For roughly three years, estate planning ran on a single assumption: the federal estate tax exemption was going to drop. The Tax Cuts and Jobs Act of 2017 had doubled the exemption, but that increase was scheduled to sunset at the end of 2025. If Congress did nothing, the exemption would revert from approximately $14 million per person back to around $7 million.
That assumption drove an enormous amount of planning activity. Families created SLATs. They made large lifetime gifts. They funded dynasty trusts and GRATs. Attorneys drafted irrevocable structures specifically designed to capture the higher exemption before it disappeared.
Then, on July 4, 2025, President Trump signed the One Big Beautiful Bill Act. The estate tax exemption did not drop. It went up. And it became permanent.
What Actually Happened
The OBBBA raised the federal estate and gift tax exemption to $15 million per individual, effective January 1, 2026. For married couples, that is $30 million. The exemption is indexed for inflation beginning in 2027, meaning it will continue to rise with the cost of living.
There is no sunset. No expiration date. The exemption is permanent until Congress changes it again.
The annual gift tax exclusion remains at $19,000 per donee for 2026 ($38,000 for married couples who elect gift-splitting).
The estate and gift tax rate for amounts above the exemption remains 40%.
If You Already Made Aggressive Moves
Many families acted between 2023 and 2025, using the then-current $13.99 million exemption before the expected sunset. If you funded a SLAT, made large lifetime gifts, or created irrevocable trust structures during that window, here is where you stand.
Your gifts are safe. The IRS anti-clawback regulations confirm that gifts made under a higher exemption are not recaptured if the exemption later drops. Since the exemption went up rather than down, this protection is now even more robust. Nobody who acted early is worse off from a tax perspective.
The urgency is gone. If you were planning additional transfers in 2026 to "use it before you lose it," that pressure has evaporated. You now have time to evaluate whether further gifting aligns with your goals, cash flow, and family dynamics rather than racing a deadline.
Your existing structures still work. A SLAT created in 2024 does not become invalid because the law changed. The trust still removes assets from your estate, still provides income to the beneficiary spouse, and still passes to the next generation outside the estate. What changed is that the tax motivation may now be less urgent for estates well below $15 million.
Consider whether you need the complexity. Some families created irrevocable structures primarily for tax savings and would not have done so otherwise. If your estate is comfortably below $30 million (married), the irrevocable trust may be carrying administrative costs and reduced flexibility for a tax benefit you no longer need. This does not mean you should unwind existing trusts. It means your next planning conversation should ask: does this structure still serve its purpose beyond taxes? Asset protection, creditor shielding, multigenerational control, and benefit preservation are all valid non-tax reasons to maintain a trust.
If You Waited
Families who chose not to act during the "use it or lose it" window now find themselves in a surprisingly strong position. The exemption is higher than it was during the rush, and there is no deadline.
You have $15 million per person to work with. That is $1 million more than 2025, with no expiration. You can plan thoughtfully rather than reactively.
SLATs remain a viable tool. A Spousal Lifetime Access Trust is not only a sunset-capture vehicle. It provides asset protection, keeps assets out of the taxable estate while maintaining family access through the beneficiary spouse, and provides structure for multigenerational wealth transfer. For estates that may grow beyond the exemption over time, a SLAT funded now locks in today's exemption and removes future appreciation from the estate.
Dynasty trusts serve long-term goals. For families with generational wealth that will compound beyond the $15 million threshold, dynasty trusts funded with the exemption remain powerful. The key difference: you can now take the time to design these structures thoughtfully rather than cramming them into a year-end deadline.
Lifetime gifting is still efficient. Annual exclusion gifts ($19,000 per donee, $38,000 split) continue to move assets without touching the lifetime exemption. For families with multiple children and grandchildren, systematic gifting over time compounds significantly.
The Special Needs Intersection
This is the section that most articles about the OBBBA skip entirely, and it is the one that matters most for families we work with at FamilyVest.
When a family includes a member with a disability, estate planning is not only about tax efficiency. It is about benefit preservation, trust structure, and ensuring that inherited wealth does not disqualify the beneficiary from SSI, Medicaid, or other means-tested programs.
The $15 million exemption does not change the need for a special needs trust. A third-party SNT is still essential for any inheritance flowing to a person receiving means-tested benefits. The trust protects government benefit eligibility regardless of the estate tax environment. Even if the estate owes zero estate tax, an outright inheritance of any size can destroy SSI eligibility instantly.
Larger exemptions create larger planning opportunities for SNT funding. With $15 million per person shielded from estate tax, families can transfer more wealth into trust structures without triggering tax. For special needs families, this means: funding a third-party SNT more aggressively during life, creating a larger pool of assets that will be managed for the beneficiary's lifetime, and structuring remainder beneficiaries without worrying about estate tax eroding the trust corpus.
ABLE accounts coordinate with the estate plan. The ABLE annual contribution limit for 2026 is $20,000 ($35,650 with the ABLE-to-Work provision). Trustees of a third-party SNT can fund the beneficiary's ABLE account annually up to this limit, providing the beneficiary with direct spending control for qualified disability expenses. The estate plan, the SNT, and the ABLE account should function as a coordinated system, not three separate documents gathering dust in different filing cabinets.
The new senior bonus deduction may help grandparents. The OBBBA created a $6,000 additional deduction for taxpayers age 65 and older ($12,000 for married couples, both 65+). This phases out between $75,000 and $175,000 MAGI for singles, $150,000 to $250,000 for married filing jointly. For grandparents who are also gifting to special needs trusts or ABLE accounts, the tax savings from this deduction can offset the cash flow impact of annual gifting.
What to Review Now
Whether you acted early or waited, the permanent $15 million exemption warrants a planning review. Not because something is broken, but because the assumptions underlying your plan may have changed.
Review the purpose of existing irrevocable trusts. If a trust was created solely for tax savings and your estate is now well below the threshold, discuss with your attorney whether the trust's administrative burden still serves your goals.
Update beneficiary designations. Life insurance policies, retirement accounts, and transfer-on-death accounts should name the right beneficiaries given the new exemption landscape. If a trust was the beneficiary primarily for estate tax reasons, confirm that still makes sense.
Revisit state-level exposure. The federal exemption is $15 million, but twelve states and the District of Columbia impose their own estate taxes at significantly lower thresholds. Connecticut exempts $15.4 million. Massachusetts and Oregon exempt only $1 million. If you have assets or property in a state with a separate estate tax, federal permanence does not eliminate your planning need.
Coordinate with retirement distribution planning. For families in the gap years between retirement and Required Minimum Distributions, the new landscape may change the Roth conversion calculus. Roth conversions reduce the taxable estate while creating tax-free growth for heirs. With a $15 million exemption, this strategy matters more for income tax optimization than estate tax reduction for most families, but the two intersect for larger estates.
If you have a family member with a disability, confirm your SNT and ABLE structures are current. The ABLE age expansion (now before age 46) and the increased contribution limit ($20,000 for 2026) mean there may be family members who are newly eligible or who should be contributing more. The estate plan should reflect these tools.
The Honest Assessment
For most American families, a $15 million per-person estate tax exemption means the federal estate tax is no longer a practical concern. Fewer than 0.1% of estates will owe federal estate tax under this threshold.
That does not mean estate planning is unnecessary. It means the focus shifts. The conversation moves from "how do we avoid the tax?" to "how do we structure things so they work the way we want?" Trusts for asset protection, guardianship and decision-making for incapacitated family members, coordinating benefit preservation for members with disabilities, managing the complexity of blended families, and ensuring wealth passes according to actual intent rather than intestacy defaults: these are the problems that persist regardless of the tax exemption.
If your estate plan was built around the assumption of a $7 million sunset, it is time for a conversation. Not because the plan failed. Because the world changed.
