Eric Felsenfeld on Business Succession and Estate Tax in 2026

What happens to your business the day you walk away? Who steps in? And how much of what you spent years building will actually reach your family after taxes take their share?

Most business owners never ask these questions until it is too late. They pour everything into growing the company but leave the exit unplanned. When that day comes, whether through retirement, a sale, or an unexpected death, the financial hit can be brutal. Families get stuck. Businesses get sold at the wrong price. Tax bills show up that no one budgeted for.

In 2026, the federal estate tax rules are shifting in a way that puts many business owners at serious risk. Eric Felsenfeld, Financial Advisor at Ameriprise, works with clients across the Washington DC metro area to tackle this head-on through estate planning, tax planning, and wealth protection strategies built for real situations.

If you own a business and have not reviewed your succession plan yet, now is the time. Let us explore what is changing in 2026, why it matters, and what you can do about it today.

What Business Succession Planning Actually Covers

Succession planning means deciding, in writing, what happens to your business when you leave. That includes who takes over, how ownership transfers, and what tax consequences come with that transfer.

Many owners assume their family will figure it out. But without a real plan, the transition usually gets messy fast. Disputes come up. Valuations get challenged. And the IRS steps in with its own opinion on what the business is worth. That opinion is rarely in your favor.

A solid succession plan addresses three things:

•      Who gets ownership and on what terms

•      How the transfer is structured to keep taxes low

•      What agreements and documents are signed before anything moves

Getting these three things right takes time. That is exactly why starting early gives you far more options than waiting until you are ready to leave.

The 2026 Estate Tax Change That Business Owners Must Know

Right now, the federal estate tax exemption is around 13.6 million dollars per person. If your total estate stays below that number, your heirs pay no federal estate tax. For many business owners, that has felt like more than enough room.

That changes in 2026. The provisions from the Tax Cuts and Jobs Act that pushed the exemption this high are set to expire. When they do, the exemption drops to roughly 7 million dollars per individual. For a married couple, the combined limit falls from over 27 million to around 14 million dollars.

Here is what that shift looks like in practice:

• A business worth 10 million dollars that cleared the exemption last year may now face a federal estate tax bill in 2026

• Taxable estates above the new threshold face rates up to 40 percent on the excess amount

• Business owners who delay planning lose access to the most effective transfer strategies

The strategies that work best right now depend on the current high exemption. Once it drops further, those same moves become far less effective. Acting now in 2026 is a real financial advantage.

Three Strategies That Protect Business Value

Eric Felsenfeld, Financial Advisor at Ameriprise, helps business owners put the right structures in place before they need them. These are three of the most practical tools for reducing estate tax on a business transfer.

1. Grantor Retained Annuity Trusts

A GRAT lets you move a business interest into a trust while you still receive annuity payments for a fixed term. Any growth above the IRS rate passes to your heirs free of gift or estate tax. With business values often rising faster than the IRS benchmark, this can shift significant wealth to the next generation at very low tax cost.

1. Family Limited Partnerships

An FLP lets you transfer ownership shares to family members at a discount, since minority interests with limited control are worth less on paper than full ownership. That discount shrinks the taxable value of what you give away, which directly cuts estate and gift tax exposure.

1. Buy-Sell Agreements

A buy-sell agreement locks in what happens to your business stake when you exit, retire, become disabled, or pass away. It also sets the value used for estate tax, which removes uncertainty and avoids costly disputes down the road. Every business with more than one owner should have one.

How Life Insurance Fits Into the Plan

Estate taxes often come due within nine months of death. If most of your estate is tied up in a business, your family may have no choice but to sell quickly just to pay the bill. A rushed sale almost never gets fair value. That is a painful outcome for something that took decades to build.

Life insurance inside an Irrevocable Life Insurance Trust solves this problem cleanly:

•      The death benefit sits outside your taxable estate

•      It gives your family cash to cover taxes without touching the business

•      The business stays intact for whoever takes it over next

This is where insurance planning and estate planning come together. Having both handled by one advisor who understands the full picture makes a real difference in how well the plan holds up.

What to Do Right Now in 2026

You do not need to have all the answers today. But you do need to start. Trust structures take time to set up. Valuations take time to complete. The earlier you begin, the more flexibility you have. Waiting until the last minute leaves you with fewer tools and higher costs.

Start with these steps and work through each one:

•      Get a current business valuation to know your real estate exposure

•      Check whether your estate crosses the new 2026 threshold

•      Review your buy-sell agreement or create one if you do not have it

•      Talk to an advisor about trust structures while the high exemption still applies

Final Thoughts

You built your business through years of work, decisions, and risk. A poor exit plan can undo a large part of that in a short time. The 2026 estate tax shift is real, the numbers are significant, and it will catch many business owners unprepared.

Eric Felsenfeld, Financial Advisor at Ameriprise, brings together tax planning, estate planning, insurance planning, and wealth management to help business owners in the DC metro area build a plan that actually holds. If you want to know where you stand and what your next move should be, reach out now before the window closes.