Heading Into 2026: What South Dakota Families Should Know About Estate & Inheritance Planning Changes

For families seeking clear, easy-to-understand information about what’s changing — and what isn’t — in today’s estate landscape.

When you’re trying to build a lasting legacy for your family, uncertainty around estate rules can create anxiety you don’t need. And until recently, the biggest source of confusion came from the looming change in the federal estate and gift tax exemption — a change many families worried would affect how they transfer land, savings, or family businesses to the next generation.

But with the passage of the One Big Beautiful Bill Act (OBBBA) in 2025, much of that uncertainty has eased. The law made key tax exemptions permanent rather than letting them shrink in 2026, giving South Dakota families something they value deeply: stability, predictability, and time for thoughtful planning.

For families who are thoughtful stewards of their land, businesses, and financial assets — here are key considerations heading into 2026.

What OBBBA Actually Changed — And Why It Helps South Dakota Families

Before OBBBA, the federal gift and estate exemption was set to drop dramatically on January 1, 2026. That uncertainty caused many families to feel rushed into decisions simply out of fear of losing tax efficiency.

OBBBA changed that.

The exemption is now set at a higher level under current law.

This means many South Dakota families may not face federal estate tax under current exemption levels, especially those whose wealth is tied to land, family businesses, and long-term investments rather than concentrated liquid assets.

You now have time.

Planning no longer needs to be driven by artificial deadlines. Instead, families can return to long-term thinking:

• What do we want our assets to accomplish?

• Who should inherit what, and why?

• What’s the most efficient way to pass down land or business interests?

  
  

Most importantly, OBBBA reinforces something Legacy Stewards have always believed: good planning is intentional, not rushed.

What Hasn’t Changed — And Still Requires Attention

Even with OBBBA’s stability, some rules remain in place that families should understand clearly.

1. The 10-Year Rule for Inherited Retirement Accounts

If your children inherit your IRA or 401(k), they generally must withdraw the entire balance within 10 years.This rule:

• Does not depend on tax-law sunsets

• Applies across generations

• Can meaningfully impact taxes for heirs who are in their peak earning years

For Legacy Stewards, this often means coordinating:

• Which child should inherit which asset

• When distributions might occur

• Whether Roth conversions during your lifetime may help reduce heirs’ future tax burdens

This is not about finding the “perfect” solution — it’s about matching inheritance decisions to the values you want to preserve.

2. Beneficiary Coordination (A Quiet Source of Problems)

One of the biggest estate-planning missteps happens when families assume their will determines everything.In reality, beneficiary designations on:

• IRAs and 401(k)s

• Life insurance policies

• Annuities

• Transfer-on-death accounts

…all override your will.

If your life has changed — a marriage, a grandchild, a shift in who will take over family land — it’s worth confirming your designations still reflect your intentions.

3. South Dakota’s Unique Landscape: Land, Titling, and Family Continuity

South Dakota families often hold wealth in:

• Agricultural land

• Family homes or cabins

• Multi-generation business property

While the state does not impose inheritance or estate tax, the federal system still applies to some transfers. The goal isn’t to reduce taxes at all costs, but rather to support asset transfer in a way that:

• Protects continuity

• Minimizes family conflict

• Avoids forced sales or liquidity issues

Tools like proper titling, buy-sell coordination, and trust structures can support those goals — but the right approach depends on your family’s values just as much as the assets themselves.

4. What OBBBA Did Not Change: The Human Part

Even with a stable rulebook, legacy decisions still involve:

• Family conversations

• Meaningful choices around fairness

• Preparation of the next generation

• The emotional side of transferring responsibility

Most Legacy Stewards want to pass down not just wealth, but wisdom and values. The law can support that, but it can’t replace it.

So What Should Families Do Heading Into 2026?

With OBBBA removing the pressure of looming deadlines, this is the ideal time for families to:

1. Review your estate plan for clarity and alignment with your intentions

2. Check beneficiary designations for accuracy

3. Evaluate whether Roth conversions or gifting strategies make sense long-term

4. Discuss land and business continuity with the next generation

5. Ensure someone you trust knows where key documents are located

6. 
   

These are not urgent tasks — but they are important ones.

A More Stable Path Forward

For South Dakota families, the stability created by OBBBA means estate planning can once again be thoughtful, values-driven, and unhurried. You don’t need to overhaul everything at once.You simply need a clear structure, a steady partner, and time — which you now have.

If you’d like help reviewing your beneficiary structure, understanding how the 10-year rule may affect your heirs, or aligning your estate plan with your long-term values, we’re here to help you take the next step with greater clarity.

Schedule your intro meeting today.

Disclosures:

Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.