Estate Planning And The Final OBBBA: Key Changes High-Net-Worth Individuals Must Know

Forbes

8 hours ago

Senator Chuck Grassley, a Republican from Iowa, departs following a vote at the US Capitol in ... More Washington, DC, US, on Saturday, June 28, 2025. President Donald Trump's $4.5 trillion tax cut bill prevailed in a crucial Senate test vote, a sign that Republican leaders are resolving the infighting over portions of the legislation and moving toward meeting a July 4 deadline the president has set for passage. Photographer: Aaron Schwartz/Bloomberg
The One Big Beautiful Bill Act (OBBBA), passed by the Senate on July 1, 2025, and approved by the House just in time for the July 4 deadline, solidifies significant tax reforms from the 2017 Tax Cuts and Jobs Act (TCJA). For high-net-worth families, collectors, and trustees, several crucial aspects stand out for estate planning:
1. Permanent, Inflation-Indexed Estate & Gift Tax Exemption
The final bill permanently increases the unified federal estate and lifetime gift tax exemption to $15 million per individual ($30 million for married couples), indexed for inflation starting in 2026. This secures the elevated threshold, preventing a drop to approximately $7 million per individual, which was anticipated if the TCJA provisions expired. This stability allows ultra-high-net-worth individuals to accelerate lifetime gifting and fund dynasty trusts efficiently.
2. GST Tax Exemption Reinforced
The generation-skipping transfer (GST) tax exemption is now aligned with the $15 million per individual exemption, also indexed for inflation. This paves the way for robust multi-generational planning through dynasty trusts and other strategic vehicles.
3. Trust Income Tax Brackets Made Permanent
The OBBBA retains the TCJA-era tax brackets for trusts and estates, with annual inflation adjustments, offering trustees long-term predictability in managing irrevocable trusts.
4. No SALT Deduction Expansion for High-Net-Worth Households
The legislation maintains the $10,000 cap on State and Local Tax (SALT) deductions, a move endorsed by Senate leadership. This decision means wealthy individuals in high-tax states must continue to focus on other tax planning strategies rather than relying on expanded SALT benefits.
5. Other Significant Changes Impacting Estate Planning
Strategic Estate Planning Moves to Consider
Act Now: No Sunset Provision
The permanent, inflation-indexed $15 million exemptions mean there is no longer a sunset provision. Delaying estate planning is riskier as assets expected to appreciate, such as art and collectibles, should be transferred or trust-funded sooner rather than later.
Dynastic Asset Transfers
Utilizing elevated GST allocations, families can establish dynasty trusts designed to transfer wealth and cultural assets across generations with minimal tax implications.
Art & Collectible Planning
Gifting during one's lifetime with the $15 million exemption keeps value out of estates. Valuation oversight is critical, particularly for illiquid or unique items. Trust structures should be tailored for artwork governance, including role assignments and liquidity funding .
Income Tax Predictability for Trusts
With permanent TCJA income brackets, fiduciaries can confidently model trust income and distributions, aiding in managing trusts that hold income-producing assets.
Avoid Relying on SALT Cap Changes
Estate plans should not depend on expanded SALT deductions. Instead, focus on strategies like Grantor Retained Annuity Trusts (GRATs), Charitable Lead Annuity Trusts (CLATs), and donor-advised funds for tax-efficient wealth transfers in high-tax states.
Conclusion: A Strategic Window of Opportunity
The OBBBA provides unprecedented permanence in estate and gift exemptions, presenting a well-defined planning window for high-net-worth families and fiduciaries. Revise estate plans to capitalize on the $15 million-per-individual exemptions, initiate or expand dynasty trusts, strengthen governance of holdings, augment liquidity reserves, and diversify planning strategies. This is a generationally significant moment—strategic action now can preserve and protect multigenerational wealth when it matters most.