIP trust components. It’s often preferable for larger or more complex estates.

Q: What is a Lifetime Asset Protection Trust?

It’s an irrevocable trust designed to hold your children’s inheritance in a protected structure. Assets in the trust are shielded from your children’s creditors, divorcing spouses, and bankruptcy estate — while still accessible to your children for their benefit. With GST provisions, it can also keep inherited assets outside your children’s taxable estate, which matters especially if they live in a state like Minnesota with a lower estate tax exemption.

Q: My current attorney told me I don’t need estate tax planning right now. Should I get a second opinion?

I would always encourage a second opinion on any significant legal or financial decision. Estate tax law is complex, politically fluid, and the stakes are high. If your estate is above $3.5 million and your current plan has no estate tax flexibility built in, it’s worth understanding your options.

About the Author

Chuck Roulet is the founding attorney of Roulet Law Firm, P.A., licensed in both Minnesota and Florida. With nearly 30 years of experience in estate planning and elder law, he has been featured in USA Today and CNN and has authored multiple books including The Florida Snowbird Guide. His firm maintains offices in Minnetonka, MN (763-420-5087) and Venice, FL (941-909-4644). Visit rouletlaw.com.

Legal Disclaimer

This article is for general informational purposes only and does not constitute legal advice. No attorney-client relationship is created by reading this article. Tax laws and estate planning rules are subject to change. Please consult a qualified estate planning attorney regarding your specific situation.