With several significant federal tax updates taking effect in 2026, you should take this opportunity to reevaluate your estate plan if you reside in New Hampshire. These developments influence how you structure wealth transfers, plan charitable gifts, and manage retirement assets. A careful review allows you to adjust your strategy in a way that preserves more of your estate, supports your long-term goals, and maximizes tax efficiency for both you and your beneficiaries. To help you get started, the attorneys at Legacy Care Law Firm discuss gift and estate tax figures for your New Hampshire estate plan.
Increased Federal Gift and Estate Tax Exemption
As of January 1, 2026, the federal lifetime exemption for estate and gift taxes increased to $15 million per individual. If you are married, you and your spouse may combine your exemptions, allowing up to thirty million dollars to pass without federal transfer tax exposure. This expanded threshold also applies to the generation-skipping transfer tax exemption, creating additional flexibility for multigenerational planning.
This adjustment creates new opportunities, particularly if you previously believed that you had exhausted your ability to make tax-efficient transfers. If you used a large portion of your exemption in earlier years, you may now have additional capacity to transfer assets during your lifetime without incurring federal gift tax. Lifetime gifting allows you to reduce the size of your taxable estate while also witnessing the benefits of your planning.
You should consider whether advanced planning tools align with your objectives. Irrevocable Trusts, dynasty Trusts, and family-controlled entities can help you leverage the expanded exemption. These structures allow you to remove assets from your estate, provide long-term management for beneficiaries, and add a layer of protection against creditors. Proper implementation ensures that you capture the benefits of the increased exemption while maintaining control over how assets are ultimately used.
Federal Tax Rates Remain Steady
Although exemption amounts are increasing, federal tax rates for estates, gifts, and generation-skipping transfers remain unchanged in 2026. The highest transfer tax rate continues at forty percent. Income tax rates applicable to estates and non-grantor Trusts also remain in place, with the top marginal rate set at thirty-seven percent once income exceeds relatively low thresholds.
These rates underscore the importance of deliberate planning. Any portion of your estate that exceeds available exemptions may be subject to substantial taxation. You should evaluate how the timing of gifts, the structure of Trusts, and the use of charitable strategies can reduce exposure to these high rates. Careful coordination allows you to preserve more wealth for your intended beneficiaries.
Portability Between Spouses
The portability election remains an important planning tool in 2026. This provision allows a surviving spouse to use any unused federal estate tax exemption from a deceased spouse. To take advantage of portability, your Executor must file a federal estate tax return after the first spouse’s death, even if no tax is owed.
The window for making a late portability election extends up to five years from the date of death. If your family experienced a loss within that timeframe and did not elect portability, you may still have the opportunity to preserve the unused exemption. This can represent significant tax savings, potentially shielding millions of dollars from federal estate tax.
You should consider how portability interacts with other spousal planning techniques. In some cases, relying solely on portability may not provide the same level of asset protection or control as a credit shelter Trust. Evaluating these options with professional guidance allows you to determine the most effective approach for your circumstances.
Annual Gift Tax Exclusion Remains Available
The annual federal gift tax exclusion continues unchanged for 2026, meaning that you may give up to $19,000 per recipient each year without using any portion of your lifetime exemption. If you are married, you and your spouse may combine your exclusions through gift-splitting, allowing you to transfer substantially more each year.
Regular use of the annual exclusion can gradually reduce the size of your taxable estate. Over time, consistent gifting can produce meaningful results. You may choose to provide financial support to family members, assist with education expenses, or fund business ventures. You can also direct these gifts into irrevocable Trusts, allowing you to maintain some level of oversight while still removing assets from your estate.
Changes to Charitable Contribution Deductions
New limitations on charitable deductions took effect this year and may influence how you approach philanthropic giving. You may only deduct charitable contributions to the extent that they exceed one-half of one percent of your adjusted gross income. This threshold can reduce the immediate tax benefit of smaller contributions, particularly if you have a high income.
In response, you may want to reconsider the timing and structure of your charitable giving. Consolidating multiple years of contributions into a single tax year may allow you to exceed the applicable threshold and secure a larger deduction. Donor-advised funds provide another useful option, allowing you to claim a deduction in the year of contribution while distributing funds to charities over time. If you have substantial philanthropic objectives, establishing a private foundation may provide greater control and long-term flexibility.
Charitable planning remains an important component of a comprehensive estate plan. Aligning your charitable intentions with tax considerations allows you to maximize both the impact of your gifts and the efficiency of your overall strategy.
Retirement Planning Considerations
Retirement accounts continue to evolve under federal law, and several updates for 2026 affect both account holders and beneficiaries. If you leave behind pre-tax retirement accounts, your beneficiaries may be required to take annual distributions if you have already reached your required beginning date. Failure to comply with these distribution rules can result in significant penalties.
Inherited Roth accounts follow different rules, which makes it essential to distinguish between account types when planning for beneficiaries. Your estate plan should coordinate beneficiary designations with your broader objectives, ensuring that distributions occur in a tax-efficient manner.
Additional retirement-related provisions include the ability to make qualified charitable distributions. If you are over age seventy and one-half, you may direct up to one hundred eleven thousand dollars annually from an individual retirement account to a qualified charity. These distributions are excluded from your taxable income, providing both charitable and tax benefits.
High-income participants in employer-sponsored retirement plans must make catch-up contributions on a Roth basis, which eliminates the immediate tax deduction but allows for tax-free growth. Required minimum distribution rules continue to apply to most non-Roth accounts beginning at age seventy-three. Employer-sponsored Roth accounts remain exempt from pre-death required distributions, which may influence how you allocate contributions.
State-Level Considerations in New Hampshire
New Hampshire does not impose a state-level estate tax or inheritance tax which distinguishes it from jurisdictions that maintain separate transfer tax systems. Even so, federal tax exposure remains a significant concern for individuals with substantial estates. You should not assume that the absence of a state tax eliminates the need for careful planning.
Property ownership, investment portfolios, and retirement accounts still require thoughtful structuring to ensure efficient transfer. In addition, if you own property in other states or have beneficiaries residing in jurisdictions with inheritance taxes, additional considerations may apply. Your plan should account for these factors to avoid unintended tax consequences.
Can We Help You with Tax Planning for Your New Hampshire Estate Plan?
For more information, please join us for an upcoming FREE seminar. If you would like assistance with tax planning in your New Hampshire estate plan, contact our estate planning attorneys in our North Andover, Woburn, and Beverly offices at (978) 969-0331. Our Salem and Nashua, New Hampshire office can be reached at (603) 894-4141.
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