A major change in the federal estate tax was recently signed into law as part of what lawmakers dubbed the “One Big Beautiful Bill Act.” The legislation includes a permanent increase to the federal estate tax exemption, raising it to $15 million per individual (or $30 million per married couple with proper planning).
This is a significant development for individuals and families with substantial estates, as the new exemption replaces the previously scheduled 2026 sunset that would have cut the exemption roughly in half (to an estimated $7 million before the law change).
What This Means for Estate Planning
With a $15 million exemption now permanently in place, fewer families will be subject to the federal estate tax. This change may reduce the need for some of the more complex tax avoidance strategies previously used to minimize federal estate tax exposure. Clients should review their documents with their estate planning attorney to ensure that their plans are current and reflect the current legal landscape.
Who Should Review Their Estate Plans Now?
Even if you think that this change will not affect you or your family, many individuals and business owners should still carefully review their estate plans:
- Business Owners: If your business makes up a large portion of your estate, the new exemption may change how you plan for succession, liquidity, or family ownership. You may now have more flexibility to transition your business without triggering estate tax, but it’s still essential to plan for control, management, and valuation issues.
- Individuals with Estates Over Previous Exemption Amounts: Even if your estate is below the $15 million exemption, your estate plan likely relies on an older exemption amount. Your estate planning attorney can review your documents and ensure that the documents allow your heirs to take advantage of the rising exemption. Older estate plans that relied on the lower exemptions can often be simplified. Below are some of the fluctuations in the estate tax:
- 2007 $2 Million
- 2009 $3.5 Million
- 2011 $5 Million
- 2017 $5.49 Million
- 2018 $11.18 Million
- 2021 $12.06 Million
- 2024 $13.99 Million
- Families Using Complex Trusts: If your plan includes ILITs, SLATs, GRATs, family limited partnerships, or other tax-motivated structures, it may be worthwhile to reevaluate whether those strategies are still necessary or could be simplified.
- Anyone with an Older Estate Plan: If your estate plan was created before this exemption increase—or in anticipation of the previous sunset—it may now be outdated and based on incorrect assumptions.
Estate planning is still critical—not just for tax efficiency—but to ensure your wishes are carried out, your heirs are protected, and your assets are transferred smoothly. If you would like to schedule a meeting to review your estate plan, or if you have any questions, please call the attorneys of Wakefield Law, PC at (248) 457-9860.
*This article is meant for informational purposes only. Please recognize that nothing in this article constitutes legal advice. If you have any questions, comments, or seek legal assistance, please contact one of the attorneys at Wakefield Law, PC.