Proposed Estate Tax Reform: What the “One Big Beautiful Bill Act” Could Mean for Your Estate Plan

A new tax proposal backed by President Trump—informally referred to as the One Big Beautiful Bill Act—has introduced significant potential changes to the federal estate, gift, and generation-skipping transfer (GST) tax regime. While still working its way through the legislative process, this bill outlines sweeping and permanent revisions that could directly impact the planning strategies of high-net-worth individuals and families.

Below is a summary of the proposed changes and what they may mean for your estate plan.

1. Permanent Increase of the Estate, Gift, and GST Tax Exemptions

Under current law, the lifetime estate and gift tax exemption is set to revert to approximately $7 million per individual ($14 million per couple) after December 31, 2025, due to the sunset of provisions enacted by the 2017 Tax Cuts and Jobs Act.

The proposed legislation would:

• Permanently increase the exemption amount to $15 million per person (or $30 million per married couple), effective for transfers after December 31, 2025.

• Index the exemption for inflation beginning in 2026.

• Apply the same $15M threshold to GST tax exemptions, enhancing opportunities for multigenerational or “dynasty” trust planning.

This would eliminate the uncertainty surrounding the scheduled sunset, providing welcome stability to long-term planning.

2. No Change to the Estate and Gift Tax Rate

The proposal retains the existing 40% top federal estate and gift tax rate. In other words, while the exemption amount would increase, the tax rate applied to transfers above that threshold would remain unchanged.

For many clients, this means the value lies not in a rate reduction—but in the opportunity to transfer more wealth tax-free during life or at death.

3. Planning Implications: Before and After 2025

Planning Variable	Current Law (2025)	Proposed Law (2026+)
Individual Lifetime Exemption	~$13.99M	$15M (indexed)
Married Couple Exemption	~$27.98M	$30M (indexed)
GST Exemption	~$13.99M	$15M (indexed)
Sunset Risk	High (reverts to ~$7M)	Eliminated
Estate/Gift Tax Rate	40%	40%

4. Strategic Considerations and Client Action Steps

a. Act Now or Wait? The current exemption remains at $13.99M through the end of 2025. Clients considering large lifetime gifts may wish to act before year-end to “lock in” today’s historically high limits. However, if the bill becomes law, waiting until 2026 may offer additional exemption room.

b. Spousal Portability. Portability remains in play, allowing a surviving spouse to use any unused portion of a deceased spouse’s exemption. Planning should consider leveraging both spouses’ exemptions strategically—especially in light of the possible increase.

c. Dynasty Trust Opportunities. The proposed changes are particularly favorable to clients interested in long-term generational planning. With a $15M GST exemption per individual, clients can fund generation-skipping trusts more robustly, ensuring wealth preservation across generations.

d. Model Both Scenarios. Until the legislation is passed and signed into law, it is prudent to prepare for both outcomes:

• A “current law” track using the $13.99M exemption before it potentially drops.

• A “future law” track based on the proposed $15M indexed exemption.

  
  

5. Next Steps for Our Clients and Colleagues

• Monitor Legislation: The bill has not yet passed and may be subject to amendments. We are tracking developments closely.

• Run Projections: For clients considering significant gifts or funding of trusts, we can model both pre-2026 and post-2026 scenarios to evaluate options.

• Update Planning Documents: Any material change in exemption amounts may require adjustments to formulas and distribution provisions in your estate plan.

• Coordinate with Advisors: Now is the time for CPAs, wealth managers, and estate counsel to align on strategy.

  
  

Bottom Line

If enacted, this proposal would cement the highest estate, gift, and GST exemptions in history—providing increased certainty and flexibility for affluent families. But until it becomes law, uncertainty remains. Planning today with optionality in mind is essential.

We are here to help you navigate this evolving landscape. Please contact us if you'd like to review your existing plan or explore gifting strategies before year-end.

Lara Sass & Associates, PLLC remains committed to providing thoughtful, personalized guidance as Congress considers reforms that could significantly alter the estate planning landscape. We will continue to update you as the situation evolves.