The One Big Beautiful Bill Act (OBBBA) significantly reshapes the estate planning landscape by permanently increasing the lifetime gift and estate tax exclusion to $15 million per individual or $30 million for a married couple, with annual adjustments for inflation. While this has alleviated estate tax concerns for many, it should not be mistaken as a reason to delay or abandon estate planning altogether.
The exclusion increase may be labeled as “permanent,” but history has shown that tax laws are subject to change with shifting political priorities. Just a few months ago, many individuals were focused on the scheduled sunset of the increased exclusion at the end of 2025, which would have cut the exemption in half. That concern may have faded, but the need for proactive planning has not.
Those with estates above $30 million will continue to implement the same strategies as pre-OBBBA to minimize their estate tax. Those with estates below the $30 million threshold may feel temporarily secure, but they should still use this opportunity to implement or refine strategies while the favorable rules are in place. Additionally, asset protection planning remains relevant at all levels of wealth.
Wealth Transfer Tools
Popular wealth transfer tools like spousal lifetime access trusts (SLATs) and dynasty trusts will likely continue to see widespread use. SLATs allow one spouse to create a trust that benefits the other, providing some indirect access to the assets while removing them from the taxable estate. Dynasty trusts are designed to last for multiple generations, helping preserve and protect family wealth while minimizing future estate and generation-skipping transfer (GST) taxes.
Non-Grantor Complex Trusts
In the post-OBBBA environment, non-grantor complex trusts may become increasingly valuable tools for income tax planning. With the standard deduction now at $31,500 for joint filers, even fewer taxpayers will itemize deductions. As a result, charitable contributions made directly by individuals may not provide meaningful tax benefits, aside from the modest $2,000 above-the-line deduction for couples.
A non-grantor trust that permits charitable contributions from its income could provide a workaround. Because trusts do not have a standard deduction, they may qualify for a larger deduction with qualifying charitable contributions, creating a planning opportunity for philanthropic families.
Additionally, non-grantor complex trusts could help shift income to beneficiaries in lower tax brackets, reducing the overall family tax burden. This strategy can help wealthier grantors avoid income thresholds that trigger phaseouts of certain tax benefits. Through carefully structured distributions, families can more efficiently manage exposure to income taxes.
Estate Planning Flexibility
As the tax law remains fluid, building flexibility into estate plans is critical. This may take the form of limited powers of appointment, which give specified individuals the limited ability to redirect assets to new trusts or beneficiaries, making it easier to adjust to future law changes. Additionally, trust protector provisions are increasingly popular. A trust protector—who is neither a trustee nor a beneficiary—is typically granted powers such as replacing trustees or changing the trust’s jurisdiction, but we may see an expansion of the trust protector’s powers to allow them to modify trust terms in response to legislative changes.
Now is the Time to Review
With estate tax pressures eased for many, now is an ideal time to review buy-sell agreements. Historically, these were often drafted using lower valuations to reduce estate tax exposure. Today, ensuring these agreements reflect true fair market value may be more advantageous, especially when seeking a full step-up in basis at death.
Similarly, wills and revocable trusts that funnel the maximum allowable amount into credit shelter trusts should be re-evaluated. While this strategy avoids estate tax at the death of the surviving spouse, it can forfeit the step-up in basis for those assets. In some cases, it may be more beneficial to leave assets outright to the surviving spouse or use a qualified terminable interest property (QTIP) trust. A QTIP trust qualifies for the marital deduction, keeps the assets in the surviving spouse’s estate, and enables a step-up in basis at their death, as well as offering asset protection and GST tax planning.
While estate taxes often dominate the conversation, effective estate planning extends well beyond tax avoidance. Considerations such as asset protection, business succession, philanthropic legacy, incapacity planning and family governance are just as essential. A solid estate plan helps you ensure your wishes are honored, minimizes conflict after you are gone and leaves a legacy that reflects your values.
OBBBA has given many families breathing room, but that is no reason to become complacent. Now is the time to review your current documents and strategy. Whether you need to make major changes or just a few updates, having a plan that reflects today’s laws—and is flexible for tomorrow’s changes—will provide peace of mind for you and your loved ones.
Let’s talk about the next steps that make sense for you. Contact your RKL advisor today.
