Why Reviewing Your Estate Plan Has Never Been More Important

On July 4, 2025, a new federal law called the One Big Beautiful Bill Act became official. Often referred to as the Big Beautiful Bill, this Bill makes several important changes to tax rules, trusts, gifts, business ownership, and charitable giving. These updates will  affect how individuals and families plan for the future, especially when it comes to estate planning, business succession, and wealth preservation.

This blog will explain  what has changed and what actions individuals, families, and business owners should consider to make sure their plans are current and effective.

Expanded Federal Estate, Gift, and Generation Skipping Transfer Tax Exemptions

The law increases the lifetime federal exemption for estate taxes, gift taxes, and generation skipping transfer taxes. The generation skipping transfer tax, also known as the GST tax, applies when assets are transferred to grandchildren or others more than one generation below the giver.

Starting in 2026, the exemption rises to 15 million dollars per person or 30 million dollars per married couple. This amount will be adjusted for inflation each year. Before this law, the exemption was about 13 million dollars and was expected to drop to around 7 million dollars in  2026. The new law prevents that reduction and provides a higher, more stable threshold for transferring wealth tax free.

This change makes it important to review any existing estate plan. Documents that were written based on older, lower exemption amounts may contain outdated formulas or language. Without review, these plans could misallocate assets or unintentionally trigger taxes.

Increased Deduction for State and Local Taxes

The law also raises the federal deduction for State and Local Taxes, commonly referred to as SALT. This deduction allows taxpayers to reduce their federal taxable income by the amount paid in state income tax, property tax, and some local taxes.

Previously, this deduction was limited to 10 thousand dollars. Under the new law, the cap increases to 40 thousand dollars for most taxpayers, starting in tax year 2025. This expanded deduction is available through 2029 and is adjusted for inflation. However, it begins to phase out for those with modified adjusted gross income, often referred to as MAGI, over 500 thousand dollars for joint filers.

For individuals who live in high-tax states or who own several properties, this change may result in significant federal tax savings. In some cases, taxpayers can legally multiply the deduction by using multiple non grantor trusts. These trusts are treated as separate taxpayers, and each trust may claim its own SALT deduction. While effective, this strategy requires careful planning, clear documentation, and compliance with federal tax rules.

Qualified Small Business Stock: Larger Tax Exemptions for Business Owners

The law expands the benefits available through Qualified Small Business Stock, commonly referred to as QSBS. These tax rules allow business owners and investors to exclude certain gains from federal tax when they sell stock in a qualified business.

Under the new rules, the gain exclusion limit increases to 15 million dollars per company. In addition, business owners may exclude fifty percent of gains after holding the stock for at least three years, seventy-five percent after four years, and one hundred percent after five years. The cap and holding period rules apply per issuer, and the company must meet certain requirements to qualify.

These improvements allow founders, investors, and startup employees to exclude larger amounts from tax when selling their interest in a business. The gross asset limit for businesses that qualify also rises from 50 million to 75 million dollars. Individuals interested in passing business interests to family or selling a business in the future should review their company’s structure and consider how to qualify under the new rules. Some individuals may also benefit from transferring shares into trusts to multiply the available exemption.

The Continued Importance of Trust Planning

The Big Beautiful Bill does not reduce the role of trusts in financial and estate planning. In fact, it strengthens the value of using trusts as part of a larger strategy.

Trusts offer several benefits. They allow individuals to:

• • Avoid the probate process, which can be costly and public 
  • Keep financial and family matters private 
  • Reduce or eliminate estate taxes 
  • Direct how and when assets are distributed 
  • Protect assets from lawsuits, creditors, or mismanagement 

Some of the most effective trust types under the new law include:

• • Living Trusts, which allow assets to transfer outside of court after death 
  • Spousal Lifetime Access Trusts, or SLATs, which allow one spouse to benefit from assets while removing them from the taxable estate 
  • Grantor Retained Annuity Trusts, or GRATs, which are used to transfer future appreciation out of an estate while keeping an income stream 
  • Dynasty Trusts, which preserve wealth across multiple generations
  • Non Grantor Trusts, which can be used in certain tax strategies such as multiplying deductions

Trust strategies should be selected based on individual circumstances, asset types, and long-term goals.

Charitable Giving Rules Have Changed

The law also adjusts the tax treatment of charitable donations. Under the new rules, taxpayers who do not itemize deductions may still claim a charitable deduction of up to one thousand dollars per individual or two thousand dollars per married couple.

For those who do itemize deductions, only donations above 0.5 percent of adjusted gross income now qualify for deduction. This change means that donation timing and amounts may need to be adjusted to match a taxpayer’s financial strategy.

Some individuals may consider setting up a charitable trust or donor-advised fund to manage larger gifts over time. These vehicles allow donations to grow tax free and be distributed to charities later, while providing a possible deduction today.

New Accounts for Children Born Between 2005 and 2028

The Big Beautiful Bill introduces a new type of government-supported account for children born from 2025 through 2028. These accounts begin with a one-time one thousand dollar contribution from the government. Families can add up to five thousand dollars each year, with contributions adjusted for inflation.

The funds can be used in the future for education, housing, or other approved purposes. These accounts can be integrated into estate and gift planning, especially for grandparents or parents who want to support future generations while also staying within annual gift limits.

Coordination Between Federal and State Tax Rules

While the federal exemption has increased, many states still impose their own estate, inheritance, or gift taxes. These state-level exemptions are often much lower than the new federal thresholds.

This creates a gap between what is allowed federally and what is taxed by the state. For individuals with property or business interests in multiple states, it is essential to coordinate both federal and state tax planning. Trusts, limited liability companies, and other legal structures can sometimes be used to reduce or avoid state-level taxes depending on the location of the assets and the applicable laws.

Flexibility Is Still Important

Although the law refers to many of its provisions as permanent, future Congresses have the power to change tax rules at any time. This means plans created today must be flexible enough to respond to changes in the law, in addition to changes in personal or financial circumstances.

Legal professionals often recommend using documents that include powers of appointment, trust protectors, and other clauses that allow families to adjust a trust’s terms or structure in the future. Planning for multiple scenarios also helps protect against future tax increases or new regulations.

What to Review and Update

 

If your estate plan was created before 2025, now is the time to review it. The expanded federal exemption amounts and other changes introduced by the 2025 law may impact how your assets are distributed, taxed, and protected.

Areas to consider include:

• Wills and trusts written under old exemption thresholds 
• Gifting strategies that may now allow for additional transfers 
• Use of specific trust structures such as Spousal Lifetime Access Trusts or Grantor Retained Annuity Trusts 
• Planning for business ownership transfers or future sales 
• Charitable giving strategies based on updated deduction limits 
• Alignment of federal and state tax planning.

Reviewing and updating your documents makes sure that your plan remains efficient under current law and adaptable to future changes.

Final Thoughts

 

The Big Beautiful Bill brings some welcome changes for families, business owners, and anyone focused on preserving wealth. The higher exemptions and expanded deductions create new opportunities, but they also mean older estate plans may no longer work the way they were intended. Outdated formulas, overlooked state-level taxes, or missed planning strategies can all lead to results you didn’t intend.

The best step you can take is to sit down with an attorney, review your current plan, and see if updates are needed. Laws will continue to change, but making sure your plan is up to date today will give you peace of mind for tomorrow.

This article is for general informational purposes only and should not be considered legal, tax, or financial advice. Please consult with a qualified professional about your specific situation before making any decisions regarding estate planning, taxes, or business matters.