The passage of the One BigBeautiful Bill (OBBB) brings a new era of certainty and opportunity for high-net-worth families. This legislation permanently increases the federal estate, gift, and generation-skipping transfer (GST) tax exemption, providing astable foundation for long-term estate planning.
Key Takeaways
- Federal estate, gift, and GST tax exemption is permanently set at $15 million per individual ($30 million for married couples), indexed for inflation starting in 2027.
- The increased exemption takes effect January 1, 2026.
- Tennessee does not impose a state estate or inheritance tax.
The New Era of Estate Tax Certainty
For years, estate planning was complicated by shifting exemption amounts and the threat of sunset provisions. The Tax Cuts and Jobs Act of 2017 temporarily increased the exemption, but it was scheduled to drop sharply in 2026. This created a dilemma for high-net-worth families: should they rush to make large gifts before the exemption decreased or wait and risk losing the higher exemption? The OBBB eliminates this uncertainty by:
- Permanently raising the exemption to $15 million per person, indexed for inflation beginning in 2027.
- Preventing the scheduled reduction to approximately $7 million per person in 2026.
- Providing a stable, predictable environment for longer-term planning.
Why Certainty Matters for High-Net-Worth Families
Longer-term planning is now possible without the risk of sudden changes in tax law (new legislation will be required now unlike in the past several years where we’ve faced threats of a “sunset”). With the exemption set at $15 million per person, families can:
- Structure estates with confidence.
- Make large lifetime gifts, up to the full exemption amount, without fear of future clawbacks or reduced limits.
- Revisit and potentially simplify older, complex planning structures designed for a less favorable tax environment.
Key Provisions of the OBBB for High-Net-Worth Clients
- Exemption Amount: $15 million per individual / $30 million per married couple
- Indexing: Indexed for inflation starting in 2027
- Permanence: Exemption is a permanent feature, not subject to sunset
- Effective Date: January 1, 2026
What Should High-Net-Worth Families Do Now?
- Review Your Estate Plan: Ensure your current plan takes full advantage of the new, permanent exemption.
- Consider Lifetime Gifting: Evaluate whether making large gifts now could benefit your family and reduce future estate tax exposure.
- Explore Advanced Strategies: Work with your estate planning attorney to implement or update trusts and other vehicles that maximize the benefits of the OBBB.
- Stay Informed: While the law is now permanent, future legislative changes are always possible. Regular reviews with your attorney are essential.
Conclusion
The OBBB ushers in a new era of estate tax certainty for high-net-worth families. With a permanent, inflation-indexed exemption, families can now plan with more confidence. If you have questions or would like to review your estate plan, contact Riggs Davie PLC to schedule your estate planning consultation.
FAQs
Q: When does the new $15million estate tax exemption take effect?
A: The exemption takes effectJanuary 1, 2026, and is indexed for inflation starting in 2027.
Q: Does Tennessee have a separate state estate tax?
A: No. Tennessee does not currently impose a state estate or inheritance tax.
Q: What should I do now?
A: Review your estate plan, consider lifetime gifting, and consult with an estate planning attorney tomaximize the benefits of the new law.
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