On July 4, 2025, President Trump signed the "One Big Beautiful Bill" Act (OBBBA) introducing major changes affecting high-net-worth individuals, family businesses and family offices. The bill impacted a variety of tax areas, including charitable giving and estate planning. From an estate-planning perspective, the most significant change is the increased estate and gift tax "exemption" amount.
Estate and Gift Tax Planning
The exemption was set to revert to its pre-Tax Cuts and Jobs Act (TCJA) amount of $5 million (indexed for inflation) on January 1, 2026. OBBBA, however, permanently increases the estate and gift tax exemptions to $15 million (indexed), or $30 million for married couples. This increased exemption also applies to the generation-skipping transfer tax exemption. Although it is technically permanent, all tax laws may be, and often are, changed by future acts of Congress. In the meantime, this expansion enhances estate planning opportunities and increases the amount of assets that may be transferred to future generations. This is particularly true for high-net-worth clients whose assets exceed the exemption amounts. This "excess" is taxed at a hefty 40% tax rate upon death, and often the estate tax check is the largest check a family will write. But even if estate taxes are not a concern right now due to the large exemption amounts, additional income tax planning should be considered.
Income Tax Planning
Assets included in a decedent's gross estate for federal estate tax purposes generally receive a basis adjustment to fair market value at death. Traditionally, taxpayers had to choose between minimizing income tax (by ensuring assets are included in the gross estate) or minimizing estate and gift tax (by ensuring assets are excluded from the gross estate).
With the new exemption amount, most taxpayers will now face little or no estate tax. As a result, many may prefer strategies to secure the basis step-up. For example, a trust designed to exclude assets from a beneficiary's estate could instead be modified or "decanted" so that up to $15 million of appreciated assets are includable in the beneficiary's estate without triggering estate tax. This adjustment could eliminate substantial built-in gains and yield significant income tax savings without any estate tax liability.
If you have questions about the OBBBA's impact on your estate plan, how the increased exemption might help reduce or eliminate income, estate, gift and GST taxes, contact your Warner estate planning attorney or Jennifer Remondino at jremondino@wnj.com.
This article is featured in Warner's Estate Planning Focus — Spring 2026 newsletter, which highlights key developments, planning strategies and insights for individuals, families and advisors.
Read the full newsletter to explore additional updates and practice guidance.
