Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) permanently reshapes the estate, gift, and generation-skipping transfer (GST) tax landscape. For high-net-worth individuals and families, these changes deliver clarity and opportunity—but only if acted on thoughtfully. For those who are under the new higher exemption amounts and who have overplanned in the past, you may risk losing other valuable tax benefits as a result of assets being outside of your estate. In that case, there are opportunities to bring those assets back into your estate, minimizing capital gains taxes for overall tax efficiency.
Permanent Increase in Exemptions
Starting January 1, 2026, the federal estate, gift, and GST tax exemptions are elevated to $15 million per individual (indexed for inflation). A married couple can now shelter up to $30 million from federal transfer taxes, permanently (or at least until Congress changes the rules again).
GST (Generation-Skipping Transfer) Tax Alignment
The GST exemption now matches the $15 million unified exemption. However, unlike the estate tax exemption, which can be “ported” over to the surviving spouse at the first death, GST exemption portability between spouses is not possible. This means that when one spouse dies, their generation-skipping tax exemption dies with them. This requires careful planning—such as separate trust structures—to fully utilize both spouses’ GST exemptions.
Tax Rate Holds Steady at 40%
For estates exceeding the exemption, tax is calculated on the excess amount at the longstanding 40% rate.
Strategic Opportunity: ‘Gift Now’ Advantage
Appreciation on assets that are outside of your taxable estate escapes future estate tax. If assets grow faster than inflation adjustments to the exemption, delaying gifts and keeping these appreciated assets in your estate can cause your estate to pay additional tax.
When you make lifetime gifts, you use up some or all of your federal exemption (now $15 million per person under the OBBBA). Here’s why doing so is often better than simply waiting until death for the estate tax to apply:
- Shrink the Taxable Estate
- Every dollar you give away during your life (above annual exclusion gifts) reduces the size of your taxable estate.
- Example: If you have a $40M estate and gift $15M today, your estate at death starts at $25M instead of $40M. That $15M (plus any future growth) is completely out of the estate tax calculation.
- Move Growth Out of the Estate
- Assets given away today don’t just escape current taxation – all future appreciation on those assets also grows outside your taxable estate.
- Example: A $15M business interest that grows to $30M over your lifetime would generate a $6M tax bill at 40% if left in the estate. If gifted now, both the $15M and the $15M in growth are free of estate tax, reducing a $6 million tax bill to zero.
- Leverage Valuation Discounts & Planning Structures
- Lifetime transfers can often be made using FLPs, LLCs, or minority interests, which may qualify for valuation discounts (for example, lack of marketability and minority interest).
- Such discounts are usually not available at death, meaning lifetime transfers can remove more value per dollar of exemption used.
- Psychological & Legacy Benefits
- If you give away during life rather than at death, you get to watch your heirs enjoy the assets you gift. (For more on this paradigm-shifting philosophy, I highly recommend the book “Die With Zero” by Bill Perkins).
- You can also use trusts to provide structure and asset protection while still moving assets out of the estate.
Bottom Line: Gifting during life isn’t just about using the exemption — it’s about shifting both the assets and all their future growth out of the estate, potentially saving millions in estate tax and creating an incredible legacy for your family or for charity.
Tax Planning Certainty & Permanency
The OBBBA removes the sunset of the enhanced exemptions scheduled under the 2017 Tax Cuts and Jobs Act (“TCJA”), offering long-term planning confidence.
One thing to consider: if your estate is BELOW the new permanent exemption and was created at a time when the exemption was much lower, you may have overplanned, which could cause loss of other valuable tax benefits, such as the step-up in basis at death, which eliminates capital gains taxes. If your estate falls in this category, contact us about how to “undo” what was previously done to maximize overall tax efficiency.
State-Level Considerations
State estate or inheritance taxes remain a separate layer of planning. For example, New York still has its own estate tax with a much lower exemption and a harsh “cliff” that causes taxation of the entire estate if the total amount is over $7,518,000 (for 2025). Federal tax relief doesn’t eliminate the need for state-specific strategies.
Illustration: Gift Now vs Wait
The charts below illustrate how gifting assets today can leverage the growth outside of your estate compared to waiting, even with inflation-adjusted exemption increases.
Gift at Death
The chart below assumes that a $15 million asset in your estate appreciates at 8% each year for 30 years. If you pass this asset to your heirs when you die in 30 years, assuming an estate tax exemption at such time of $36 million ($15 million indexed for 3% inflation), then the net taxable estate of $114 million would be taxed at 40% for a total of $45 million and an after-tax estate of $105 million passing to your heirs.
Gift Now
If instead you gift that asset now into an irrevocable trust for your heirs, the asset with absorb your entire tax exemption of $15 million (in 2026), but will grow tax-free, saving $45 million in tax (with an estate tax exemption of $21mm remaining for other assets).
Summary: Action Items & Planning Recommendations
| Strategy | Brief Explanation |
| Evaluate Lifetime Gifting | Gift appreciated assets now to transfer future growth out of the estate. |
| Set Up or Review Trust Structures | Use trusts to lock in exemptions and manage assets for beneficiaries. |
| Maximize GST Exemption Use | Without portability, make strategic GST-exempt gifts for each spouse. |
| Reassess Estate Plan Timing | Earlier gifts may offer more leverage than waiting years. |
| Update Estate Documents | Ensure wills, trusts, and related documents reflect the new exemption levels. If prior planning has been done around older, lower exemption amounts, there are opportunities to bring assets back into the estate, which can minimize capital gains at death. |
Conclusion & Call to Action
The OBBBA has transformed estate-planning rules for high-net-worth families—elevating exemptions, preserving tax-efficient wealth transfers, and granting long-term clarity. However, state taxes and fine-print limitations underscore the need for careful and nuanced planning. With enough time and planning, estate taxes can be greatly reduced or eliminated entirely, even for estates well in excess of the new permanent exemptions.
Tobey Blanton Forney is a member of Kean Miller’s Estate Planning, Trusts, Successions & Probate group and practices in the firm’s Houston office. Tobey advises clients on their personal wealth, family, and legacy, helping them to not only manage their assets, minimize taxes, and put the right documents in place, but to translate their success into a meaningful legacy.