The passage of the “One Big Beautiful Tax Bill” (the OBBTB) this last week marks a seismic shift in the estate, gift, and generation-skipping transfer (GST) tax changes. OBBTB could reshape how clients transfer wealth for decades.
Here’s what clients—and their advisors—need to keep top of mind.
1. Elevated Exemption Amounts—No Sunset
One of the headline-grabbing features of OBBTB is the dramatic increase in the unified estate, gift, and GST tax exemption—from $13.9 million per person to $15 million per person. This amount will be adjusted for inflation annually. This opens the door for ultra-high-net-worth families to shift significantly more wealth out of their taxable estates in the next few years.
What to do now:
Clients with sizable estates should consider leveraging the increased exemption through lifetime gifts, spousal lifetime access trusts (SLATs), and other irrevocable trust structures. We will be encouraging this since in recent years political reversal occurs somewhat frequently!
For our HNW clients we are crafting gifting strategies now but which implementation will trigger later based on political and economic signals. Flexibility is our new buzz word.
2. Clawback Clarity—For Now
OBBTB includes language affirming that no “clawback” will occur if the exemption drops in the future (e.g., if Congress changes its mind or sunsets kick in). That means gifts made today using the higher exemption won’t be penalized if the threshold shrinks later.
Planning takeaway:
This is a green light to act. Wealth we transfer could be grandfathered against future changes, giving our clients a powerful tool for intergenerational planning.
3. Step-Up Still Lives—But Under Watch
The basis step-up at death remains intact under OBBTB—at least for now. This means that heirs will receive appreciated assets with a fair market value basis, avoiding capital gains tax on pre-death appreciation.
But the bill includes “sunrise” provisions authorizing the Treasury to revisit this in future years, possibly tying basis adjustments to holding periods or use.
Actionable advice:
Review estate plans that rely heavily on step-up assumptions. Consider planning that balances lifetime gifting with stepped-up assets retained until death.
4. Trusts and Valuation Shifts Under Scrutiny
The OBBTB also includes provisions aimed at curbing valuation discounts and the abuse of grantor trusts, particularly where the grantor retains control or economic benefits. This may limit popular techniques like GRATs, IDGTs, and closely-held business discounts.
What to review:
- Review business succession plans and family limited partnerships.
- Consider alternate structures like charitable lead trusts or BDITs.
Future-proofing: We always build in trust protector (or trust advisor) clauses and modification powers to adapt if Treasury guidance evolves.
5. Portability and Spousal Transfers: Still Critical, More Valuable
Portability of the deceased spouse’s unused exemption (DSUE) remains intact and becomes even more valuable with the increased exemption amount. For many married couples, portability planning offers a simple way to double estate tax exemptions.
Planning tip:
Ensure timely filing of estate tax returns, even for estates under the filing threshold, to elect portability. Delays or oversights could forfeit millions in future tax savings.
Final Thoughts: This Is the Moment to Reassess
The One Big Beautiful Tax Bill has created a rare window of opportunity for high-net-worth families—and a moment of recalibration for everyone else. It also comes with significant uncertainties. The best strategy right now? Don’t wait.
Clients should:
- Update wills and trusts.
- Reassess gifting strategies.
- Coordinate with legal, tax, and financial advisors to future-proof their plans.
Estate planning is no longer a once-in-a-decade activity. With tax laws in flux, it’s an active strategy. This tax bill may be “beautiful” to some, but it’s complex to all—and staying ahead of its implications is key to protecting and preserving wealth. Contact our office for a complimentary review or initial consult to meet with one of our experienced attorneys. Our email is info@tcslawgroup.com or 512-263-5400. Thrash, Carroll & Sanchez Law Group has been in the Lake Travis area for 25 years serving you and your neighbors with expertise, insight, compassion and respect.