Published: March 27, 2026 · Last updated: April 30, 2026
At the end of 2025, the temporary provisions of the Tax Cuts and Jobs Act expired. Congress did not extend them. From 2026, the federal estate-tax exemption has reverted from ~$13.6M per person to ~$7M (~$14M joint, indexed). For UHNW families holding estates in Atherton, Hillsborough, and Los Altos Hills, the change is structurally significant — a single residence, plus the rest of the family balance sheet, can now trigger 40% federal estate tax.
Tighter rules do not mean fewer tools. Irrevocable trusts, GRATs, QPRTs, Family LLCs, and charitable structures remain effective at the new exemption level — what changes is the urgency and the precision required. The window is narrower, not closed.
This guide draws on Marie Wang and Kevin Mo's transaction work with Silicon Valley UHNW families to set out the post-TCJA framework: tax mechanics, succession tools, real-estate architecture, cross-border specifics, and an immediate action checklist — the foundation for the conversation with your attorney and tax advisor.
The 2026 Estate-Tax Landscape
The Tax Cuts and Jobs Act (TCJA) temporarily lifted the federal estate-tax exemption to ~$11.18M in 2018, indexed to inflation each year, reaching $13.61M per person by 2024 (~$27.2M for a married couple). The provision had a hard sunset at end-of-2025, and Congress did not extend it.
From 2026 forward, the federal estate-tax exemption has reverted to roughly $7M per person (~$14M for a married couple), with annual inflation indexing. This level approximates the early-2010s baseline.
The impact on Silicon Valley estate buyers is direct. Atherton's median sale runs above $10M; Los Altos Hills and Hillsborough $8M+ assets cluster between $8M–$20M. A principal with $15M of net worth — including one estate — is now ~$8M above the exemption, exposing roughly $3.2M in federal estate tax at the 40% rate. Plans built under the prior $13.6M ceiling need an immediate review.
California has no state-level estate tax — a meaningful advantage relative to states like Massachusetts or Oregon. But the federal change alone is enough to pull many families that were previously out-of-scope back into the planning conversation.
- ·From 2026: ~$7M federal exemption per person, ~$14M joint — roughly half of the TCJA peak.
- ·California has no state estate tax; the federal regime is the planning target.
- ·40% top federal rate applies above the exemption.
- ·Atherton and Los Altos Hills can put a single estate at or above the individual exemption.
How the Tax Is Calculated
The taxable base is the Gross Taxable Estate — every asset titled to the decedent at death: U.S. real property (including the residence), financial accounts, brokerage holdings, retirement accounts (IRA, 401(k)), life-insurance death benefits owned by the decedent, and certain prior lifetime gifts.
Deductions: unlimited marital deduction (assets pass to a U.S.-citizen spouse without immediate estate tax — but this defers, it does not eliminate); charitable bequests; funeral expenses; debts. The net taxable amount above the exemption is taxed on a graduated scale up to 40%.
U.S. citizens and green-card holders qualify for the full exemption, and a Portability Election can transfer any unused exemption from a deceased spouse to the surviving spouse — but only if Form 706 is filed within 9 months of the first spouse's death (with a possible extension to 18 months). Portability is easy to miss; it should sit on the executor's checklist.
Non-resident aliens (NRAs) face a very different regime. For a Chinese-national buyer holding U.S. property without green-card or citizenship status, the federal estate-tax exemption on U.S.-situs assets is only $60,000. Everything held in the U.S. — including real estate — counts; everything above $60,000 can be taxed up to 40%. The gap makes cross-border families' planning load-bearing.
- ·Real property, financial accounts, retirement assets, and decedent-owned life insurance enter the taxable estate.
- ·Marital deduction defers tax to the surviving spouse's estate; Portability Election preserves unused exemption (file Form 706 in 9 months).
- ·Non-resident aliens get only a $60,000 exemption on U.S.-situs assets — cross-border families need bespoke architecture.
- ·Lifetime gifts and the estate share a unified exemption; gifts during life consume future exemption.
Common Succession Tools
Five tools see the most use in the post-TCJA environment.
Irrevocable Trust. Once assets transfer in, they generally exit the grantor's taxable estate. The SLAT (Spousal Lifetime Access Trust) is a common variant — one spouse funds the trust, the other is the lifetime beneficiary, preserving indirect access while moving the asset out of the estate.
GRAT (Grantor Retained Annuity Trust). The grantor transfers assets in and receives a fixed annuity over a defined term. Appreciation above the IRS 7520 rate passes to the remainder beneficiaries (typically children) at minimal gift-tax cost. Effective for assets expected to outperform the 7520 rate, with the caveat that the grantor must survive the GRAT term.
QPRT (Qualified Personal Residence Trust). The grantor transfers a residence in and retains the right to live there for a fixed term. After the term, the home transfers to beneficiaries at a discounted valuation. The discount depends on term length, grantor's age, and the prevailing 7520 rate — lower rates produce larger discounts. Particularly relevant for high-appreciation estates in Atherton and Los Altos Hills, on the condition the grantor pays market rent to the trust if continuing to occupy after the term.
Family LLC. Real property or other assets transfer into the LLC; minority interests are gifted to family members, taking valuation discounts (typically 15–40%) for lack of marketability and lack of control. Enables both estate-tax compression and centralized management — but the entity must operate at arm's length, or the IRS will challenge the discount.
Charitable trusts. The CRT (Charitable Remainder Trust) provides the grantor a lifetime income stream, with the remainder passing to charity. The CLT (Charitable Lead Trust) inverts the order: charity gets the income stream first, beneficiaries take the remainder. Both compress estate-tax exposure while satisfying philanthropic objectives — a fit for families with charitable intent already on the agenda.
- ·GRAT — high-growth assets transfer above-7520-rate appreciation cheaply.
- ·QPRT — residence transfer at a valuation discount; pay market rent post-term to continue occupying.
- ·Family LLC — minority-interest discounts compress taxable value while preserving management.
- ·Charitable trusts (CRT/CLT) — combine philanthropy with estate-tax efficiency.
Real-Estate Holding Architecture
An estate is typically the largest single asset in an UHNW family's portfolio; how it is titled at death drives the tax math.
Lifetime gift vs. inheritance — the basis question. A direct lifetime gift transfers the donor's original cost basis (carryover basis). When the children later sell, gain runs from the original purchase price — exposing decades of appreciation to capital-gains tax. Inheritance at death triggers a step-up in basis: the heir's basis equals the property's fair market value at the date of death.
On a Silicon Valley estate this matters enormously. A property bought in Atherton at $2M, worth $12M at death — passing through inheritance, the heir's basis becomes $12M. A future sale at $12M produces no capital gain. The same property gifted during life carries a $2M basis; a $12M sale would produce $10M of taxable gain. For appreciated estates, inheritance with a step-up usually beats lifetime transfer even when some estate tax is due.
QPRT + Irrevocable Trust architecture. For families above the joint exemption, a QPRT can compress the transfer value of the residence, while an Irrevocable Trust (often paired with a Family LLC layer) further compresses taxable value through minority-interest discounts. The right configuration depends on family balance sheet, expected hold period, and liquidity needs — the estate attorney's territory, but the broker can flag it at acquisition.
- ·Step-up in basis at death is the most powerful tax feature for high-appreciation Silicon Valley estates.
- ·A direct lifetime gift to children carries the donor's original basis — usually the wrong move for appreciated property.
- ·QPRT + Irrevocable Trust + Family LLC compresses both estate value and capital-gains exposure.
- ·Decide holding architecture at purchase, not after — restructuring later is expensive.
Cross-Border Family Considerations
A meaningful share of Silicon Valley UHNW Mandarin-speaking families face cross-border complexity: a buyer or spouse holds Chinese citizenship without a green card, or family assets straddle the U.S. and overseas.
Non-citizen spouse. The unlimited marital deduction does not apply to a non-citizen spouse — green card or not. If the U.S.-citizen spouse predeceases, assets above the exemption cannot be deferred via marital deduction.
QDOT (Qualified Domestic Trust) is the design solution. The U.S. citizen funds the QDOT; the non-citizen spouse receives lifetime distributions (with estate-tax withholding on principal distributions). The estate tax settles when the non-citizen spouse dies. QDOT requires at least one trustee that is a U.S. citizen or U.S. corporate fiduciary, plus other formal requirements.
Direct NRA ownership. A non-resident alien holding U.S. real property faces the $60,000 exemption — punishingly low for $8M+ assets. Trusts and LLCs can shift the asset characterization, but the architecture must be designed by counsel deeply experienced in U.S.-China cross-border tax to avoid IRS recharacterization.
Global reporting obligations. Green-card holders and substantial-presence residents are subject to global tax reporting (FBAR, FATCA). Estate planning must factor in the offshore portfolio: it both inflates the gross taxable estate and runs into the absence of a comprehensive U.S.-China estate-tax treaty, raising the prospect of dual reporting in some scenarios.
- ·Non-citizen spouse: no unlimited marital deduction; QDOT is the deferral instrument.
- ·Non-resident alien: $60,000 exemption on U.S.-situs assets — design through trust/LLC carefully.
- ·No comprehensive U.S.-China estate-tax treaty; plan for potential dual reporting.
- ·Green-card holders are taxed on global assets — offshore portfolio enters the U.S. estate.
Action Checklist
Five steps every Silicon Valley family above ~$5M of net worth should run now.
1. Inventory total net worth. List every asset class — real estate (current market value), brokerage, retirement, life insurance owned by the decedent (death benefit lands in the taxable estate), offshore positions, business interests — and liabilities. Calculate gross taxable estate against ~$7M per person (~$14M joint). Quantify the exposure.
2. Review existing trust and will documents. Many families' planning was authored under the TCJA-peak assumption (2018–2025). With the exemption cut, AB-trust formula clauses, allocation logic, and beneficiary designations may not produce the right outcomes. Re-validate with counsel.
3. Confirm the spouse's citizenship status and plan accordingly. Non-citizen spouse triggers the QDOT question and a parallel decision: pursue naturalization, set up the QDOT now, or do both. The choice has architectural implications for everything else.
4. Evaluate Irrevocable Trust / GRAT activation. For families with confirmed exposure, run the analysis on ILIT (Irrevocable Life Insurance Trust), SLAT, GRAT, and QPRT. Each has an optimal launch window; earlier transfers move more future appreciation outside the estate at lower gift-tax cost.
5. Align property title with the plan. Confirm the residence's title structure (individual / trust / LLC) matches the latest estate plan. If it needs to change, update homeowner's insurance, title insurance, and any HOA-side records to reflect the new holder.
- ·Quantify the exposure: gross taxable estate vs. ~$14M joint exemption.
- ·Re-audit any TCJA-era plan; assumptions have moved.
- ·Spouse citizenship: QDOT now, naturalize, or both — decide and execute.
- ·ILIT / SLAT / GRAT / QPRT effectiveness compounds with time — start early.
- ·Sync property title with the estate plan and update all dependent records.
Common questions
Marie Wang · DRE# 02110980 · Kevin Mo · DRE# 02127623 · Keller Williams Realty