State Law Update: Recent Changes in Inheritance and Estate Tax Rules

Lawmakers across several states enacted changes in 2025 that affect inheritance rules, estate tax thresholds, and probate procedures. These shifts impact estate planning strategies and the timing of transfers for many families. Below we summarize the most consequential changes and offer practical planning responses.

Highlights from 2025–2026

• State estate tax threshold increases: Several states raised exemption amounts, resulting in fewer estates being subject to state-level estate taxes.
• Clarified digital fiduciary statutes: Two states created clearer frameworks for appointing and empowering digital executors or fiduciaries.
• Probate simplification measures: A handful of states expanded small estate procedures, shortening timelines and reducing costs for low-value estates.
• Trust registration reforms: New reporting requirements for certain domestic asset protection trusts were introduced in one major jurisdiction.

Notable State-Level Changes

State A — Increased Estate Tax Exemption

State A increased its exemption by indexing it to inflation, effectively keeping pace with rising asset values. Practically, fewer families will require state-level estate tax planning, but multi-state estate owners should still consider nexus rules.

State B — Digital Fiduciary Statute

State B passed a statute allowing explicit appointment of a digital fiduciary with authority to access and manage digital assets under specified conditions. This new law reduces uncertainty and provides a smoother path for executors handling extensive online portfolios.

State C — Simplified Probate Expansion

State C expanded its simplified probate process to higher thresholds, accelerating estate settlement for small to mid-value estates and lowering legal expenses.

Practical Implications

What do these changes mean for your planning?

• Review multi-state real property: If you own property in several states, determine whether new exemptions or threshold changes affect probate expectations.
• Update digital asset directives: In states with explicit digital fiduciary laws, ensure trust and will language aligns with statutory authority to enable efficient administration.
• Leverage simplified probate where appropriate: If your estate now falls under simplified procedures, you may save time and cost by relying on the streamlined path.

When to Revisit Your Plan

Significant life events and law changes both trigger plan reviews. Consider a review if any of the following apply:

• Acquisition or sale of real estate in a different state.
• Substantial changes in asset values or net worth.
• New state statutes affecting digital assets or trust reporting.
• Changes in family structure like marriage, divorce, or births.

Next Steps for California, New York, Texas Owners (Examples)

Because probate and estate tax laws vary widely, residents of high-net-worth states should consult local counsel. For example, property in a state with a recently expanded simplified probate law might avoid full probate, while a separate state's estate tax threshold change could reduce cross-jurisdictional planning needs.

Conclusion

Legislative changes in 2025–2026 signal both progress and complexity in estate planning. While many reforms simplify administration, new rules around digital fiduciaries and trust reporting can add compliance steps. Regular reviews with local specialists — at least every two years or after significant life events — are essential to keep your plan effective and compliant.