A Game-Changer for Estate Planning: Understanding the “One Big Beautiful Bill Act” (OBBBA)

In a significant development for wealth transfer and estate planning, the “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025, has brought about monumental changes to the federal estate, gift, and generation-skipping transfer (GST) tax laws. This new legislation provides high-net-worth individuals and families with newfound certainty and opportunities for long-term planning. This post will delve into the most impactful provisions of the OBBBA relevant to estate planning.

The cornerstone of the OBBBA’s estate planning provisions is the substantial and permanent increase in the federal estate, gift, and GST tax exemptions. Here are the key numbers you need to know:

• 2025 Exemption: For 2025, the exemption amount has been adjusted for inflation to $13.99 million per individual.
• 2026 and Beyond: Beginning January 1, 2026, the exemption will permanently increase to $15 million per individual, and $30 million for a married couple.

This significant increase means that a larger portion of an individual’s or a couple’s assets can be transferred to heirs free from federal estate and gift taxes. For perspective, the top marginal estate tax rate remains at a steep 40%, so this increased exemption offers substantial tax savings.

Perhaps the most crucial aspect of the OBBBA for long-term estate planning is the elimination of the “sunset provision” that was a key feature of the 2017 Tax Cuts and Jobs Act (TCJA). Under the TCJA, the increased exemption amounts were temporary and scheduled to revert to a much lower, inflation-adjusted $5 million level (estimated to be around $7 million) on January 1, 2026.

This impending “sunset” created a sense of urgency for many, leading to a “use it or lose it” approach to estate planning. High-net-worth individuals felt compelled to make large gifts to utilize the higher exemption before it disappeared.

With the passage of the OBBBA, this uncertainty is gone. The new, higher exemption amount is now a permanent fixture of the tax code (barring future legislative changes), allowing for more thoughtful, long-term, and strategic estate planning without the pressure of a looming deadline.

The changes brought about by the OBBBA have several practical implications for your estate planning strategy:

• Reduced Urgency, Increased Opportunity: The removal of the sunset provision allows for a more measured approach. You can now plan with greater confidence, focusing on a holistic strategy that aligns with your long-term goals rather than reacting to a deadline.
• Focus on Appreciation: With a higher exemption, you can now gift assets with high growth potential out of your estate, ensuring that future appreciation also occurs outside of the reach of estate taxes.
• Review Existing Plans: If you have an existing estate plan, it is essential to have it reviewed by a qualified attorney. Plans that were structured around the previous, lower exemption amounts and the sunset provision may no longer be optimal.
• State-Level Considerations: It is crucial to remember that the OBBBA only affects federal estate taxes. Many states have their own estate or inheritance taxes with much lower exemption amounts. Therefore, even if your estate is well below the new federal threshold, you may still have state-level tax exposure to consider.

The “One Big Beautiful Bill Act” represents a paradigm shift in the world of estate planning. The permanent increase in the estate and GST tax exemptions provides an unprecedented opportunity for wealth preservation and transfer. The newfound certainty allows for more strategic and less frantic planning.

While this new legislation is a significant benefit, the world of estate planning remains complex. It is highly recommended that you consult with an experienced estate planning attorney to understand how the OBBBA impacts your specific circumstances and to ensure that your estate plan is optimized to achieve your goals in this new legislative landscape.