Donald Trump calls it the “One Big Beautiful Bill.” Critics call it a tax giveaway to the rich. However, regardless of your politics, the legislation signed into law this summer provides significant, and in some cases permanent, benefits to high-net-worth individuals.
For estate planners, wealth managers, and anyone seeking to protect generational wealth, the One Big Beautiful Bill (OBBBA) represents a significant shift. The bill raises the federal estate and gift tax exemption to $15 million per person—$30 million per married couple—and permanently indexes it to inflation. It preserves favorable capital gains treatment, extends full expensing for new investments, and reconfigures rules around charitable deductions and trust taxation. In short, it changes the entire calculus for wealth transfer planning.
“Although these provisions are labeled ‘permanent,’ a future administration and Congress may once again modify these amounts,” cautions Richard Miller Jr., partner in Hughes Hubbard & Reed LLP’s tax and trust & estates group. “Individuals should proactively make use of the increased exemption amounts either during their lifetime or at death.”
Max Out the Exemption Now
Estate planners agree on one thing: time is of the essence. The new exemption provides individuals with the opportunity to transfer substantial wealth tax-free, exempt from federal estate and gift taxes. But this window may not last forever.
“If a family is financially independent, gifting assets sooner rather than later can be beneficial,” says Dawn Jinsky, a Certified Financial Planner and partner at Plante Moran Wealth Management. “This allows the growth and appreciation of the gifted assets to occur outside of the taxable estate.”
Choosing what to gift is just as important as when to give it. Real estate and closely held businesses are ideal candidates, especially when paired with valuation discounts. “Assets that can be leveraged provide a future income stream to the heirs and allow you to apply discounts for lack of marketability and control,” Jinsky adds.
Those discounts may not be available forever. Miller warns that “discounts for lack of marketability and control in entities such as Limited Liability Companies could be disallowed, so donors relying on discounted valuations should act now before legislative changes are enacted.”
The Dynasty Trust Opportunity
The law also creates an unprecedented opportunity for multigenerational wealth planning through dynasty trusts. “To make the most of GST exemptions for multigenerational trusts, coordinate the use of estate and generation-skipping transfer (GST) exemptions, since they are identical, to fully apply the GST exemption without triggering gift tax,” Jinsky explains.
Miller suggests going a step further by establishing irrevocable non-grantor trusts (INGTs). These vehicles allow the trust itself—rather than the grantor—to pay its own income tax. That turns out to be a significant advantage under the new rules.
“OBBBA has increased the SALT deduction from $10,000 to $40,000 and has made permanent the Qualified Business Income Deduction (QBI),” Miller notes. “Irrevocable non-grantor trusts are permitted to take these deductions, providing the opportunity to shift income to such trusts to maximize the benefit.”
In some cases, Miller says, it may even make sense to convert existing intentionally defective grantor trusts (IDGTs) into INGTs to benefit from these deductions at the trust level.
Think Local: State Estate Taxes Still Apply
While the federal estate exemption has gone up, many states haven’t followed suit. And that creates a hidden danger.
“An individual residing in a state that imposes a separate estate or inheritance tax should review the language in his or her Will or Revocable Trust,” Miller says. “Many states have estate tax exemption amounts that are substantially lower than the federal exemption. If your credit shelter trust is drafted based on the federal exemption, your estate may be exposed to state estate taxes.”
In high-tax jurisdictions like New York, Massachusetts, and Oregon, that could mean millions in unexpected estate tax liability. Updating estate documents to align with both federal and state laws is critical.
OBBBA makes several changes that impact charitable giving, including the addition of a 0.5% adjusted gross income (AGI) “haircut” on charitable deductions. For a taxpayer with $5 million in AGI, that’s a $25,000 deduction lost out of the gate.
Miller also notes that “taxpayers in the top bracket are limited to a charitable deduction that produces tax savings based on an assumed 35% income tax rate, rather than the taxpayer’s actual marginal rate of 37%.”
That may not sound like much, but for multi-million-dollar donations, it adds up. Miller recommends accelerating major giving before December 31, 2025, to take advantage of the more generous deduction rates still in effect this year.
GRATs, ILITs, and Other Structures Need a Second Look
Grantor Retained Annuity Trusts (GRATs) and Irrevocable Life Insurance Trusts (ILITs) have long been estate planning staples. But under OBBBA, they may require revision.
“New rules could impose minimum terms or eliminate so-called ‘zeroed-out’ GRATs,” says Miller. “Individuals considering GRATs should lock in such transactions now before possible legislation prevents them.”
ILITs also come under scrutiny. Because many are structured as grantor trusts, the value of the trust may be included in the grantor’s estate for tax purposes. Miller suggests reviewing these trusts to determine whether “any of the grantor trust administrative provisions can be eliminated,” allowing conversion into a non-grantor trust to better align with the new tax environment.
HNW individuals with international holdings or heirs face an added layer of complexity. U.S. citizens are taxed on their worldwide assets. And while treaties may offer some protection, they’re inconsistent and complex.
“If a future Congress changes the estate tax exemption, more foreign assets will be subject to estate tax,” Miller warns. “Individuals with real property in multiple countries may face double taxation absent treaty provisions.”
The Political Risk
Although the law indexes the $15 million exemption to inflation and makes the changes permanent, tax professionals remain skeptical that the current regime will last. “The increased exemption amount under the TCJA was scheduled to expire at the end of 2025,” Miller says. “The enactment of OBBBA has permanently increased those tax exemptions. But future administrations may revisit them.”
That means the current rules may represent the high-water mark for tax-free wealth transfer in the U.S. The savvy move? Act now. “Individuals should proactively make use of the increased exemption amounts either during lifetime or at death,” Miller reiterates.
Or as Jinsky puts it: “Gift early. Gift smart. And make sure your structure can adapt.”
