The One Big Beautiful Bill Act: The New Must-Know Estate Planning Features & Considerations

By Edward Sparkowski, CFP®, CIC, Partner, CPS Private Client Solutions

A volatile financial Countdown Clock of sorts has been in play in the estate planning world since 2018.  The steady tick, tick, tick was closely watched by some while others were oblivious of its existence.  However, the pending dark cloud was recently averted, as explained below.

On July 4, 2025, with the stroke of a pen, President Trump signed The One, Big, Beautiful Bill Act (OBBBA) on the White House north lawn.  Among its most significant provisions for estate planning, Section 70106 permanently sets the federal unified estate and gift tax exclusion at $15 million per individual ($30 million for married couples). This amount will be effective for calendar year 2026, with subsequent inflation indexing starting in 2027. 

Previously, the 2017 Tax Cuts and Jobs Act (TCJA) had temporarily doubled the then-existing federal unified estate and gift tax exclusion amount, increasing it from $5 million to $10 million per person, with annual inflation adjustments.  By 2025, the inflation adjusted exclusion amount had reached $13.99 million.  However, this exclusion amount was subject to a sunset reduction scheduled for January 1, 2026.  The new amount was estimated to be reduced down to $7 million per individual.  With the passage of the OBBBA, the scheduled reduction was avoided, and the exclusion is now fixed at the $15 million level.

This landmark change provides some advantageous certainty for long-term planning, along with greater clarity and flexibility for wealth transfer strategies.  It should be noted, however, that although there is currently no sunset provision for the estate and gift tax exclusion, a future Congress could pass a bill that again overhauls these provisions of the Tax Code.

Other key estate planning aspects of the OBBBA include increasing the generation-skipping transfer (GST) tax exemption to align with the new $15 million estate and gift tax exemption.  It also retains the TCJA-era tax brackets for trusts and estates, with annual inflation adjustments, offering long-term predictability in managing irrevocable trusts.  The OBBBA retains features of current law such as portability between spouses, allowing a surviving spouse to utilize any unused exclusion from the deceased spouse.  The annual gift tax exclusion also stays the same, currently set at $19,000 per recipient for 2025, with annual inflation adjustments.

Several planning considerations:

• Does your state have an Estate or Inheritance Tax?

  Location can dramatically affect an outcome.  Currently, 12 states and the District of Columbia have an Estate Tax; five states have an Inheritance Tax.  And, if you are a resident of the State of Maryland, you are subject to both.  Awareness of your state’s tax regime is critical.  You may be protected by the $15 million federal exemption, but state estate tax rates could be more onerous than the federal rates.

  
  

• Are you minimizing estate taxes?

  It is important to properly title assets such as insurance contracts to ensure you have the lowest possible estate tax exposure.

  
  

• Are married couples going to use their $30MM exemption?

  Many couples aren’t aware of the proper process necessary to use both exemptions and end up paying more estate taxes than necessary at the death of the second spouse.

  
  

• Is a lifetime bypass trust still useful?

  Funding a bypass trust with access by the surviving spouse is still a viable planning technique. Asset growth within the trust avoids additional estate taxes and the trust provides creditor protection.

  
  

• Are there other liquidation needs at death?

  Estate equalization can require cash at death. It is important to have the ability to have cash available in these situations. Life insurance can provide that liquidity.

  
  

• Does your gift tax and estate planning provide flexibility?

  Estate and gift tax rules have been in a state of flux over the past three decades.  Even with the OBBBA’s permanency, rules may continue to evolve.  An estate plan should be as flexible as possible to adapt to changing legislative circumstances.

In light of the new OBBBA landscape, we recommend that these and other critical issues be addressed with a professional. The new higher exemption may not be sufficient to protect you from other insurable risks in your business, including key person coverage, funded business transition agreements and benefits for key personnel.