The passage and signing of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, has fundamentally transformed the estate planning landscape for high-net-worth families. President Trump's signature on this comprehensive tax legislation permanently set the federal unified estate and gift tax exclusion amount at $15 million per individual, or $30 million for married couples, effective for calendar year 2026, with subsequent inflation indexing beginning in 2027.
This landmark change eliminates the uncertainty that dominated estate planning discussions in the first half of 2025 and creates an entirely new strategic framework for wealth transfer planning.
For estate planning practitioners, the OBBBA represents both relief from the previously looming "fiscal cliff" and a new set of considerations for advising clients. The days of urgent "use it or lose it" planning are over. They have been replaced by more nuanced strategic decisions about optimal timing, tax efficiency, and family wealth objectives in a permanently high-exemption environment.
From Crisis to Certainty
Throughout the first half of 2025, estate planning practitioners operated under the assumption that the 2017 Tax Cuts and Jobs Act's (TCJA) doubled exemption would sunset on December 31, 2025, reverting to approximately $7 million per person or $14 million per married couple. This created unprecedented urgency for large wealth transfers, with many families rushing to complete substantial gifts before the anticipated reduction.
The OBBBA not only extended the high exemption but increased it further. The legislation permanently sets the federal unified estate and gift tax exclusion amount at $15 million per individual, or $30 million for married couples, effective for calendar year 2026, with inflation beginning in 2027. This provides unprecedented certainty for long-term wealth planning.
Recalibrating the Stepped-Up Basis Analysis
One of the most significant implications of the OBBBA is its impact on the traditional trade-off between estate tax savings and the fact that assets receive a “step-up” in tax basis at the transferor’s death.
For individuals with estates below $15 million per person, and married couples below the $30 million combined exemption, the analysis now heavily favors retaining assets until death to capture the stepped-up basis benefit. Consider a married couple with a $20 million estate consisting largely of highly appreciated assets. Under previous law, this family potentially faced significant estate tax exposure and had strong incentives to make lifetime gifts. Under the OBBBA, the same family faces no estate tax and should generally retain assets to benefit from the basis step-up.
Planning for Appreciation Beyond the Exemption
For individuals with estates above $15 million per person, and married couples above the $30 million combined exemption, the analysis becomes more complex. These families must balance the probability and timing of exceeding the exemption against the certainty of current income tax benefits from step-up basis.
Advanced techniques like sales to intentionally defective grantor trusts, which remove the asset from the grantor’s estate for estate tax purposes but allow the grantor to continue to pay income tax, may become more attractive in this environment. These strategies allow families to benefit from continued growth while gradually transferring wealth in a tax-efficient manner.
Looking Forward: Long-Term Implications
While the OBBBA's permanent nature provides unprecedented stability for estate planning, there are several factors that warrant ongoing attention.
Political Durability
While the OBBBA establishes permanent exemption levels, future political changes could still affect estate tax policy. Practitioners should help clients understand that "permanent" in tax law means "until Congress changes it" and maintain some flexibility in planning approaches.
Economic and Fiscal Pressures
Extending the cuts has caused some economists to worry it could boost inflationary pressures and worsen America's fiscal trajectory. The $4.5 trillion reduction in tax revenues could increase the budget deficit and push up interest costs, though the government’s recent efforts in efficiency and spending reduction could offset any loss in tax revenue.
Evolving Planning Techniques
The stable exemption environment may foster the development of new planning techniques optimized for the permanent high-exemption regime. Practitioners should stay current with emerging strategies and techniques that take advantage of the new environment.
Conclusion
The window of urgent action may have closed, but the window of strategic opportunity has opened wider than ever before. The most successful estate planning in the post-OBBBA era will be that which takes full advantage of this stability to build robust, flexible, and family-centered wealth transfer strategies designed to serve multiple generations.
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About the Author
Sarah M. Clifford is a shareholder at Gallagher & Kennedy, advising individuals, families, and business owners with their estate planning to help manage and preserve wealth and assets. Her experience includes probate and trust administration, including representation of high-net-worth clients with complex trusts and estates.