Q&A: THE ONE BIG BEAUTIFUL BILL

For years, wealthy families have lived with uncertainty around legacy planning and have often found themselves rushing to complete transactions before exemptions expired or halved. Now that there’s clarity from a tax-planning standpoint, there are some new questions for families and their advisors, such as: how should strategies shift for families far above the exemption? And what about those who are below it? Meanwhile, what tools remain relevant in this new environment? 

To unpack these issues, we’ve developed a Q&A on what the OBBBA means for multigenerational giving.

Why is the permanence of the estate, gift and GST tax exemption such a meaningful development compared to the temporary framework under the 2017 tax bill?

The biggest difference is certainty. Under the temporary rules provided by the Tax Cuts and Jobs Act of 2017, families worried the exemption—currently about $14 million—might be cut in half at the end of 2025. Many rushed to transfer property or set up trusts before year-end. Others hesitated, hoping Congress would act. Now that the exemption has been made permanent, families don’t have to scramble before an arbitrary deadline. They can plan more thoughtfully, knowing the rules aren’t scheduled to change overnight.

That said, “permanent” only lasts until Congress changes again, but at least for the next few years, families can plan with confidence. 

In 2026, the exemption increases to $15 million. How might this reshape the way families think about wealth? 

It really depends on the size of the estate:

• Single individuals under $15 million don’t really need to worry about the federal estate tax. They can simply decide whether to gift during life for personal reasons, like helping a child buy a house.
• Married couples with $15 million - $30 million together can shield up to $30 million. They also may not face the federal estate tax, though some will still choose to gift early. However, sophisticated planning is required to ensure that both spouses take full advantage of their increased exemption.
  
• Families over $30 million will still need advanced planning. Tools like grantor-retained annuity trusts (GRATs), sales to intentionally defective grantor trusts, irrevocable life insurance trusts, and sophisticated charitable strategies will remain essential.

So, the higher exemption solidifies planning for many families, but those at the very top still need to engage in complex estate planning 

What existing estate planning structures should families revisit in light of the new rules? 

Families who previously used valuation discount strategies, like family limited partnerships or qualified personal residence trusts, may want to rethink them. If their estates now fall below the exemption those discounts could backfire by lowering the cost basis of inherited assets, ultimately increasing the income tax when heirs sell.

In contrast, families still above the exemption will continue to rely on tools like dynasty trusts, GRATs, charitable remainder trusts and valuation discounts. For them, minimizing taxable value remains the name of the game. 

Are there risks or unintended consequences advisors should watch for when leveraging the higher exemption? 

Yes, the government often challenges aggressive valuation discounts. If you claim too steep a discount, the IRS may argue the asset was undervalued and increase the reported value, triggering higher taxes and valuation penalties. 

To protect against this, many attorneys use formula or “defined value” clauses, which peg the gift to a specified dollar amount rather than a fixed number of units. That way, if the IRS revalues the asset, the excess portion automatically shifts to a spouse, charity or another tax-favored destination, avoiding surprise tax bills. 

What role does life insurance and other liquidity tools play now?  

Life insurance still matters, though less for covering estate taxes since fewer estates will be taxable. It remains critical for funding buy-sell agreements in closely held businesses and for replacing income for families. 

What is the single most important step a wealthy family should take to align their estate with the OBBBA?   

Review everything. Every time the tax law changes, families need to revisit their documents and structures to make sure their plans still fit. Even if nothing needs adjusting, the review provides peace of mind. We recommend reviewing every three years as a rule, but especially whenever major tax legislation is passed. 

The OBBBA’s permanent $15 million estate and GST exemption has reshaped the landscape for family wealth transfer. For many families, it provides relief from the pressure of hurried transactions and a sense of certainty in planning. For the wealthiest, it reaffirms the need for sophisticated strategies to reduce taxable estates and preserve legacies.

Above all, permanence gives families the breathing room to focus on what estate planning is really about. Aligning wealth with values, strengthening family bonds and enabling multigenerational giving that last far beyond a single tax cycle.

Want to go deeper? Explore our detailed OBBBA fact sheet for a full breakdown of key changes to U.S. tax law.