Understanding the One Big Beautiful Bill: A New Era for Estate Planning

An older couple is sitting at their kitchen table reviewing financial and legal documents.

Introduction to the One Big Beautiful Bill Act

On July 4, 2025, a significant piece of legislation known as the One Big Beautiful Bill Act was signed into law. This act has brought much-needed clarity to the uncertainty surrounding the federal estate tax exemption. With an exemption set at $13,990,000 for 2025, it was feared that this amount would be slashed nearly by half in 2026 if Congress had not intervened.

New Estate Tax Exemption: What You Need to Know

As of January 1, 2026, the One Big Beautiful Bill permanently raises the estate tax exemption to $15 million. This means that married couples can now transfer up to $30 million to their heirs without incurring federal estate tax, potentially saving $12 million at a 40% tax rate. The exemption will also be adjusted annually for inflation starting in 2027.

The Impact of the Bill on Estate Planning Strategies

Maximize Gift Opportunities

With the increase in exemption, it’s a perfect time to review your past gifting strategies. If you’ve made gifts in the past but haven’t taken full advantage of the tax exemption limits, consider topping off those gifts. You’ll have an additional $1,010,000 to gift starting next year, with the opportunity to increase your gifts yearly in line with the new exemption limits.

Gifting as a Strategy to Reduce Your Taxable Estate

Haven’t considered gifting yet? Now is the time. Gifting allows assets to be removed from your taxable estate, allowing them to grow without future estate taxes. For example, if you gift assets valued at $15 million, and, by the time of your passing, their value has appreciated to $20 million, you effectively transfer $20 million to your heirs without any estate tax implications.

Evaluate Heirs’ Financial Savvy

Gifting can also serve as a “test drive” for your heirs. It gives you insight into how your children might manage an inheritance. This knowledge can help you make future adjustments to your estate plan.

Consider Charitable Contributions

Feeling overwhelmed by the wealth you’ve accumulated? If you’ve provided adequately for your children and wish to leave a charitable legacy, now is a great time to revisit your charitable planning. The new tax savings can allow you to leave a more considerable legacy for charities you care about, while benefiting your heirs as well.

Maintain Anonymity in Giving

For those interested in charitable giving but concerned about privacy, consider making anonymous donations. Many community foundations and donor-advised funds allow you to support causes without revealing your identity.

Final Thoughts: The Importance of Planning with the One Big Beautiful Bill

The One Big Beautiful Bill has established a firm foundation for estate planning by locking in the amounts that can be passed on free of estate taxes. To make the most of this opportunity, be proactive in planning whether your aim is to maximize benefits for your heirs or to create a lasting charitable legacy. Engage with a financial advisor to ensure you are leveraging all available tax savings and planning opportunities.

Key Takeaways

• Permanent Estate Tax Exemption: The exemption rises to $15 million starting January 1, 2026, adjusted for inflation thereafter.
• Gifting Strategies: Maximize your gifting limits before the exemption changes.
• Charitable Opportunities: Explore ways to contribute anonymously while still making a significant impact.

In conclusion, the One Big Beautiful Bill Act empowers you to take charge of your estate planning, ensuring your assets are managed and distributed according to your wishes. Don’t miss the chance to enhance your financial legacy!