The One Big Beautiful Bill Act and Estate Planning: What You Need to Know

by Layla Kailani McLean, Buckley Law P.C.

Navigating estate planning can be complex, especially in light of legislation like the One Big Beautiful Bill Act (“OBBBA” or the “Act”), signed into law on July 4, 2025. The OBBBA made significant changes to tax structures, asset transfers, and inheritance rules that could directly impact how individuals plan for the future of their estates, and made permanent changes to federal estate, gift and generation-skipping transfer (GST) taxes. Here are some key provisions that are relevant to our estate planning clients.

Permanent Exemption Increases

• The Federal estate (Unified estate and gift) tax exemption is permanently increased to $15 million per individual ($30 million for married couples with “portability”) beginning on January 1, 2026, with annual inflation adjustments thereafter. This new $15 million exemption amount will be reflected as the “basic exclusion amount”, where it will officially replace the old $5 million exemption.
• The Generation Skipping Transfer Tax (“GSTT”) exemption is still equal to the basic Federal estate tax exclusion amount ($15 million in 2026) and will also be indexed for inflation. The GST exemption, unlike the estate and gift exemption, is still not portable from spouse to spouse. In other words, if one spouse doesn’t use their entire exclusion amount, the surviving spouse cannot use the amount their deceased spouse failed to use prior to death.
• How “permanent” is the basic exclusion amount as enacted? The increase in the basic exclusion amount to $15 million for 2026, with further inflation-indexed increases after 2026, is “permanent” because no automatic sunset or expiration date has been added. Therefore, the increased basic exclusion amount will not be decreased unless a future Congress and President enact and sign legislation to scale back or change the basic exclusion amount.

Rules that Remain Unchanged

• Top marginal estate, gift and GST tax rates remain at 40%.
• The step-up in basis of the decedent’s interest in property (or all of it for those who hold such assets as community property) at death remains intact. This means heirs will continue to receive assets with an adjusted tax basis equal to the asset’s fair market value of the decedent’s interest in the asset as of the decedent’s date of death. Gifts made during life continue to carry over the donor’s basis (i.e., no step up or adjusted tax basis).
• The Act does not impose any new taxes on trusts or alter their tax treatment. Income tax brackets for trusts remain unchanged, and common estate planning structures, such as grantor trusts, Spousal Lifetime Access Trusts (SLATs) and Grantor Retained Annuity Trusts (GRATs), remain unaffected.

Whether you’re updating an existing plan or creating one for the first time, understanding how this law affects your financial legacy is essential. Given the potential implications of this legislation on financial and estate planning strategies, please reach out to your estate planning attorney and financial advisors for guidance.

If you have questions or need legal assistance in estate planning, probate, or trust administration, please contact Layla McLean at 503-620-8900 or email the firm at [email protected].