One Big Beautiful Bill Act: Navigating New Estate Planning
The recent passage of the One Big Beautiful Bill Act (OBBBA) brings notable changes to the estate and gift tax planning landscape, especially for high-net-worth individuals and families. Navigating this complex terrain requires a keen understanding of its implications and opportunities.
The Expanded $15 Million Lifetime Exclusion
Effective in 2026, the new $15 million lifetime exclusion applies to both estate and gift taxes, indexed for inflation. This significant increase offers flexibility for your gifting strategies, easing tax burdens for many families.
Impact of the Combined $30 Million Exclusion for Couples
For married couples, the ability to combine their exclusions to $30 million can drastically reduce potential tax exposure, providing a new horizon for financial planning and wealth preservation.
Addressing the Previous $7.2 Million Threshold
The prior projected $7.2 million threshold posed risks for many. Under the new law, many families will see alleviated tax pressures, creating essential room for strategic estate planning.
Considerations of Pre-used Exclusions
It's crucial to note that previously used exclusions still count. For example, if $13.99 million was used previously, an additional $1.01 million becomes available in 2026, expanding planning opportunities.
Key Points on Portability and GST
While rules for portability and the GST exemption remain unchanged, understanding the necessity of filing federal estate tax returns for portability, in contrast with GST’s non-transferability, remains vital.
Permanence and Potential Changes
Though OBBBA doesn’t include a sunset clause, future changes are possible, urging timely planning. While the law offers stability now, vigilance remains essential.
Updates for High Earners and Charitable Givers
The top tax rate remains at 37%, the deduction cap persists, and new rules cap cash donations at 60% of AGI (over 0.5% income) maintaining a tightrope walk for strategic giving and planning.
Opportunities Amidst Reduced Urgency
With no pressing 2025 deadline, planning becomes more flexible, yet essential for long-term fiscal health. Take advantage of the favorable laws to reinforce your estate planning.
The OBBBA presents more room for strategic estate planning and offers greater stability, yet the complex landscape still requires informed navigation. Connect with a knowledgeable advisor to update or craft a robust estate plan tailored to your circumstances.