Estate Planning Blog

Review Your One Big Beautiful Estate Plan: Estate and Tax Changes under the OBBBA

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), a sweeping tax reform package that reshapes the financial landscape for high-net-worth families. From estate tax exemptions to new savings vehicles for children, the Act presents both opportunities and strategic considerations for those looking to preserve and grow their wealth across generations.

Let’s explore what this means for your legacy, your wealth, and your estate strategy.

A New Era for Estate and Gift Tax Exemptions

The OBBBA raises the federal estate, gift, and generation-skipping transfer (GST) tax exemptions to $15 million per person (or $30 million per married couple) beginning on January 1, 2026. This increase is indexed for inflation and, notably, is not subject to a sunset provision—offering a rare sense of legislative stability, assuming no further Congressional meddling.

For wealthy families, this opens the door to substantial lifetime gifting and trust funding strategies. However, given the political nature of tax law, it’s prudent to act while the exemption is high and stable, especially with the impending midterm elections in 2026.

Strategic Gifting and Trust Planning

The annual gift tax exclusion rises to $19,000 per recipient in 2026. While modest compared to the lifetime exemption, it remains a valuable tool for incremental wealth transfer on an annual basis. Families may consider using this exclusion to fund irrevocable trusts such as SLATs, Dynasty Trusts, ILITs, or Gift Trusts for children, which can lock in today’s favorable tax treatment while maintaining flexibility.

Preservation of Step-Up in Basis and Trust Taxation

The OBBBA preserves the step-up in basis at death, allowing heirs to inherit appreciated assets without capital gains tax on prior appreciation. This remains a cornerstone of tax-efficient wealth transfer.

Additionally, grantor trusts, GRATs, and other advanced planning vehicles remain unaffected, preserving their utility in estate planning.

Expanded Flexibility for 529 Plans

The OBBBA also significantly expands the utility of 529 college savings plans:

• The annual withdrawal limit for K–12 expenses doubles from $10,000 to $20,000 starting in 2026.
• Qualified expenses now include books, online learning tools, tutoring, standardized test fees, and dual enrollment tuition.
• 529 funds can now be used for vocational training, licensing exams, and credentialing programs, including CPA, bar exam, CDL, and skilled trades.
• The ability to roll over unused 529 funds into ABLE accounts for individuals with disabilities is now permanent.

These changes make 529 plans more versatile—not just for college, but for a broader range of educational and career pathways, all while earning interest, tax-free. For families with excess funds in 529s or children pursuing non-traditional education, this flexibility is a welcome enhancement.

New Savings Vehicles: Trump Accounts

One of the most novel features of the OBBBA is the introduction of Trump Accounts—federally backed savings accounts for children born between 2025 and 2028. Each eligible child receives a $1,000 federal seed deposit, and families can contribute up to $5,000 annually, with contributions invested in low-cost index funds.

These accounts function similarly to IRAs, with tax-deferred growth and taxable withdrawals. Funds become  accessible at age 18, and early withdrawals are penalized unless used for education or first-time home purchases.

For affluent families, Trump Accounts offer a new way to build generational wealth starting at birth. While contributions are not tax-deductible, the long-term compounding potential—especially when paired with employer or charitable contributions—makes them a compelling planning tool. Both grandparents and parents can use these accounts to help children gain a financial head start, potentially reaching six-figure balances by adulthood if contributions are maximized. Permissible contributions total $135,000 without regard to inflation adjustments and earnings. While Trump accounts may not replace 529 plans or other savings tools, they can be a valuable addition to a well-rounded estate plan.

SALT Deduction Relief

The State and Local Tax (SALT) deduction cap increases to $40,000 through 2029, offering meaningful relief for clients in high-tax states. This change may influence decisions around residency, charitable giving, and income tax planning.

What Should You Do Now?

With expanded exemptions, new savings vehicles, and enhanced flexibility in education planning, now is the time to revisit your estate plan. Consider:

• Updating your documents to reflect the new exemption levels.
• Funding irrevocable trusts while exemptions are high.
• Exploring Trump Accounts and enhanced 529 plans for children and grandchildren.
• Coordinating with your advisors to align your estate, tax, and philanthropic goals.

The One Big Beautiful Bill Act has created a favorable environment for wealth transfer and family planning. Whether you're preserving a legacy, supporting future generations, or building a philanthropic footprint, the tools are now more powerful than ever.

If you have questions regarding the OBBBA and your estate plan, please contact your McBrayer Estate Planning attorney today.

McBrayer Estate Planning Team: Phillip Pearson, Ivan Schell, Alan Linker, Victoria Dickson, Kenton Ball, and Miles Lee.