Estate planning essentials: Why it matters at any age

A New Era for Wealth Transfer

The landscape for estate planning shifted decisively in mid-2025 when the One Big Beautiful Bill Act became law, resolving years of uncertainty over the 2017 Tax Cuts and Jobs Act provisions set to expire at the end of that year. That expiration would have slashed the lifetime estate, gift, and generation-skipping transfer (GST) tax exemption roughly in half—from about $14 million per individual to around $7 million—triggering a 40% federal tax on amounts above the threshold for many upper-middle and high-net-worth households.

Instead, the new legislation set a permanent baseline of $15 million per person ($30 million for married couples via portability) effective January 1, 2026, with annual inflation indexing from 2027 onward. This increase adds roughly $1 million more in tax-free transfer capacity per person compared with 2025 levels.

The real-world stakes remain high for those with estates near or above these thresholds. An estate exceeding $15 million faces immediate 40% federal taxation on the excess, potentially amounting to hundreds of thousands or millions depending on size—funds that could otherwise pass to heirs, charities, or trusts. Families in states with their own estate or inheritance taxes face compounded burdens, as federal changes do not affect state levies; some states impose taxes at far lower thresholds.

Non-obvious angles persist. The higher exemptions ease pressure on pure tax-minimization strategies but refocus attention on preserving basis step-up at death, which resets asset values for capital gains purposes and can save heirs substantial taxes on appreciated property. Over-reliance on lifetime gifting risks forgoing this benefit, creating a tension between current tax savings and future capital gains exposure. Portability of unused exemptions between spouses continues uninterrupted, but improper elections or outdated documents could still forfeit advantages. Moreover, while the changes are labeled 'permanent,' future Congresses could amend them, introducing long-term uncertainty that prudent planners weigh against immediate opportunities.

For most Americans below these thresholds, federal estate taxes are irrelevant, yet broader estate planning—wills, trusts, powers of attorney—gains renewed relevance amid demographic shifts like aging populations and complex family structures.