Family Wealth Arrangement: A Refresher for Securing Your Loved Ones' Tomorrow
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, has brought significant changes to estate planning. This landmark legislation permanently increases the federal estate and gift tax exemption amount to $15 million per individual ($30 million per married couple), starting January 1, 2026[1][2][3][4].
Before OBBBA, the federal exemption for 2025 was approximately $14 million per person, but it was scheduled to revert to about $7 million per person in 2026 without new legislation. OBBBA not only prevents this decrease but also raises the exemption to $15 million and makes that increase permanent[2][3].
This permanent increase offers long-term certainty and a larger amount of wealth that can be transferred free of federal estate and gift taxes, benefiting individuals with significant assets by expanding their tax-efficient estate and gift planning opportunities[1][2][3][4].
Taking Advantage of the OBBBA Increase
Individuals with assets near or above this exemption threshold should review and possibly update their estate plans to maximise use of the higher exemption and inflation adjustments. Couples can combine exemptions for up to $30 million in tax-free transfers, enabling significant wealth transfer without triggering federal estate or gift taxes[2][4].
Accelerated lifetime giving strategies remain attractive, with a higher exclusion allowing more wealth to be gifted tax-free, possibly reducing future estate taxes and allowing assets to grow outside the taxable estate[4]. Making lifetime gifts can lock in the higher estate tax exemption amount and remove future asset appreciation from your estate.
Examples of annual gifts include contributing to a 529 plan, helping a grandchild buy a vehicle, or gifting into an irrevocable trust. These gifts do not require the filing of a gift tax return, provided they are below the current annual exemption amount of $19,000 per beneficiary[1].
Summer is Ideal for Estate Planning Discussions
Summer is an ideal time to discuss estate planning intentions with family members. This can help prevent misunderstandings down the road. It's also a great time to review or create your estate plan, as life changes can affect your estate plan[1].
Trusts can be tailored to meet specific goals such as education, housing, charitable giving, or multigenerational wealth transfers. Consulting with an experienced estate planning attorney is recommended to avoid missteps in creating an effective estate plan[5].
While most people will not be affected by this change in the law regarding estate and gift taxes, it offers a significant opportunity for those with significant assets. The increase in the federal estate and gift tax exemption amount is permanent, subject to the whims of a new administration and/or Congress[6].
In conclusion, OBBBA's permanent increase to a $15 million exemption per person offers long-term certainty and a larger amount of wealth that can be transferred free of federal estate and gift taxes, benefiting individuals with significant assets by expanding their tax-efficient estate and gift planning opportunities[1][2][3][4].
- For individuals with assets nearing or exceeding the increased federal estate and gift tax exemption amount, it would be advantageous to reassess and potentially modify their estate plans to maximize the higher exemption and take advantage of inflation adjustments.
- With the permanent increase in the federal estate and gift tax exemption to $15 million and a higher annual gift exclusion, individuals can opt for accelerated lifetime giving strategies, such as contributions to a 529 plan or establishing irrevocable trusts, to reduce future estate taxes, lock in the higher exemption, and remove future asset appreciation from their estates.
