The enactment of the One Big Beautiful Bill Act (OBBB) in July 2025 brought about a significant shift in U.S. tax policy, with substantial implications for estate planning. The landmark legislation extended and expanded many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introduced new rules that affect how individuals and families transfer wealth, structure trusts and plan for charitable giving.
Individuals should reassess their plans now to take advantage of new opportunities created by the OBBB.
Key Estate Planning Changes Under the OBBB
Increased Lifetime Transfer Tax Exemptions
One of the most significant changes to come out of OBBB is the permanent increase in the federal unified credit against estate, gift and generation-skipping transfer taxes (also called the estate tax “exemption”). Effective 1/1/2026 the exemption will be:
- $15 million per individual
- $30 million per married couple
These amounts are indexed for inflation, allowing more wealth to be transferred tax-free during life or at death.
Implication: High-net-worth individuals can use advanced strategies like Spousal Lifetime Access Trusts (SLATs), Grantor Retained Annuity Trusts (GRATs) and Intentionally Defective Grantor Trusts (IDGTs) to transfer significant assets without triggering federal transfer taxes.
Preserved Portability Between Spouses
The bill maintains portability of the estate tax exemption between spouses. This means that if one spouse dies without using their full exemption, the surviving spouse can inherit the unused portion.
Implication: Couples can utilize this feature in their estate planning to better facilitate their estate planning goals, though proper documentation and timely filing of IRS Form 706 remain essential.
Charitable Giving Enhancements
The OBBB introduced several changes to charitable giving rules:
- Taxpayers who take the standard deduction can now claim an above-the-line deduction for cash donations ($1,000 for single taxpayers and $2,000 for married filing jointly taxpayers).
- High-income donors may face reduced tax benefits due to adjusted AGI limits.
Implication: While charitable giving remains a powerful estate planning tool, individuals should consult advisors to optimize timing, structure and type of donations (e.g., donor-advised funds, charitable trusts).
Qualified Small Business Stock (QSBS) Exclusion
The capital gain exclusion for QSBS was expanded, allowing founders and early investors to exclude more gains when selling qualifying shares.
Implication: Entrepreneurs and investors should revisit their income and estate plans to incorporate QSBS strategies, especially when gifting shares to heirs or trusts.
Bonus Depreciation for Business Owners
Though not directly an estate planning tool, the extension of 100% bonus depreciation for qualifying property affects business succession planning and estate planning, particularly in cases where a business will be succeeded to a family member.
Implication: Owners can invest in capital assets with favorable tax treatment, potentially increasing the value of estates and requiring updated valuation strategies to keep the estate below the $15 million exemption.
What Individuals Should Do Now
With these changes in place, proactive planning is essential. Here’s what individuals should consider:
Update Estate Plans
Many people updated their estate plans to maximize the tax benefits of the TCJA. But those updates were made with certain assumptions, including the possibility that the TCJA-level estate tax exemption would expire at the end of 2025. Consequently, if your estate plan was created before July 2025, it may be worth reviewing under the current rules.
- Review wills, trusts and beneficiary designations.
- Ensure documents contemplate current exemption amounts.
- Consider adding or modifying SLATs, GRATs or IDGTs.
Maximize Use of Increased Exemptions
The $15 million (individuals) and $30 million (married filing jointly) exemptions open the door for significant tax-free transfers.
- Gift appreciated assets to heirs or trusts.
- Use valuation discounts for family limited partnerships or LLCs.
- Consider lifetime gifting to reduce future estate size.
Leverage Portability Wisely
If one spouse dies without using all of their $15 million exemption, the unused portion can be transferred to the surviving spouse, increasing the surviving spouse’s exemption. But portability doesn’t happen automatically.
- Portability must be elected on Form 706 United States Gift (and Generation-Skipping) Tax Return, which is filed with the IRS by the executor of the deceased spouse’s estate within nine months of the date of death.
- Keep records of exemption usage and DSUE (Deceased Spousal Unused Exclusion) amounts.
Reassess Charitable Strategies
The new rules may affect the tax efficiency of your giving.
- Evaluate using donor-advised funds to maximize and accelerate tax benefits.
- Consider charitable trusts for income and tax benefits.
- Coordinate giving with income levels to maximize deductions.
Plan for Business Succession
Business owners should align estate plans with bonus depreciation and QSBS rules.
- Use trusts to transfer business interests.
- Consider gifting qualified small business stock (QSBS) to heirs or charitable entities.
- Revisit buy-sell agreements and valuation clauses.
Coordinate with Financial Advisors and Family
Estate planning is no longer just about writing a will. It’s a multidisciplinary effort. It’s essential to work with CPAs, financial planners and attorneys to model scenarios using updated tax assumptions.
Additionally, individuals should monitor legislative developments that could alter current rules and stay connected with trusted advisors about tax law changes that could affect estate plans.
Educate Heirs and Beneficiaries
The best estate plan can fail if heirs are unprepared or uninformed about its details. To provide a firm foundation for your estate plan, consider these strategies:
- Hold family meetings to explain your intentions and how they will be carried out in the estate plan.
- Share key documents and contact information, as necessary.
- Consider legacy letters or ethical wills to convey your values and rationale for the way your estate plan is structured.
Conclusion
While the OBBB offers generous exemptions and planning flexibility, it’s not without risks. Political volatility could lead to future rollbacks, and state estate taxes may still apply, complicating your estate planning. Professional guidance is essential to ensure you are effectively navigating the complexity of the new rules.
For those interested in acting now, the current environment is ideal for transferring wealth, supporting causes and securing family legacies. But it’s important to act in a timely manner; failing to update your plan could mean missed tax savings or lead to unintended consequences.
Estate planning is not a one-time event, it’s a dynamic process that must evolve with the law, your assets and your life.
If you would like to discuss your estate plan, contact Doug Neal or your Windham Brannon advisor.
