What OBBB Means for Estate Tax and Wealth Transfer

The One Big Beautiful Bill (OBBB) Act raises the federal estate tax exemption to $15 million per individual beginning January 1, 2026, a permanent change indexed for inflation. For many families, this eases the prospect of federal estate tax altogether. Yet planning remains as vital as ever. The increase does not replace the value of tools that protect wealth, preserve flexibility, and ensure assets pass as intended. For estates above the new threshold, advanced strategies may still be needed. For those below it, the step up in basis and well-structured trusts continue to shape outcomes for heirs. The law may have shifted the boundaries, but thoughtful planning remains at the center of protecting family wealth.

The permanence of this higher exemption changes the tone of recent years. Much of the discussion before OBBB centered on using gift and estate tax exemptions before they expired. Families were encouraged to move quickly to capture the benefit of a larger exemption before the law changed. That urgency is gone. With $15 million secured and set to rise with inflation, many will find themselves comfortably below the threshold.

Estate planning is not measured solely by tax brackets.

The step up in basis remains intact under OBBB, preserving one of the most significant advantages for families whose estates fall below the exemption. Assets transferred at death are reset to their fair market value, reducing capital gains tax for heirs when they eventually sell. Thoughtful planning can ensure this benefit is maximized, often by carefully drafting trusts and reviewing existing arrangements to confirm they still serve the intended purpose.

For families whose wealth does exceed $15 million, advanced strategies remain important. The Spousal Lifetime Access Trust, for example, continues to offer flexibility by allowing a couple to make gifts to one another while removing significant assets from the taxable estate. These trusts not only manage estate tax exposure but also protect assets from divorce, creditors, or bankruptcy, ensuring that wealth is preserved for future generations.

In addition, opportunities exist for existing grantor trusts to be revised or restructured as complex trusts. When designed effectively, these structures can address both estate and income tax objectives at the same time. They allow families to manage the shifting of deductible expenses between the trust and individual returns, creating tax efficiency without the need for wholesale changes to their financial architecture.

The OBBB exemption increase is good news for high-net-worth individuals, but it does not diminish the need for careful planning. Families at every level of wealth benefit from ensuring their estate plans are current, aligned with their wishes, and structured to take advantage of enduring features of the tax code. Whether the goal is to minimize exposure for an estate above $15 million or to preserve step up in basis and asset protection strategies for a more modest estate, planning remains the most effective way to protect wealth across generations.

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