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The “One Big Beautiful Bill Act” brings clarity and opportunity for estate planning.

The new legislation passed last year, known as the “One Big Beautiful Bill Act,” solidified key provisions from the 2017 Tax Cuts and Jobs Act, extending the estate, gift and generation-skipping transfer tax exemptions that were previously set to expire at the end of 2025.

Before the new legislation, many investors were preparing to make large gifts ahead of the deadline to take advantage of the higher exemption before it was cut in half. Now some may feel a sense of relief, but it’s important to remember that a lot can happen in a short time.

While one major uncertainty has been addressed for now, laws and life can change. This new legislation serves as a reminder to review your estate plan and ensure your long-term financial goals are fully supported.

A shift in focus

Even with more certainty around federal tax exemptions, there are still important details to keep in mind, especially if you're thinking about how to help protect and pass on your wealth.

Step-up in basis

With the indefinite extension of the federal estate and gift tax exemption in effect, pressure to “use it or lose it” has subsided for the time being. Even though the lifetime exemption amount is the same whether you use it for gifting during your lifetime or as inheritance through your estate, the way you transfer assets can have a major impact on taxes.

If you gift someone an appreciating asset during your lifetime, they inherit your original cost basis and have to pay capital gains tax on the accrued value. However, if they receive it through your estate, it may get a step-up in basis to its current market value, potentially eliminating capital gains tax.

Estate and gift tax exemption portability

Any unused portion of the combined $30 million estate and gift tax exemption for married couples can transfer to the surviving spouse, allowing them to use the unused exemption, provided the appropriate election is made on the federal estate tax return. While this can increase the total amount of assets eligible for a step-up in basis and exempt from federal estate tax, not all assets qualify. It’s important to plan ahead to understand which assets do and how to best structure the estate.

Generation-skipping transfer tax exemption

A separate exemption of $15 million per person protects assets passed to grandchildren or other skipped-generation beneficiaries from the 40% generation-skipping transfer tax. Unlike the estate and gift tax exemption, it can’t be transferred to a surviving spouse and must be used during one’s lifetime or directed through estate documents. This exemption can be useful for families looking to pass wealth to future generations or set up long-term trusts, together with the estate and gift tax exemption.

Strategic planning and focus

Estate planning is not just about limiting taxes. It’s about asset protection, control and privacy.

For estates valued within the new exemption limits, emphasis on planning shifts from mitigating federal estate tax to focusing on relevant state-level tax implications – which can significantly impact wealth transfer – and broader legacy goals. Regardless of asset size, it’s essential to have foundational estate planning documents in place such as wills, powers of attorney, healthcare directives and privacy protections. For families with minor children or dependents, naming guardians is a critical step to ensure their care and well-being in the event of an untimely loss.

Owners of estates that fall within the expanded portion of the exception amount should consider the possibility of exposure if that amount were reduced, especially if their time horizon includes the next few election cycles. Should the exclusion be reduced in their lifetime, their estate plan should have flexibility in place to help protect assets that would otherwise become subject to federal estate tax. Many states also impose estate or inheritance taxes, which should be considered in overall planning.

For individuals with $30 million or more in liquid assets, estate planning shifts to preserving capital, minimizing tax exposure and helping protect assets and legacy. Strategies like preventing further growth of appreciating assets and their associated tax liabilities through estate freezing and moving assets outside of the estate through the strategic use of trusts will likely remain viable in the future for amounts over the exemption.

Regardless of estate size, all investors can benefit from taking measures to help protect their assets and preserve their legacy for generations to come by ensuring their estate plans remain adaptable.

The OBBBA taught us that tax law can change at any time depending on who is responsible for making those laws. What resulted in many things staying the same could just have easily brought significant change, so ensuring that your estate plan is flexible is essential for its ongoing effectiveness. Accounting for the possibility of legislation changes in the future can help you set up beneficiaries and heirs for financial success in accordance with your wishes.

Raymond James does not provide tax advice. Please discuss these matters with your tax professional.