Estate Planning and The One, Big, Beautiful Bill Act
Posted by Cheryl A. Jankowski on July 10, 2025
Since the passage of the Tax Cuts and Jobs Act (TCJA) in 2017, estate planners have been eyeing January 1, 2026, with caution. The TCJA temporarily doubled the federal gift and estate tax exemption to $10 million (indexed for inflation), but it was set to revert to pre-2018 levels after 2025 unless Congress intervened. This created uncertainty for high-net-worth individuals concerned about future estate tax exposure.
That uncertainty has now been resolved. The newly enacted One, Big, Beautiful Bill Act permanently raises the federal gift and estate tax exemption to $15 million per individual (or $30 million for married couples), with annual inflation adjustments. For those whose estates may exceed this threshold, now is the time to consider strategies to reduce or eliminate future estate tax liabilities.
Planning with Flexibility
If you're not yet ready to transfer substantial wealth to the next generation, there are planning tools that allow you to leverage the higher exemption while maintaining access to your assets. Two such tools are:
1. Spousal Lifetime Access Trusts (SLATs)
A SLAT is an irrevocable trust that allows you to transfer assets out of your estate while still providing indirect access to those assets through your spouse. The trust is typically set up for the benefit of your children or other heirs, but it permits distributions to your spouse if needed.
Key considerations:
- You must fund the SLAT with separate property, not jointly owned or community property.
- You cannot serve as trustee.
- If structured properly, the assets are excluded from both your estate and your spouse’s estate.
To mitigate the risk of losing access if your spouse passes away, couples often establish reciprocal SLATs—one for each spouse. However, these must be carefully structured to avoid the reciprocal trust doctrine, which could cause the IRS to treat the trusts as if each spouse had created a trust for their own benefit, nullifying the estate tax benefits.
2. Special Power of Appointment Trusts (SPATs)
A SPAT is another irrevocable trust that offers flexibility. In this arrangement, you grant a special power of appointment to a trusted individual—such as a spouse or close friend—who can direct the trustee to make distributions to you if needed.
Benefits include:
- Assets are removed from your taxable estate.
- You retain indirect access to the assets.
- The trust provides creditor protection, if you are not a trustee or named beneficiary.
Preserve Wealth, Maintain Control
These strategies allow you to take advantage of the newly permanent exemption while preserving flexibility and control. If your estate is likely to exceed the exemption threshold, now is the time to act. We can help you evaluate your options, design a tax-efficient estate plan, and ensure compliance with the latest legal requirements.
Download a two-page summary of Effective OBBB Dates for Individual Taxpayers here.
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Cheryl has extensive experience working with business owners and individuals on minimizing taxes, with a focus on succession planning. With a thoughtful approach, Cheryl helps clients explore their long-term goals and plan accordingly. Leveraging Cheryl’s expertise in this area, the goal is to implement plans that achieve the wishes of the client and provide for tax-efficient transitions. Cheryl’s passion for working with corporations and individuals has allowed her to become a trusted business advisor. She has worked with clients not only in the Western New York region but also throughout the country. The breadth of this experience has allowed her to collaborate with other professional advisors to ensure that plans are flexible and innovative in the ever-changing world in which we live. Cheryl started her career with the Firm in 1991 and rejoined in 2019 adding additional strength to the tremendous talent of the Lumsden McCormick tax team.